Fulfilling the Promise of Workforce Pell: Why We Need State Leadership
In July 2025, after years of bipartisan advocacy, Workforce Pell became law. Workforce Pell makes postsecondary credential programs as short as eight to 15 weeks in length eligible for federal Pell Grants, the primary source of federal financial aid for college students with low incomes. Advocates hope that completing short-term, career-focused credential programs will boost the employment prospects of learners and workers in the near term. This move to make short-term credentials more affordable and accessible could be a boon to Americans seeking to gain traction in an uncertain economy and labor market, but short-term programs can be a risky bet, as we noted in All4Ed’s recommendations to the U.S. Department of Education on Workforce Pell. High standards for credential quality are essential to ensure that short-term programs don’t leave learners and workers worse off than when they started, having lost time and money completing a program that doesn’t help them gain real traction and upward mobility in our economy.
States can benefit from Workforce Pell, which offers an opportunity to strengthen education systems, the workforce, and economies. But states will only realize those benefits if they build needed guardrails to ensure program quality and protect learners and workers. And given the short timeline for Workforce Pell implementation—the U.S. Department of Education (ED) expects to launch the program by July 2026—the time for states to take action is now.
The Risks for Learners and Workers
At their best, short-term credentials can offer an efficient and flexible path to a good job. In recent years, this promise has led to significant growth in demand for short-term credentials, but, despite narratives that position credentials as an affordable alternative to degrees, the cost of these credentials is out of reach for many. The median monthly cost of attendance for a certificate program is between $2,000 and $3,000—and costs can climb as high as $26,000 per month. This presents an acute challenge given that over half of learners pay out of pocket for short-term programs. Workforce Pell can provide much-needed support in making these credentials more affordable, but careful implementation is needed to mitigate three major risks.
Only a fraction of the short-term credentials newly eligible for Pell funding are backed by evidence showing they lead to real wage gains and employment in good jobs. Learners who complete credit-bearing, short-term community college workforce programs that are less than a year in length see median annual earnings of only $32,000 two years after completion—which is less than the median wage for workers who did not complete high school. And it is likely that many Workforce Pell recipients will earn even less than $32,000 per year, given that that figure includes all programs under a year in length, not just the eight- to 15-week programs eligible for Workforce Pell, and the data consistently shows that longer programs yield better outcomes.
In addition, most short-term credentials are currently offered through noncredit programs, for which we lack needed data about outcomes. Noncredit programs are courses and training opportunities offered by community colleges that do not award academic credit applicable toward a degree or for-credit certificate (though some articulate to for-credit programs). These programs are often career-oriented and designed to provide adults with targeted skills, credentials, or preparation needed for employment or licensure. However, a growing body of evidence shows that many nondegree credentials don’t pay off, and returns to credentials vary greatly by program of study. While there is some evidence that nondegree credentials improve the likelihood of obtaining a job, credential holders generally see only a modest increase in earnings immediately following program completion, and that earnings bump typically disappears just a few years later. One study found that half of working adults who hold short-term certificates earn poverty-level wages, and there are significant racial and gender disparities in the returns to credentials. It’s no wonder that many learners say the credentials they earned fell short of their expectations.
Noncredit programs are similar in many ways to workforce training programs funded by the U.S. Department of Labor. Rigorous evaluations of those programs have shown that they do not improve earnings, with a 2022 study finding that, while short-term training programs did increase employment, those who completed the programs saw earnings increases of only six percent within three years of program completion. And after three years, there was no difference in earnings between those who had completed the programs and those who hadn’t.
Workers with bachelor’s degrees earn higher wages and are less likely to be unemployed than those whose only postsecondary education is a short-term program. The learners and workers most likely to see a payoff from short-term credentials are those who also already have degrees, since employers who prioritize credentials in the hiring process generally seek workers who hold credentials in combination with associate’s or bachelor’s degrees. But affordability is a major obstacle to degree completion, especially for Pell-eligible learners. Short-term programs have the potential to help address this challenge by enabling learners to secure good jobs that help them pay for degrees.
However, few short-term credential programs offer their graduates clear routes to further education. Only five percent of learners in noncredit programs go on to enroll in the for-credit postsecondary programs that lead to degrees. And it’s rare for those who complete a first credential to go on to “stack” it with a second credential that increases their qualifications and helps them move up career ladders. The value of stacking also varies by field of study, with the greatest returns accruing to those who stack credentials with associate’s and bachelor’s degrees. Under five percent of the U.S. workforce holds stackable credentials, and the majority of those who do earned those credentials after completing degrees.
