Short-Term Pell Already Exists

By

Rachel Fishman

Many high school graduates with no further education have limited economic opportunities. That's why it is imperative that postsecondary education and workforce training offer multiple pathways beyond a traditional college degree-including non-degree certificate programs-to good jobs and economic security.

Federal lawmakers think they have the answer to helping pay for this type of training: the Pell Grant, the cornerstone of need-based financial aid for all of higher education. Employers want individuals with some postsecondary training, would-be employees need access to specialized postsecondary training, and so-called "short-term Pell'' seems like the perfect solution to fill that gap. The result is proposed legislation-the JOBS Act and the Bipartisan Workforce Pell Act-to expand the Pell Grant to short-term training programs.

But two important details are being lost in the fervor to pass these bills: The federal government already pays for a lot of short-term programs, both through Pell and other funding streams. And many of these programs don't have strong economic returns.

Students can already receive Pell for programs as short as 15 weeks (one term), and can take out loans for some programs as short as 10 weeks-often for programs cited as the reason we need short-term Pell. Want to become a welder? You can get a Pell Grant for that. What about HVAC technician? That, too, is a program that can already receive Pell. In addition to the nearly $6 billion a year in federal Pell Grants and loans that undergraduate short-term credentials already receive, the federal government also spends about $420 million a year on training for adults and dislocated workers through the Workforce Innovation and Opportunity Act (WIOA), and states invest another $4 billion a year on financial aid for short-term workforce credentials.

While half a semester of training to land a good job sounds enticing, in reality these programs will likely fall short. Some 15-week-or-longer short-term credentials that already receive Pell yield positive student outcomes. But many certificate programs that receive Pell result in poor outcomes-like low wages and low job placement rates. Students completing these credentials can find themselves worse off than if they never enrolled in the program in the first place, wasting their time and money for only a piece of paper that holds little value in the labor market.

Alarms are already sounding about the quality and the outcomes of Pell-funded short-term credentials. But those alarm bells should reach cacophony when accounting for data on programs as short as eight weeks-the ones that would be newly Pell eligible. These very-short programs-which will be referred to as 8-week Pell programs in this post-are off ramps to opportunity, leading to unemployment, poverty-level wages, and further racial stratification of our higher education system.

Federal Student Aid, Including Pell Grants, Already Flows to Short-Term Programs and the Outcomes Are Questionable.

Data on current (15-week-or-longer) short-term programs that receive Pell paint a concerning picture: the shorter the credential, the less return for students and taxpayers. Credentials less than a year long do not improve outcomes for men, and only help women marginally in terms of helping them find year-round employment, according to research from the Community College Research Center. And while longer-term (one year or more, but short of an associate degree) credentials appear to improve employment rates and employment stability, associate degree earners receive a much bigger earnings boost and are more likely to earn a living wage, according to that same study.

Department of Education data offer a deeper look into economic returns of existing short-term programs that receive Pell and loans. Of the undergraduate certificates that receive federal financial aid and that the Department is able to provide sufficient data on outcomes, nearly half leave graduates earning less than a typical worker with a high school diploma. That amounts to roughly 175,000 students per year who spend time, their money, and taxpayer subsidies but end up worse off than if they never attended, with low wages or unaffordable debts. This figure doesn't include non-graduates, who are likely to have even worse outcomes.

While Pell currently can't apply to programs shorter than 15 weeks, federal student loans are available to some programs as short as 10 weeks-an even closer approximation of the very-short programs that would be Pell eligible under the JOBS Act or the Bipartisan Workforce Pell Act. The data continue to tell the same troubling story-70 percent of graduates from those 10-week programs make less than they would have if they'd never enrolled in the program.

Very-Short-Term Credentials Often Lead to Poverty-Level Jobs and Unemployment. In Reality, They Are an Off-Ramp from Credentials with Better Outcomes.

