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The following blog outlines TICAS’ new Workforce Pell model legislation, which you can access here.
As part of the budget reconciliation legislation known as H.R. 1 or the One Big Beautiful Bill Act (OBBB), Congress created Workforce Pell Grants, which expand access to Pell Grant funds for students enrolled in programs that are shorter than the previous minimum required length. Starting July 1, 2026, programs between 150 and 599 clock hours that can be completed in as little as 8 to 15 weeks may become eligible for Workforce Pell Grants for the first time. Previously, Pell Grants could only be used to pay for programs that provide at least 600 clock hours of instruction and are offered for a minimum of 15 weeks. Unlike traditional Pell Grants, which are available only for undergraduate students who have not yet received a bachelor’s or professional degree, Workforce Pell Grants may be available to students who already have undergraduate degrees.
Although existing research shows some students experience modest positive benefits from certificate programs, no comprehensive national data source currently exists to track the outcomes of short-term programs, making it challenging to assess the possible impacts of Workforce Pell Grants. Implementing this significant expansion of the Pell program will require states to consider strategies to protect their residents from wasting their limited lifetime Pell Grant eligibility on untested, low-quality, overly expensive, or fraudulent programs that only pay off for schools seeking increased federal revenue instead of students seeking economic mobility.
Given the need to establish a clear implementation structure by July 1, 2026, states should take legislative action to create an implementation scheme as soon as possible. TICAS’ model state legislation is designed as a building block for state policymakers and institutions and will be updated as more information is released by the Department of Education (ED) and further research is performed. The model legislation includes a structure for schools to gain approval for Workforce Pell Grant funds and guardrails to protect students from needlessly expensive programs, unaccredited bad actors, and other potential problems that Congress did not solve. Because there are examples of problematic behavior and potential illegal conduct committed by some short-term program providers, any state law should bolster student protections and prevent bad actors and subpar programs from accessing this significant expansion of federal aid.
The State and Federal Roles in Implementing the Workforce Pell Grant Program
Institutions seeking access to Pell funds for their short-term programs will be required to undergo a two-step process to become eligible, the first determined by state officials and the second by ED.
- First, states must determine whether the program: (i) prepares students for “high-skill, high-wage” jobs or “in-demand industry sectors or occupations,” (ii) meets the hiring requirements of potential employers in certain sectors, (iii) leads to a recognized postsecondary credential that is stackable and portable, unless the program prepares a student for employment in an occupation where there is only one recognized postsecondary credential, and (iv) prepares students for a subsequent certificate or degree program by ensuring that the short-term program counts as academic credit for the subsequent program. Section 83002(b)(2)(iii).
- Second, ED must determine that the program: (i) has been offered by the institution for at least one year, (ii) for each year, has a verified completion rate of at least 70 percent within 150 percent of normal completion time, (iii) for each year, has a verified job placement rate of 70 percent measured 180 days after program completion, and (iv) has what the bill calls “median value-added earnings” that exceed the program’s published tuition and fees. Section 83002(b)(2)(iv).
States will need to carefully consider how to make the required determinations and clarify how a program can be accurately defined as providing an education aligned with the requirements of a “high-skill, high-wage” or “in-demand sector or occupation” and meeting “the hiring requirements of potential employers.” Creating a clear and measurable definition will pose a significant challenge given the limited data available on existing programs shorter than 15 weeks. What little research is available on the outcomes of very short-term credentials shows that most working adults with a short-term certificate earn $30,000 or less annually, with Black and Latino students earning less than White students with similar credentials. Without robust data on existing short-term programs, states will struggle with making the necessary determinations, and students will not have a full understanding of their expected outcomes and earnings before drawing down their lifetime limited Pell dollars to earn a credential.
In addition to requirements outlined in the federal law, states should also consider how to evaluate and approve short-term online programs offered by schools seeking to enroll students in the state but have no physical presence in the state. OBBB does not specify whether the state that is responsible for program approval is the home state of the enrolling student or the state in which the school is based. It is also unclear whether the current system of reciprocity for out-of-state schools used for Title IV loan and grant eligibility applies to the Workforce Pell Grant program. As a result, a state seeking to put protections in place for its residents should ensure any institution that enrolls its residents in a Workforce Pell Grant program must obtain state approval, even those without a physical presence in the state.
State Legislation is Needed
TICAS created model legislative language that states can use as a starting point for considering how to meet and build upon the requirements outlined in OBBB. Legislation is the strongest and longest-lasting way to implement the state approval process as outlined in OBBB, set additional guardrails designed to protect students from low-quality programs, and set up a data collection and reporting scheme to ensure states can accurately evaluate programs. State agencies can then promulgate regulations to provide schools with further details, definitions, and standards.
