Workforce Pell Grants are coming this year, helping to level the playing field between traditional degree programs and workforce education. Starting on July 1, workforce programs between eight and 15 weeks in length can qualify for Pell Grants, so long as they meet certain student outcomes benchmarks. Specifically, workforce programs must boast a completion rate of 70 percent and a job placement rate of 70 percent. The median graduate must also earn at least $23,940 plus the cost of tuition.
It is critical to ensure that Workforce Pell dollars go to the highest-quality programs. As I wrote in December, many short-term workforce programs lead to exceptional earnings gains by equipping graduates with valuable skills and sought-after certifications. But other workforce programs do nothing to improve earning power—meaning students could be worse off if they fork over tuition with nothing to show for it.
Workforce Pell operates as a partnership between states and the federal government. Each state’s governor sends the US Secretary of Education a list of “eligible workforce programs” at institutions in the state. Among other things, the governor certifies that these programs lead to high-skill, high-wage, or in-demand occupations, and calculates the job placement rate for each program based on administrative data, such as unemployment insurance (UI) records. The Secretary of Education then verifies that each program has met the requirements for Workforce Pell. She also measures the earnings of each program’s graduates, using federal tax data, to ensure compliance with the earnings benchmark.
However, the Secretary can only measure earnings for graduates who receive federal aid for their workforce programs. After all, the federal government only knows who completed which program if the student received a Pell Grant for it. That necessarily means that no earnings data is available for programs newly eligible for Workforce Pell, as they don’t yet have any federally-aided students. Once the first cohort completes their programs, the Secretary must wait a few years to measure earnings. The Education Department therefore expects that a program receiving Workforce Pell Grants in 2026 will not generate usable earnings data until 2030.
This lack of federal data could present challenges if certain programs receive Pell Grants, only to find that their earnings outcomes render them ineligible in 2030. Taxpayers would shell out Workforce Pell for four award years, costing hundreds of millions of dollars. Students would exhaust part of their lifetime Pell Grant eligibility (students who receive Pell Grants for six years are ineligible for more). Institutions might make investments in scaling up short-term programs on the promise of continued access to Workforce Pell, only to lose it once they discover the earnings outcomes aren’t up to snuff.
The Education Department is aware of these challenges. In its proposed regulations to implement Workforce Pell, issued last month, the Department sought feedback from the public regarding interim measures of earnings to assess programs’ likelihood of compliance with the official earnings benchmark. I submitted a comment on the regulations describing a potential solution.
Ideally, before putting programs forward for Workforce Pell Grants, governors would examine the earnings outcomes for each program. If an institution offers a short-term program that is unlikely to pass the earnings test, the governor should either reject the program outright, or ask the institution to improve the program’s outcomes before putting it forward.
It should not be challenging for governors to assess earnings outcomes. Federal law requires that workforce programs be active for a full year before gaining access to Pell Grants, so there will be cohorts of students who finish the program and enter the labor force before Pell dollars start flowing. Governors must be able to identify these completers in state UI records or another administrative data source in order to calculate job placement rates, as required under the regulation. As UI records include wages, governors should also be able to calculate the median earnings of each program’s completers.
The Education Department can help by offering guidance to states. The Department should strongly encourage states to consider these data points and discourage governors from certifying workforce programs that are unlikely to pass the earnings test. The guidance could show states how to translate wage records from UI systems into data points that can be used to assess whether each program is likely to clear the earnings benchmark.
In the past, the federal government splashed out grant and loan subsidies to higher education without regard for quality or outcomes. Workforce Pell Grants are designed not to repeat the mistakes of the past. In creating outcomes benchmarks, Congress intended for dollars to flow only to programs delivering demonstrable earnings gains. States can help make that vision a reality by assessing the wage outcomes of their workforce programs before putting them forward for Workforce Pell Grants.
