Very-Short-Term Pell Requires Multiple Meaningful Guardrails

Just before members of Congress left Washington in December, the House education committee turned attention to legislation that would extend Pell Grant dollars to very-short-term programs – those as short as eight weeks. The committee advanced a bill, the Bipartisan Workforce Pell Act (BWPA), a compromise struck by Chair Virginia Foxx (R-NC) and Ranking Member Bobby Scott (D-VA). As Congress considers the latest in a series of short-term Pell proposals, it's crucial to establish meaningful safeguards to prevent waste of student and taxpayer dollars on subpar programs. There are multiple bills that would open up Pell to very-short-term programs—and while they all claim to have guardrails, only a few of those safeguards have any teeth.

Supporters of expanding Pell to very short-term programs say these programs are designed to produce job opportunities for students who can’t commit to longer programs (although Pell can already go to students in short-term programs as short as 15 weeks). To ensure the stated goal is met, however, short-term Pell programs must ensure a meaningful pay off. Unfortunately, the data we do have on existing short-term certificate programs show that these programs leave most graduates in poverty-level jobs, often in fields with high turnover rates, low wages, and difficult workplace conditions.

The Bipartisan Workforce Pell Act has a critical safeguard to prevent opening up Pell to programs that promise the moon, but leave students in poverty-level jobs, especially relative to other proposals to extend Pell to very-short programs like the JOBS Act. The legislation includes two forms of earnings-based measures. One would cap student tuition at the difference between a program’s typical earnings and 150 percent of the Federal Poverty Level (just shy of $22,000 this year). Another requires all programs to demonstrate they leave graduates better off than a young adult in their state with only a high school diploma.

Capping tuition would create a disincentive that will prevent institutions from standing up academic offerings that result in poor wages, as the low tuition they would have to charge would hardly cover the program costs. However, even this measure is imperfect because programs producing middling wages could potentially charge students several times the size of their Pell Grant, actually driving up program costs compared to where they are today.

The second measure, which requires graduates to meet a base earnings threshold, sets a minimum performance bar. This guardrail would more effectively prevent colleges from offering programs that waste students’ time, money, and limited Pell dollars by leaving them no better off than if they’d enrolled in the first place. While this sounds pretty straightforward and like an obvious guardrail for programs that are supposed to pay off for students, this piece is missing from the Senate’s versions of short-term Pell. And while the earnings measure is a much-needed addition, this test—particularly one that allows colleges to fail for several years before they could lose federal financial aid—won’t be enough to prevent the continued abuse by a bad actor: for-profit colleges.

Allowing for-profit schools to access Pell for very short-term programs is worrisome. In past expansions of federal financial aid, for-profits have flooded the space with high-cost or low-value offerings, relying on abusive, aggressive, or deceptive recruiting efforts to drive up enrollment. Among for-profit undergraduate certificate programs that are already long enough to qualify for federal aid, nearly a third leave graduates unable to make more than they would with only a high school degree. There would be greater cause for concern if these schools could access federal dollars for even shorter programs, with less workforce training.

Lawmakers behind the latest versions of the JOBS Act recognized that threat, and included language allowing only public and nonprofit colleges to qualify for federal aid. But House lawmakers behind the BWPA sidestepped the concern. The truth is that both guardrails are necessary to preserve the integrity of the Pell Grant program and provide students with the best odds of success.

Other issues linger, too. Short-term certificate programs often focus in fields that require hands-on training — think phlebotomists learning to draw blood or truck-driving programs preparing individuals to drive 18-wheelers. But that’s one issue neither BWPA nor the JOBS Act would solve. Entirely online programs would qualify for Pell Grants, even where hands-on training is essential to learn skills that protect public health and safety. (The short-term Pell bill proposed by Rep. Scott before he negotiated the BWPA with Rep. Foxx would have prohibited online programs; that provision was dropped from the BWPA.)

In a nod to the importance of workforce development in short-term programs, every legislative short-term Pell proposal under consideration requires programs be “high-skill, high-wage, or in-demand” (emphasis added). That will not be good enough for students who hear “in-demand” and think “good money” – at least, not once graduates see that their paychecks are too small to cover living costs. Pell Grants, which have helped build America’s middle class, should not be used for poverty-level jobs. Without question, that “or” must be an “and.” Short-term Pell programs must lead to well-paying and in-demand jobs that require postsecondary training.

Similarly, all of the bills copy over a requirement that certain short-term programs that are eligible for student loans already need to meet: a 70 percent completion rate, and a 70 percent job placement rate. But because schools generally self-report those measures, job placements could well be in low-paying or low-quality positions, and/or unrelated to the position for which the student trained. It also doesn’t take a lot to complete an 8-week program, making completion measures a low-bar and practically meaningless. These two “guardrails” are little more than window dressing.

Finally, lawmakers need to be cautious of the initiative's price. The Pell Grant program has been on fiscally strong ground for the last several years, as the pandemic spurred a drop in enrollment of low-income students. But those enrollments are beginning to rebound. And new policies underlying the student aid formula are taking effect that will drive up the number of Pell Grant recipients and the size of their awards. As the program deals with increased costs, short-term Pell could tip the program into a shortfall that would force lawmakers to cut spending or limit eligibility in other areas. In the past, we’ve seen lawmakers address a Pell shortfall by making eligibility cuts on the backs of community college students. It would be an unfortunate irony to expand eligibility on the one hand (and for programs that largely don’t pay off) and take away eligibility on the other.

The House BWPA took what could politely be called a novel approach to address paying for the program: Students, both undergraduate and graduate, at the wealthiest (highest-endowment) schools would no longer be able to access federal student loans. This pay-for raises huge equity considerations, and probably won’t result in the cost savings needed given that students who attend the wealthiest school are likely to repay their loans.

Consider, for example, that a low- or moderate-income student seeking to attend Harvard medical school would be effectively boxed out of the program, or locked into exorbitantly expensive private student loans, when meanwhile that same student could borrow in full to attend a for-profit Carribean medical school that often can’t place its graduates into residency programs. The graduates of those programs at the prestigious schools with high endowments also would be disincentivized from going into public service since they would not be able to qualify for Public Service Loan Forgiveness. While only the House has attempted to articulate savings equivalent to the price of the short-term Pell expansion, other lawmakers will need to find more responsible, equitable, and reasonable approaches to covering the cost –– preferably ones that don’t have some students directly paying the price for others.

As lawmakers continue to mull over Pell Grant eligibility for extremely short-term programs, it’s worth remembering how policy intricacies will matter in ensuring these programs have value for students and for taxpayers. Any legislative deal would draw on the best parts of multiple bills — holding the line to require programs to demonstrate value, ensuring institutions accessing the funds are public or nonprofit institutions, and establishing guardrails that will promote strong program outcomes.