These challenges are especially significant because Workforce Pell recipients are subject to a lifetime limit on Pell Grants that caps the total aid available to each learner at the equivalent of six years of Pell funding. But almost half of learners over the age of 24 who enroll in bachelor’s degree programs don’t complete their degrees within six years, and research suggests that 20 percent of Pell Grant recipients may reach their lifetime limit without completing a degree. Learners and workers who apply Pell funding to short-term programs and later go on to seek further education may therefore find that they can’t access the financial aid they need to pay for valuable degrees. This is a problem that threatens to exacerbate educational and income inequality, especially given existing racial disparities in degree completion and the improved employment outcomes associated with bachelor’s degrees.
An expected federal investment of hundreds of millions of dollars in Workforce Pell over the next 10 years represents a potentially lucrative new market for for-profit credential providers. Workforce Pell requires that providers be accredited, but doesn’t exclude for-profit providers, which have historically offered about 70% of credential programs under 15 weeks long. Some for-profit providers offer high-quality programs, but overall, for-profit postsecondary institutions have a track record of generating poor student outcomes—including employment and earnings outcomes. Outcomes are especially poor for learners who earn certificates, rather than degrees, from for-profit institutions.
The business models of for-profit institutions have historically relied on the availability of federal financial aid, especially Pell Grants, and aggressive marketing that promises credentials that will lead to upward economic mobility. A decade ago, federal regulations aimed at eliminating deceptive for-profit practices led to the closures of some for-profit colleges, but there have been recent signs of a rebound in the for-profit sector. Workforce Pell has the potential to accelerate that growth and expose learners to the well-documented risks associated with for-profit educational institutions.
The Opportunity for States
States are positioned to lead the way in mitigating these risks while increasing postsecondary attainment, which strengthens communities and leads to economic growth. To do so successfully, states will need well-designed implementation strategies for Workforce Pell. The federal statute outlines significant responsibilities for state leaders. Governors are responsible for authorizing and proposing eligible programs to ED, while state workforce boards are charged with working with governors’ offices to validate target industries and occupations.
Key Decisions for Governors
Under the federal statute, governors are responsible for working in consultation with the state workforce board to determine which short-term credential programs in their state will be eligible for Workforce Pell. States have the opportunity to set a higher bar for quality than the minimal guardrails included in the federal statute, which says the criteria states use to make determinations about program eligibility must include:
- Alignment to high-skill, high-wage, or in-demand industries or occupations in the state
- Alignment to the hiring requirements of employers in targeted industries and occupations
- Stackability and portability of awarded credentials, including a requirement that awarded credentials must be portable across more than one employer or aligned with occupations for which there is only one recognized credential
- Preparation of program completers to pursue one or more additional certificate or degree programs at one or more institutions of higher education, including ensuring that Workforce Pell program completers who enroll in an additional program receive academic credit for the completed program that counts toward the requirements of the additional program
ED is undertaking a negotiated rulemaking process regarding Workforce Pell from December 2025 through early January 2026 that may result in regulations for states beyond what currently exists in statute. But in light of the short timeline for implementation, states will need to start planning for implementation before the conclusion of the rulemaking process. State leaders should take four key steps to make the most of this opportunity.
States should go beyond the federal requirement for engagement of the governor’s office and state workforce board by bringing leaders from multiple sectors into the conversation to develop a shared set of quality standards for credentials. Institutions of higher education, particularly community colleges, offer many of the programs that are eligible under Workforce Pell, and engaging higher education system leaders early in the process will ensure a cohesive and effective approach to implementation. In addition, states should engage K-12 system leaders in statewide efforts to define credentials of value and ensure stackability given both the prevalence of state policies encouraging completion of industry-recognized credentials prior to high school graduation and the likelihood that some learners will enter Workforce Pell-eligible programs immediately following high school graduation.
Tapping into the expertise of business and industry leaders is also a critical step toward ensuring that programs authorized by the state lead to credentials with real value in the labor market. States such as Alabama, North Carolina, and Florida have formed state-level advisory councils, which include private- and public-sector leaders, to create shared definitions and frameworks for credentials and identify the ones that offer a real return on investment for states, employers, and learners and workers.
States—and learners and workers—will see gains from short-term credentials only if those credentials meet high standards for quality. Under Workforce Pell, states are required to identify that eligible programs lead to credentials that meet at least one of three standards for labor-market alignment: high-skill, high-wage, or in-demand. But meeting just one of these three standards is no guarantee of positive outcomes.
