Short-Term Pell Accountability Measures

The most prominent legislative proposal to expand Pell eligibility to short-term programs, the JOBs Act, would make programs in locally recognized, in-demand industries eligible to receive Pell funding. Certificates in in-demand industries, however, often don’t lead to high-quality jobs. Indeed, the aforementioned pilot study conducted by the Department of Education found that the vast majority of students who completed a short-term program in an in-demand field pursed credentials in transportation and material moving (65%) or health professions (24%), both of which often lead to jobs with high turnover and low wages. Therefore, requiring programs to focus on in-demand industries does little to ensure program quality or guarantee good employment outcomes for graduates.

The 70-70 rule would condition Pell eligibility for short-term vocational programs to those having both a completion and job-placement rate of at least 70%. The rule is already used as an eligibility requirement for short-term programs, ranging from 300 to 600 clock hours, to participate in the federal student loan program. Despite this requirement, short-term programs that produce relatively poor earnings outcomes for their students remain eligible. In fact, a recent analysis from the Brookings Institution found that, among students who graduated from short-term programs that passed the 70-70 rule, average annual earnings were only $24,000—equivalent to only $12 per hour for a full-time worker.

These sorts of outcomes—where wages are beneath the average median wage of a high school graduate—are unsurprising. High completion rates are easy to achieve in a short-term program that lasts only a few weeks or months. Additionally, job placement rates lack a standardized definition, are self-reported, and can be easily gamed by institutions. For example, the rates often only measure whether a graduate secured any job, regardless of its relevance to their course of study. Given the flaws with using completion and job placement rates when assessing short-term program quality, the 70-70 rule alone seems insufficient.

Accountability standards based on federal student loan outcomes, such as default and repayment rates, are commonly used to assess traditional two- and four-year educational programs. On average, students attending short-term vocational programs only borrow $750. This is unsurprising given the short duration and relatively low cost of these programs. With so little borrowing, few program graduates struggle to repay their loans or default, making it difficult to identify poor quality programs with a loan-based metric.

Previous efforts to place loan-based accountability standards on short-term programs, such as the Gainful Employment Rule, failed in part because of low borrowing levels. Repealed in 2019, the rule was intended to prevent federal student aid from going to programs in which more than half of borrowers had particularly high debt-to-earnings ratios after graduating. Yet during 2017, only 5% of short-term programs that offer federal student loans were identified as having poor outcomes and placed in a warning “zone” under the rule. No programs were classified as failing the rule.

Another potential accountability standard for expanding Pell access to short-term programs could be based on students’ earnings after completing a program. The Department of Education could set minimum average earnings for a program’s graduates or require programs to demonstrate that their students, on average, experience a substantial wage gain following graduation.

Although a standard based on post-completion earnings or wage gains would be the most robust way to assess student outcomes, only limited data are available. Earnings outcomes for institutions eligible to receive federal student aid are currently estimated through data matching between the Department of Education and the Internal Revenue Service, with earnings data in the College Scorecard available both for all attendees of an institution as well as graduates of specific programs. However, the use of these data is limited by privacy considerations, especially for small programs that might need to have multiple cohorts combined to reach privacy thresholds. Specifically, highly specialized programs may have their data “rolled up” with similar programs in the College Scorecard data, making it difficult to use Scorecard data on earnings as a responsive and specific metric for the regulation of short-term vocational programs. On the other hand, requiring these programs to collect their own data on earnings and on wage gains—including reference wage data from before students enrolled—could impose a significant burden. Studies of student outcomes can cost $13.25 per participant.

Beyond finding a way to collect and compare wage data, policymakers would have to decide on appropriate thresholds and timelines for wage gains. Setting easy-to-pass thresholds would provide minimal checks on program quality but setting requirements too high could prevent students at worthwhile programs from accessing Pell Grants.

For any of the above approaches to be a success, policymakers must understand how graduate outcomes vary across short-term programs and what factors contribute to this variability. BPC’s Taskforce on Higher Education Financing and Student Outcomes recommended conducting a new pilot study to examine how expanding Pell Grant access to short-term programs impacts student outcomes and institutional behavior. In addition to shedding light on appropriate accountability standards, the new pilot study could explore, identify, and test other requirements for Pell eligibility, such as requiring that programs provide students with adequate learning supports or that programs have agreements with local employers to facilitate hiring after program completion. Regardless of the details, an expansion of Pell Grants to short-term vocational programs must make use of evidence-based policy to drive successful implementation for students and taxpayers alike.