Identifying Nondegree Credentials of Value – Lessons from the States

Increasing skepticism of the value of 4-year college degrees and interest in faster, more affordable educational pathways have fueled growth in nondegree credentials, including short-term certificates, industry certifications, and microcredentials like badges. States have responded with investments in alternative credential pathways and varying strategies to direct learners and dollars toward quality nondegree programs.

To better understand the state policy landscape around short-term credentials, BPC brought together state policymakers, system leaders, and experts last October for a virtual roundtable conversation on how states are working to define quality nondegree credentials and identify which short-term credentials provide value.

This blog summarizes key lessons learned from that conversation. There is already bipartisan interest in Workforce Pell Grants, which would expand Pell Grants to programs under 15 weeks in length. State efforts to define and identify quality nondegree credentials hold insight into other ways that federal policymakers can help ensure that learners seeking alternative educational pathways have access to credentials of value.

Nondegree Credentials

The past two decades have witnessed significant growth in short-term and nondegree credentials. Between 2010 and 2019, the number of certificates below associate degrees awarded by community colleges increased by 30%. In Fall 2024, undergraduate enrollment in certificate programs increased by nearly 10%, compared to a 5% increase in undergraduate enrollment overall.

Outcomes for nondegree credentials are, however, mixed and the value of short-term credentials can vary significantly by field, geography, and learner population. Short-term credentials appear, on average, to produce modest increases in earnings—smaller than those of longer-term certificates and degree programs—that may disappear over time. Short-term certificates in some occupational fields produce negative returns. In other fields, certificates show positive returns and can lead to significant increases in earnings. Learners generally receive larger earnings gains when they stack credentials as part of a career pathway, but rates of stacking vary by state, field, and learner demographics.

State Actions to Define and Identify Short Term Credentials of Value

In recent years, states have made major strategic investments in short-term credential pathways. As of late 2024, 32 states had invested more than $5.6 billion across 70 short-term credential initiatives. Most of these initiatives provide financial aid to students pursuing short-term certificates or certifications, while others focus on boosting institutional capacity to meet demand for shorter term programs.

States have adopted varying approaches to quality assurance for nondegree credentials, including looking at labor-market relevance, industry recognition, earnings, return on investment, stackability, and accessibility. Most states investing in short-term credentials require that they be in high-demand areas or achieve specified wage standards. Some states have adopted more advanced value frameworks that include clearer definitions and more comprehensive consideration of value. The North Carolina Workforce Credentials Initiative, for example, is a cross-sector collaboration that reviews and categorizes credentials submitted by community colleges and employers based on whether they lead to family-sustaining wages and employment in high-demand, high-growth fields. Only programs that the North Carolina Workforce Credentials Advisory Council certifies as leading to employment in high-growth fields that pay family-sustaining wages are eligible for North Carolina’s Reinforcement and Investment to Strengthen the Economy (R.A.I.S.E.) Scholarship, which covers the cost of programs leading to industry-valued credentials for adult learners.

Key Challenges to Developing Credential of Value Pathways

States face several challenges in supporting the development of nondegree credential pathways. In BPC’s roundtable, data gaps rose to the top of these challenges. Participants observed that helping policymakers make informed decisions about which pathways to incentivize requires better understanding of the outcomes those pathways produce and how those outcomes vary by geography and population.

• Data collection. Most states do not have the data infrastructure or governance structures in place to track all forms of credentials. Most collect limited or inconsistent data on noncredit credentials and few collect outcomes data for certifications provided by third parties outside the formal educational system. Roundtable participants further noted that data constraints make it difficult to track learners across career pathways and evaluate the value added that they receive when stacking or combining different credentials.
• Measuring value. As more states link educational and workforce data systems, they are gaining greater insight into labor market outcomes, with some states like Virginia and Minnesota building datasets and systems to help define credential quality and track the outcomes students receive from credentials over time. Roundtable participants observed, however, that states still lack key measures for evaluating the value for credentials, especially since value might look different to a young adult just out of high school and an adult learner looking to return to employment after a job loss. They observed that understanding the value of credentials also requires assessing metrics like workers’ ability to maintain job stability and how quickly they can return to their previous wage levels after a period of unemployment.
• Support and navigation. Even when states publish data on outcomes, learners may struggle to find this information or understand how to apply it to their decision-making. Participants observed that career coaching is critical, especially since outcomes can vary substantially across programs and learners generally see the strongest returns when they increase their skills by stacking credentials. They suggested that states and institutions need to invest in coaching to help learners understand the outcomes they can expect from different credentials and career pathways.

Where Federal Action Can Help

The roundtable conversation identified steps federal policymakers can take to support states’ work around quality nondegree credentials. Participants observed that Workforce Pell could help spur action at the state level to identify credentials of value. They also suggested that improved federal guidance for generating WIOA in-demand occupation lists could help steer learners toward programs that provide greater value.

There was consensus that the federal government can best advance states’ efforts through support for improvements in data collection. A few states, like Minnesota, already collect comprehensive outcomes data from programs that receive state funding. Others, like Virginia through its Office of Education Economics, are pulling together data sources to better understand the value that different credentials provide. Participants emphasized the importance of continued federal investment in state longitudinal data systems, as well as in improved labor market data so that institutions can create more value for learners by better aligning programs with workforce needs.

They further observed that federal guidance can encourage states to enhance the information collected through unemployment insurance wage records to include occupation, location, and worker type. Federal guidance could also promote more states to disaggregate data so that policymakers can better understand how outcomes vary across populations.

Conclusion

Learners are increasingly pursuing short-term credentials and states are investing heavily in alternative pathways to skills acquisition. More work is needed, however, at both the state and federal level to ensure that these credentials and pathways lead to economic opportunity and family-sustaining wages.

One of the priorities for BPC’s new Commission on the American Workforce is to identify the changes needed in America’s postsecondary education system to ensure that every adult can develop the skills and attain the credentials they need to succeed. This will include examining how federal policy can expand access to credentials of value that are workforce aligned, learner-centered, and skills-based, and how federal policymakers can help provide the data and transparency that states, institutions, and learners need to know which nondegree credentials and pathways provide value.