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As students return to the classroom, will career education programs help the most vulnerable succeed economically?

Third Way
Third Way
Jul 7 · 6 min read

By Michael Itzkowitz

As COVID-19 rocks the world of higher education, policymakers and institutional leaders are trying to figure out in real time how they can best support today’s students and continue to provide educational services in highly unpredictable circumstances. Since the pandemic hit the US, brick and mortar institutions have been forced to cancel in-person learning and, instead, move all instruction to an online setting. This, coupled with unprecedented unemployment rates, has left many worried about the disproportionate effect this crisis will have on low-income and underrepresented students, who are already most susceptible to economic upheaval and educational interruption.

To mitigate these effects, Congress has already rightfully allocated more than $14 billion in emergency grant aid to keep students and institutions afloat. $1.6 billion of this funding went to certificate-granting institutions, which serve a higher proportion of low-income students, student parents, and older and returning students. But as Congress continues to provide additional relief, will this taxpayer investment go to institutions that are shown to increase economic mobility for our most vulnerable students?

If past recessions are prologue, newly displaced workers — over 40 million since mid-March — may soon turn to postsecondary education to reskill as they attempt to weather this economic storm. In particular, we know that institutions concentrated on awarding shorter-term credentials have historically shown a surge in enrollment during times of economic uncertainty. Below, we examine a few data points that give us an idea of how well low-income students fare at certificate-granting institutions overall, and to what extent they are currently providing students and taxpayers with a good return on investment. While some certificate-granting institutions are shown to provide increased economic opportunity for their low-income students, many show them earning even less than an average high school graduate after they attend. We also look at the first round of COVID-funding that went to these institutions, highlighting whether those schools have a track record of providing increased economic opportunity to low-income students who enroll.

Many Certificate-Granting Institutions Provide Limited Value to Low-Income Students

Certificate-granting institutions primarily offer non-degree programs meant to provide the technical skills necessary to enter a certain profession, such as a medical coder, veterinary assistant, or nurse. They are typically shorter in length than two- or four-year programs, with the average certificate-granting program taking between six and 18 months. To examine the economic value these institutions currently provide to their students, we looked at a subset of 230 schools that have federal data on the economic outcomes of both low-income students — defined as making $30,000 or less annually — and higher-income students, shown to have a family income of at least $75,000 per year. Specifically, we examined the post-enrollment earnings of students who attend these institutions by looking at the percentage who earn more than a typical high school graduate (>$28,000) six years after enrollment (a generous timeline for a six- to 18-month program).

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The data show that low-income students attending certificate-granting institutions are substantially less likely to earn an adequate salary in comparison to their wealthier peers. In fact, more than 70% of certificate-granting institutions leave low-income students earning below the typical high school graduate, whose salary is $28,000. And only nine out of 230 institutions (4%) leave the average low-income student earning more than $35,000 six years after their initial enrollment. These same institutions show better prospects for higher-income students, a demographic that only makes up 20% of students within this subset of schools. Nearly half of these institutions (48%) show their higher-income students earning more than $35,000 within six years of initial enrollment — meaning these well-off students are much more likely to hit this basic economic benchmark than their low-income peers who attended the same school. But for those looking for economic mobility, these schools are generally falling short.

Earnings Gaps Persist Over Time

While differences in post-enrollment earnings are apparent six years after initial enrollment, these disparities also grow over time — sometimes substantially — at certificate-granting institutions just a few years later.

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For example, after six years, the majority of these institutions (63%) show an earnings differential of $10,000 or less between low- and higher-income students. Yet, four years later, these numbers flip. Ten years after enrollment, the majority of institutions (53%) show a disparity of $10,000 or more between these two groups of students. Furthermore, during this same timeframe, 30 institutions show an earnings differential of $15,000 or more, meaning they leave their low-income students earning substantially less than their higher-income peers, even though they signed up and paid to receive the same education.

Targeting COVID-19 Funding Toward the Most Vulnerable Students

Through the CARES Act, Congress has already allocated more than $14 billion in COVID-19 funding — $7 billion in emergency grant aid to affected students, $7 billion to directly fund institutions of higher education — in an effort to keep both afloat. Some lawmakers have also proposed to open the door to the $30 billion in Pell Grant funds to even shorter postsecondary education programs than the ones currently eligible, even though US Department of Education data show some of the worst economic outcomes for students who enroll in existing short-term programs. While more funding for worker training is critical, future investments must be targeted toward educational programs that provide real mobility to the low-income students who will most likely be affected by this educational disruption and economic upheaval. In future aid packages, policymakers should put in place guardrails to ensure that additional taxpayer investments flow to schools and programs equipped to provide students, particularly low-income students, with paths to increased economic opportunity.

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In the first round of stimulus funding, hundreds of millions in taxpayer dollars went to the certificate-granting institutions examined in this analysis. Yet, many of the institutions that were COVID-stimulus recipients fail to prepare most low-income students to earn above the typical high school graduate, even 10 years after they enrolled. In fact, these low-performing institutions received approximately $3 million each on average, even though they provide limited economic mobility. Rather than allocating federal funds based on student enrollment alone, Congress should also ensure that institutions receiving funds to help in this crisis have a track record of good outcomes for all students who enroll, especially those most susceptible to the rapid economic changes happening in the postsecondary landscape.

Conclusion

The next academic year will bring a lot of uncertainty for both students and institutions. More schools will shift toward or maintain online learning environments and more adults will face unemployment and will be looking to upskill for the post-COVID workforce. We know that some short-term credential programs can add value to students in a shorter amount of time than an associate or bachelor’s degree program may require. However, this data demonstrates that without strong guardrails to ensure that all programs are high-quality and lead to strong employment opportunities, students attending short-term certificate programs may end up wasting time and money in the long run. As Congress considers future measures to support today’s students, taxpayer dollars must be focused on institutions shown to serve our most vulnerable students well. Many institutions deliver on this promise, but some do not. If institutions have historically failed to prepare low-income students to earn a decent living, it’s unlikely that their outcomes will suddenly improve during a time of rapid transition. Unfortunately, providing them with additional federal funds without clear requirements that they produce good outcomes for students could just exacerbate the employment and economic disparities that already exist.

Third Way

Written by

Third Way

Our work championing modern center-left ideas is grounded in the mainstream American values of opportunity, freedom, and security. Learn more: www.thirdway.org

Third Way

Third Way

Our work championing modern center-left ideas is grounded in the mainstream American values of opportunity, freedom, and security.

Third Way

Written by

Third Way

Our work championing modern center-left ideas is grounded in the mainstream American values of opportunity, freedom, and security. Learn more: www.thirdway.org

Third Way

Third Way

Our work championing modern center-left ideas is grounded in the mainstream American values of opportunity, freedom, and security.

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