Short-Term Pell Grants: What the Data Say
by Michael Itzkowitz
By next year alone, 65% of all jobs will require some sort of education beyond high school. This reality has forced lawmakers to think seriously about how to increase access to our nation’s higher education system so that more students can earn the credentials they need to succeed in today’s economy.
One proposal gaining traction from Democratic and Republican lawmakers, alike, is to open the door to the $30 billion in Pell Grant funding — the main source of federal grant aid to low- and moderate-income students — to programs as short as eight weeks, such as certifications in medical coding, manufacturing, transportation, and IT.
While well-intentioned, proposals of this nature have the potential to do more harm than good if they are not paired with robust quality control. That’s because as history has taught us, when Congress opens up the floodgates to postsecondary programs that are unproven and unchecked, we risk wasting student and taxpayer money that could have been targeted toward programs that have proven their worth as drivers of economic opportunity.
To better understand whether opening up Pell Grant dollars to shorter-term programs will yield the return on investment students and taxpayers deserve, we can examine earnings data at institutions that focus primarily on offering certificate programs — even though these kinds of programs may be longer and more academically rigorous than the ones short-term Pell Grants would fund — to see if they provide the economic outcomes that lawmakers aim to induce through proposed legislation. Right now, Pell Grants can be used at programs as short as 15 weeks or as long as 18 months, provided that program is at least 600 hours in length and is offered at an accredited institution. We use data from institutions that primarily offer certificates that fit this criteria to inform this analysis.
Yet, some legislative proposals would allow Pell Grants to be used at programs as short as eight weeks — or 150 hours of instruction — while also expanding them to non-credit coursework and removing the existing accreditation requirements. This would present more risk to students and taxpayers, as it removes one of the key quality assurance mechanisms we have in place today, while also making it less likely that students will be able to transfer their coursework if they choose to subsequently pursue a longer-term degree.
Unfortunately, a quick run of the data from the US Department of Education (Department) reveal some of the worst economic outcomes for students who enroll in existing short-term programs. For example, over four-fifths of certificate-granting institutions show the majority of their students earning even less than the typical high school graduate (measured by the Department to be $28,000) within six years of entering of the institution, accounting for more than half of all institutions of higher education who fail to meet this low bar. And, as most certificate programs are 18 months or shorter, this means that even four and a half years after attending a program, most students who attend these institutions leave with little to no economic benefit.
To further put into context what this already means for taxpayers, a deeper dive into financial aid data finds that most Pell Grant dollars that flowed to existing short-term programs actually funded those that produced the least economic benefit for those who enroll. Last year alone, $3.3 billion in Pell Grants ended up at the 1,113 institutions where the majority of students earn less than the average high school graduate, accounting for 85% of all Pell Grants that went to predominately certificate-granting institutions. These findings call into question whether additional funding of short-term certificate programs will serve as the economic drivers they’re intended to be, especially given the inadequate earning potential that existing programs provide to far too many students today.
Cutting the data another way, we see that most (60%) primarily certificate-granting institutions are concentrated within the for-profit sector. While no institutional sector is immune to problems when it comes to setting students up to earn more than the average high school graduate, the for-profit sector holds the most worrisome outcomes, with nine in 10 of its certificate-granting institutions failing this basic economic threshold. Even worse, a quarter of for-profit certificate-granting schools — 208 institutions — leave over 80% of former students earning even less than this baseline amount, which you could see as the most basic measure of whether a student is getting a return on investment. When deciding on whether and how to most efficiently target billions in Pell Grant funding to programs intended to meet the demands of the 21st century workforce, Congress should also consider that some sectors have historically shown particularly bad economic outcomes for students who enroll in short-term programs.
As Congress works toward a reauthorization of the Higher Education Act, it’s critical that policymakers consider how to safeguard students and taxpayers from programs that show little potential for economic advancement. If sufficient guardrails aren’t put in place to ensure good outcomes for students, providing additional money will do little to meet the demands of today’s workforce. And since Pell Grant recipients are typically from low- and moderate-income backgrounds, funneling money to even shorter-term programs that are untested and unregulated could actually exacerbate economic inequality, as those students could be encouraged to enroll in programs that disproportionately show some of the worst employment outcomes. The data are clear: Rather than supplying a swath of Pell dollars to all short-term programs, Congress must carefully consider whether and how to open any additional funds to programs that have yet to demonstrate their value.
