Put the bed under it...use it as a headboard with a pair of tied back draperies, leaving the blinds for light control...
Not sure if that would work but that's what I'd suggest based on your pic

Why is that window that size? Is there a 1st floor roof comes right under it?
Because if there is no roof, that window can be easily changed height wise, keeping the same width, It will add extra light and there is more you can do with it to give a nice appeal. Especially you can get that window changed at a very reasonable cost, and with minimal disturbance to the surrounding surfaces inside and out... Just something to consider.

Good luck

it is an older house... lol-- no clue why they made it this way. The garage is below it.

can you upload more pictures of the room as a whole? so we can advise you better

If this the case Jennifer, get someone to open that up if your budget allows and put a regular size window in there, it will be well worth it, throw a little crown molding in the room, trim the window out, a few nice wall colors and you will have a beautiful light room and it will make a huge difference. If you take another picture of the room standing a little back, I will show you how its gonna look.

Good luck