Legislation Should Create a Process to Ensure Institutions Meet the Minimum Requirements
While the federal law directs state governors to determine whether a program meets the established criteria, states should delegate this authority to a state authorizing entity. Institutions would then be required to provide documentation to the state authorizer that the program seeking access to Workforce Pell meets the requirements in OBBB, including that it provides an education aligned with the requirements of a “high-skill, high-wage” or “in-demand sector or occupation.” Schools would also certify that their programs meet other federal requirements, including 70 percent job placement and 70 percent completion rates, allowing states to thoroughly vet a program before issuing the approval necessary to access Pell. States should also consider requiring programs to submit data annually on student enrollment, completion, and job placement outcomes to ensure continued compliance.
Legislation Should Provide Additional Guardrails to Protect Students
In addition to the standards set by federal law, states can establish other guardrails that would protect their residents from financially risky, low-quality, or fraudulent short-term programs. We created a list of options for states to consider including in any implementation legislation:
- Prohibit the institution from partnering or contracting with unaccredited service providers related to the instruction of the short-term program.
- OBBB states that only accredited institutions are eligible to access Workforce Pell Grant funds. States should clarify that this also means that unaccredited schools, entities, or service providers are prohibited from partnering with schools to provide instruction for short-term programs. Institutions have increasingly turned to unaccredited companies known as online program managers (OPMs) to operate online programs on behalf of the school. Some schools have also been alleged to have not been transparent or truthful about their relationship with their OPM. And many institutions finance their partnerships with OPMs through tuition-sharing agreements that condition the OPM’s profits on the number of students that the OPM enrolled. States can prevent misleading advertising and associated quality issues and ensure that the federal law is faithfully enforced by requiring Workforce Pell-eligible programs to contract only with accredited schools to provide program instruction.
- Prohibit institutions from offering, or affiliating with companies that offer, private education loans (including Income Share Agreements) for short-term programs, unless those loans or payment plans charge no interest.
- Income share agreements (ISAs) are loan products that cover students’ up-front costs by requiring them to pay back a portion of their future income. Usually offered by third-party companies, ISAs may stipulate that students repay their income over a set period of time or up to a certain amount, and they usually lack many protections of federal loans. Both ED and the Consumer Financial Protection Bureau have taken the position that ISAs are private education loans in response to the attempts to skirt applicable loan laws and mislead borrowers. Schools should not be permitted to enroll students in short-term programs using the promise of Pell Grants, only to allow them to be victimized by predatory private loans. However, if students need a payment plan, they should be free to obtain one from the school, as long as no interest is charged to the student.
- Prohibit institutions from charging tuition and fees for a short-term program that are more than the maximum amount of Pell Grant funds available to any student in that short-term program, as set by the Secretary of Education, for the period of time that the program is offered.
- Setting the price at or below the maximum Pell Grant award available to any student in that program would discourage institutions from artificially inflating tuition rates. This would also ensure that students eligible for the maximum Pell award do not need to take on debt to afford the program. States could allow any tuition or fee in excess of the maximum allowable Pell award for that program if it is paid by a third-party, such as an employer paying for an apprenticeship program.
- Require institutions to obtain review of their short-term programs from their institutional accrediting agencies.
- OBBB mandates that only accredited Title IV-eligible institutions can receive Workforce Pell Grants. However, states should ensure a minimum level of quality by requiring that the institution’s institutional accrediting agency reviews the Workforce Pell-eligible program as part of its accreditation process. This requirement would ensure that Workforce Pell programs receive a minimum level of quality oversight, which students would reasonably expect to be occurring, just like the school’s Title IV-eligible programs.
- Only programs that include exclusively credit-bearing courses should be eligible for Workforce Pell Grants.
- States should consider restricting access to Workforce Pell only to programs that exclusively include credit-bearing courses. While non-credit courses can provide meaningful training, students will face challenges applying non-credit courses toward other programs or transferring non-credit courses to other institutions, thereby limiting their options to continue their education while exhausting valuable Pell Grant eligibility for further education. Also, accrediting agency review of those credit-bearing programs ensures a minimum level of quality.
- Strictly enforce the federal requirement that a program must have existed for one year before obtaining Workforce Pell Grant Funds.
- OBBB mandates that programs exist for one year before the Secretary of Education can approve them for Workforce Pell Funds. States should look at the details of the program like the number of clock hours to ensure that schools are not skirting the federal requirements and artificially increasing the number of hours without any benefit to students.
The expansion of Pell Grant eligibility to short-term programs marks a crucial moment for states to take action to ensure their residents—and all taxpayers—invest federal funds in high-quality programs that deliver meaningful outcomes. Building on the requirements of OBBB, states should consider legislative guardrails that would properly implement Workforce Pell and protect students from programs that are unaffordable, low-quality, or not in full compliance with federal law. Students should feel confident they will receive quality training when they pursue a credential using their limited Pell Grant money. To achieve these goals, states must take an active oversight role and pass legislation before July 1, 2026, to ensure the promise of Workforce Pell can deliver for students.
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