If it were a 3 score+ blowout result, I could see Michigan dropping just out of the top 25, but since it was a close loss to a team that's actually not bad at all, I think they manage to hold onto a 20-25 spot.
Washington wasn't going to have nearly as good of a season as last year's magical season, but they're still going to be a bowl team, even if they lose all of their games to the ranked guys left on their schedule (Indiana, USC, Penn State, Oregon).