States can ensure short-term credentials lead to positive employment outcomes by setting quality standards that require that credentials be aligned to high-skill, high-wage, and in-demand industries and occupations—or at least meet two out of these three requirements. Credentials aligned to high-skill or high-wage industries and occupations are unlikely to lead to employment if those credentials aren’t also in demand.
And demand alone is no measure of quality. Indeed, high demand can be a sign of low-quality jobs with correspondingly high turnover rates. For example, short-term credentials such as a Commercial Driver’s License or Certified Nursing Assistant lead to jobs with very high rates of demand—but demand is a function of high turnover in roles that are notorious for their poor working conditions, lack of opportunities for career advancement, and low pay.
Requiring alignment with high-wage industries and occupations is the surest road to credentials that meet the expectations of learners and workers and support program completers in gaining traction in a rapidly changing labor market. To achieve this, however, states will need to adopt much more rigorous standards for wages than those in the federal Workforce Pell statute. The law does establish a floor for the wages of program completers, but it is a very low bar. ED will assess the “value-added earnings” of program completers three years after program completion in order to determine program eligibility. The crux of this metric involves comparing earnings of program completers to 150% of the federal poverty line. In 2025, wages at 150% of the federal poverty line work out to $11.30 an hour for a full-time worker—less than the minimum wage in 26 states.
“Value-Added Earnings” Don’t Add Up for Learners
If used as the threshold for wages, the value-added earnings metric has the potential to leave learners and workers worse off than they were before enrolling in a short-term program.
Value-added earnings are calculated by subtracting wages equal to 150% of the federal poverty line from the median earnings of program graduates, then further adjusting for the cost of living in the region where the program is located using regional price parities from the Bureau of Economic Analysis. For a program to be eligible for Workforce Pell, associated tuition and fees must be less than the program’s value-added earnings.
The following example of how this would play out for a hypothetical short-term program in Saint Louis—which has a cost of living just below the national average—shows why the value-added earnings metric is an insufficient guardrail.
- Assume the program’s graduates earn a median of $32,000, which is the same as the national median for all completers of for-credit community college workforce certificates under a year in length. With the adjustment for regional price parities, earnings are $33,225.
- That wage is $11,355 more than 150% of the federal poverty line, which is $21,870 for an individual.
- Therefore, under federal guidelines, the program passes the value-added earnings test as long as its tuition and fees are less than $11,355.
- Yet the maximum Pell Grant per semester is about $4,000, and Workforce Pell grants will be prorated depending on program length.
- To cover the cost of an $11,000 program, a learner who is eligible for the maximum Pell award would still need to make up a difference of $7,000, likely by taking out a student loan.
- After completing the program, the credential holder making $32,000 per year would need to repay that loan—while earning almost $5,000 a year less than the median wage for someone who has not completed high school and almost $13,000 less than the median for a high school graduate with no additional credential.
Note: Example uses 2023 data.
States can lead the way on adopting quality standards that ensure credentials lead to good jobs. Texas has adopted a definition of credentials of value that requires credentials to produce a positive return on investment for students, including leading to earnings sufficient to recoup the cost of the program, and puts limitations on credentials that are in demand, but do not produce earnings gains. California is driving improvements in noncredit education through the Career Development and College Preparation (CDCP) program, which provides enhanced funding to support noncredit courses that lead to improved employment outcomes or accelerate progress toward associate’s and bachelor’s degrees, and the DataVista platform tracks noncredit program data.
Postsecondary education systems are often full of obstacles that prevent learners and workers from stacking credentials and moving from noncredit to credit-bearing programs. These challenges need to be addressed to improve learner outcomes and to meet the requirements of Workforce Pell. To make this a reality—especially given that most short-term credentials are currently offered via noncredit programs—states will need to adopt policies that support education and training providers in breaking down barriers to stackability and credit mobility. Those could include:
- Requiring colleges to offer and recognize stackable credentials;
- Supporting collaboration across the workforce and academic sides of higher education systems and institutions to increase permeability and design strategies for awarding academic credit for workforce courses;
- Strengthening statewide transfer and articulation agreements;
- Adopting credit for prior learning policies; and
- Streamlining administrative processes for program approvals.
States also have a vital role to play in supporting learners and workers in understanding and progressing along stackable credential pathways. That includes providing education and career navigation supports and advising, including for high school students considering short-term credentials as a postsecondary option, and making credential outcomes data transparent and understandable.