Extending Pell grants to even shorter-term programs and expecting positive outcomes for students ignores the reality of poor results from current very-short-term credentials. Our public workforce system provided support for short-term training programs-many of them very-short-for over two decades with little positive impact on graduates' long-term earnings. The 2017 gold standard evaluation of WIOA programs by Mathematica found no evidence of improvement in earnings for individuals 30-months after completing training. A more recent evaluation of short-term training programs for healthcare workers participating in the federally-funded Health Profession Opportunities Grant program similarly found no evidence of higher earnings for program graduates. These results should give us pause, as a large share of short-term training vouchers fund training of entry-level healthcare workers. These programs prepare workers for low-wage, dead-end jobs.

A New America analysis of very-short-term credentials of 8 to 14 weeks, the ones that would become eligible for 8-week Pell, shows most lead to poverty-level jobs, if they yield a job at all. Half of working adults with very-short-term credentials earn less than $30,000 per year, and nearly 20 percent earn less than $10,000 per year. People of color and women earn far less than white and male graduates. The median income for Black and Latino/a working adults, for example, is $10,000 to $20,000 less than the median income of white peers who hold very-short-term credentials. Roughly 40 percent of very-short-term credential earners are not employed at all. Another New America analysis of Washington state data found that many graduates with very-short credentials still can't land jobs that pay a living wage and that these credentials reinforce occupation segregation by race and gender.

One reason 8-week Pell has become a popular policy pitch is the notion that students can "stack" these credentials. The argument is these very-short credentials would act as an on-ramp to longer, higher-value degrees, allowing students to build toward more advanced credentials over time, improving their economic outcomes with each consecutive degree earned. The truth is that for many students, 8-week Pell would more likely act as an off ramp to a low-value credential. Research from the Urban Institute found only 3 percent of Certified Nursing Assistants (called CNAs, a program that would be eligible for 8-week Pell) ever became Licensed Practical Nurses or Registered Nurses (programs already eligible for Pell). Just 1 percent obtained an associate degree or higher. The research also found CNAs are among the lowest-paid healthcare workers in the country, along with home health aides (another credential that could qualify for 8-week Pell), with average wages close to the poverty level and challenging working conditions that force high employee turnover rates.

Further research from the Center on Education and the Workforce at Georgetown University has found that in today's economy, a bachelor's degree still provides the best return on investment. The movement to expand short-term training and sub-baccalaureate credentials is exacerbating the growing racial divide in educational attainment, according to the research. While college degrees help rectify racial wealth gaps, the rush to shorter-term credentials (which enroll students of color at higher rates) has been accompanied by what economist Tony Carnevale has called "a White flight to the bachelor's degree." That phenomenon deepens the existing racial stratification of postsecondary education and limits pathways to good and stable jobs for Black and Latino/a adults. Eight-week Pell will further exacerbate that divide, subsidizing more low-value credentials and enabling providers to enter the space with false promises of a bright future.

Empire's Empire: How a School Offering Short-Term Credentials Went from the Brink of Closure to Thriving Despite Poor Outcomes.

We've been down this road before. We know the outcomes aren't strong for existing Pell-eligible short-term programs. We know that the programs that would receive 8-week Pell also have poor outcomes. And with history as our guide, we also know how institutions will react to a new pot of federal money being available. It's nearly impossible to turn off the spigot once federal aid has begun to flow.

In 1972, Congress passed the Basic Education Opportunity Grant program, the precursor to Pell. This law opened the floodgates to federal financial aid to for-profit colleges and new sub-baccalaureate training programs, which became eligible for federal financial aid. A 1978 article in the Washington Post highlighted the concerning growth of these credentials calling into question why the government would spend money on programs with poor outcomes, particularly in the cosmetology sector.* Increased scrutiny from the federal government over waste, fraud, and abuse of taxpayer dollars soon followed. The Department of Health, Education and Welfare-the precursor to the U.S. Department of Education-launched an investigation into the proprietary schools that offered these short-term programs. The deputy commissioner of education at the time said this investigation, along with new regulations, were needed to "prevent rip-offs." A general counsel for the House Education and Labor Committee at that time explained to the Post, "there was an understanding that much good could be done in the vocational sector to help the poor to get jobs." He concluded "that many things may [now] be out of hand."

One of the schools featured in that 1978 Post article was Empire Beauty School, a proprietary institution with questionable outcomes offering short-term cosmetology programs. In 1973, Empire's enrollments were shrinking, which put it on the brink of closure. But in 1974, it became eligible to participate in federal financial aid programs and began to heavily recruit students. Empire's administrative manager admitted to the Post that, "many of our schools would not be in existence today without grants."

Today, the school has grown to 76 locations nationwide. The Education Department found Empire has engaged in misconduct, and the Massachusetts attorney general has sued Empire for deceptive practices. The Education Department estimates that almost all of Empire Beauty School's short-term cosmetology programs would fail minimum benchmarks for recently finalized federal regulations that evaluate non-degree and for-profit programs. Its graduates typically carry federal student loan debt of $11,000 but only earn about $17,000, well below the national average for a high school graduate. Despite all that, federal aid continues to flow to Empire campuses-last year it received more than $65 million in federal aid.

Evidence Says We Should Not Expand Pell to Shorter-Term Credentials. But If We Do, We Need Strong Guardrails.

Empire's story is illustrative of what will likely happen if the government extends Pell Grants to even shorter-term programs. The incentive structure for schools changes once a new pot of money is available. Offering federal subsidies and a flow of assured taxpayer dollars enables institutions to stand up and quickly enroll students into programs-even when they will not lead to good jobs or economic security for students.

Given what we know about the poor outcomes of these programs, it will be important that lawmakers put strong guardrails in place in any legislation that would allow for 8-week Pell. Without those guardrails, history will repeat itself and we will likely further entrench structural racism endemic to our higher education system and economy.

Any 8-week Pell legislation must include multiple robust safeguards to ensure students' economic security and avoid public funds from supporting low-quality programs. No single measure can guarantee a favorable return on investment for students and taxpayers.

The JOBS Act's primary guardrail would exclude the for-profit sector, given its history of fraud and abuse of federal financial aid dollars. That is an important protection, but not sufficient. Even public and nonprofit institutions offer many low-value programs, sometimes by outsourcing them to a shadow for-profit industry.

One important guardrail in the Bipartisan Workforce Pell Act is a wage threshold with a proof of concept. Programs would have to demonstrate that they leave most college graduates better off than those with only a high school diploma, and would have to prove those outcomes before gaining access to 8-week Pell.

Other protections are absent from active 8-week Pell legislation, however. For one, lawmakers should exclude online providers from accessing 8-week Pell. Typically, 8-week programs center on industries that require hands-on training-think phlebotomy, truck driving, or healthcare aides. It is wholly imprudent to train to draw blood or drive a truck online.

These safeguards, of which there are many more, are essential if legislation advances. But there are better ways to fund workforce development than vouchers for very short-term training programs that have few accountability mechanisms. Direct support for community colleges, through an investment like the Trade Adjustment Assistance Community College and Career Training program, paid off during the Great Recession and its aftermath. Federal policy could also support High-Road Training Partnerships that bring together employers, worker advocates, training providers and jobseekers as an evidenced-based workforce development strategy. Other examples of worker-led workforce development could serve as models for future policymaking. And support for work-based learning like high-quality apprenticeship programs could provide relevant experience alongside classroom training, with students learning while they earn.

Rather than turn the Pell Grant program-a powerful tool for socioeconomic mobility-into an ATM for job training programs that leave far too many students in poverty, we must support investments in students and workers that will pay off.

*Walter Pincus, "Want to Study Cosmetology? 'Government Grants Available,'" The Washington Post, May 6, 1948. Article available in ProQuest Historical Newspapers database (subscription required).

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