In Kentucky, state statute requires the Kentucky Community and Technical College System (KCTCS) to support the transfer of credit across certificate, diploma, technical, and associate’s degree programs, while the state’s postsecondary funding statute emphasizes that the public college and university system can help build a stronger state economy by facilitating credit accumulation and transfer from KCTCS to four-year institutions. The state backs this commitment with a wide range of student-facing resources and information, including the Futuriti website, which offers information on multiple postsecondary options and how they connect along pathways.
A lack of data threatens to derail efforts to ensure program quality. Without strong longitudinal data systems and clear definitions, states will not have a way to measure the outcomes of Workforce Pell programs and ensure that they work for both participants and states.
Under the federal statute, ED has a role to play in monitoring program outcomes, but this is another area in which states will need to be proactive to ensure that guardrails on Workforce Pell are effective. ED is required to verify that eligible programs have 70 percent completion and job placement rates. This standard, known as the “70-70 rule,” is already in place for short-term programs participating in federal student-loan programs—but has not demonstrated great efficacy. A key challenge is that the data needed to support student-loan eligibility is reported directly by community and technical colleges because the federal Integrated Postsecondary Education Data System (IPEDS) does not require reporting on noncredit program data. A lack of standardized definitions means that institutions are left to determine for themselves how to measure outcomes—with the unlikely result that all approved programs report completion and job placement rates that easily clear the 70-70 rule hurdle.
Completion and job placement rates are unlikely to be effective metrics for purposes of accountability and measuring program quality without further definition and guidance from states. Short-term programs tend to have high completion rates simply because their timeline minimizes the risk that learners’ progress will be derailed by unexpected events or that learners will choose to leave the program before completing it. Completion rates can also be easily controlled by education and training providers that choose to pass students despite poor performance. Meanwhile, there is no federal definition for job placement rates, leaving colleges to determine what constitutes a “placement.”
States are positioned to create more standardized approaches and data definitions that would support program quality, but many are not currently capturing the data needed to determine program eligibility. While about three quarters of states collect noncredit community college data at the state level, data is not always standardized, and basic information about noncredit programs—such as duration and field of study—can be unclear. Many states have been working to address these challenges through the State Noncredit Data Project, but there is more to be done to prepare for Workforce Pell implementation. In addition to the need to better standardize and track noncredit programs, not all states have the statewide longitudinal data systems needed to fully understand the wage and employment outcomes of programs offered by institutions of higher education. Many states also lack the data needed to fully understand academic outcomes, including whether students are stacking credentials or whether transfer students complete degrees.
Longitudinal data systems are essential to understanding earnings and employment outcomes. Unless states collect and use wage data as a criterion for program eligibility, there are few safeguards to ensure that credential completers earn wages that put them on a real path to upward mobility. Given existing research showing that wage gains from short-term credentials often do not last, states should work to collect data that shines a light on wages more than three years after program completion.
States should consider collecting outcomes data aligned to the performance indicators required under the Workforce Innovation and Opportunity Act (WIOA), including employment rates, median earnings, credential attainment, measurable skill gains, and effectiveness in serving employers. This is data that is already being collected for many workforce development programs, and it can help to drive accountability for program quality, ensure that programs are aligned to industry needs, create transparency for workers and learners, and promote equity and access.
Key Indicators to Consider
States should create standardized definitions—and collect and publicly report on disaggregated data—for the following indicators, at minimum, for each program the state identifies as eligible for Workforce Pell:
- Program completion rate
- Credential attainment rate (for programs in which credentials are conferred through an assessment process, not just as a function of program completion)
- Job placement rate in occupations aligned to the credential earned
- Median wage for program completers, including:
- Whether wages exceed the state’s median wage for workers with a high school diploma and no postsecondary credential
- Median wage six months after program completion
- Median wage two years after program completion
- Median wage five years after program completion
- Rate at which program completers earn additional nondegree credentials
- Rate at which program completers earn associate’s degrees
- Rate at which program completers earn bachelor’s degrees
Conclusion
Although high-quality and effective implementation of Workforce Pell will require considerable effort from state leaders, it is work that promises to pay off. By carefully planning for implementation, state leaders can ensure Workforce Pell expands opportunities for learners and workers while supporting economic growth and meeting employer needs. The benefits of this work for states will also extend beyond Workforce Pell. The steps outlined in this brief will help to ensure the efficacy of existing sizable investments of state dollars in short-term credentials while supporting the development of stronger and more integrated state education and workforce systems—which will ultimately benefit all learners and workers.
All4Ed’s State Policy Center stands ready to support state leaders in designing and executing strategies to ensure successful implementation of Workforce Pell. To learn more about working with us, please contact Jenn Ellis at jellis@all4ed.org.
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