Footing the Bill

Pew finds that Americans are most likely to use their own money to pay for certificates and licenses, potentially taking on risky debt with credit cards. Also, research from Rutgers shows that community colleges are unrecognized drivers of economic development as they train technicians for manufacturing jobs. (Subscribe here.)

The Other Student Debt Problem

Nondegree credentials are booming in the U.S. And students appear to be covering most of the costs themselves for this increasingly popular form of education and training.

An analysis by the Pew Charitable Trusts of a nationally representative survey of 15K Americans by the U.S. Census Bureau found that 51% of respondents said they paid for their most recent vocational certificate out of pocket, while 71% used their own money to pay for their “most important” license or certification.

Following far behind was government or private loans, with about 20% of respondents citing those forms of financing for their nondegree credentials. Among certificate holders, 15% said they received employer support, with the same share citing grants or scholarships from other sources.

As Colleen Connolly reported last week for Work Shift, the new analysis sheds more light on what the National Skills Coalition calls the “nondegree credential financial aid gap.”

However, a clear definition of nondegree credentials remains elusive. A huge range of certificates and licenses fall under that umbrella phrase (which the field has long sought—unsuccessfully—to replace with something less privative and more specific).

“The term ‘credential’ has become so expansive that it often means everything, and therefore nothing at all,” says Amanda Winters, a program director at the National Governors Association.

For example, colleges issue both credit-bearing and noncredit certificates. Businesses and unaccredited providers issue certs as well. Likewise, many nondegree credentials are earned by learners without college degrees. But workers with four-year or even advanced degrees hold a wide range of professional licenses and certifications.

As states focus on defining quality and tracking results with nondegree credentials, Winters says it’s crucial to not lump together very different programs, like professional licenses that require a degree and shorter-term workforce credentials.

“Conflating them risks distorting the data and obscuring our understanding of value,” says Winters, who works on advancing state strategies on workforce development and economic development.

Overall, Pew agrees with Winters, noting that the survey data didn’t make it possible to identify outcomes with specificity. Follow-up questions on credential sectors offer some clues, but also aren’t definitive, says Ama Takyi-Laryea, Pew’s senior manager for student loans, who was involved in the data analysis.

“We plan to clarify this in our upcoming research,” she says, “in addition to examining how these programs intersect with degree attainment and whether they relate to differences in income or job satisfaction.”

Credit Card Debt: The Pew analysis is the first in a series focused on the federal survey. Experts say the findings are a welcome addition to research on nondegree credentials, particularly on who pays for them.

Information on the financing of these programs is a black hole, says Melissa Smith, VP of public policy, talent, and workforce development at the Strada Education Foundation. “We know next to nothing about how students pay for these programs.”

Good education and training providers, particularly community colleges, have worked hard to make nondegree credential programs affordable, says Smith, often through relationships with employers and creative uses of state and federal training dollars. Yet the analysis found relatively limited public support, and other financing isn’t enough to cover the costs.

“The next big question is, are students using private market options?” says Smith, a veteran of the U.S. Departments of Labor and Commerce. “My guess is that we have a lot of debt sitting on credit cards with interest rates that triple the rates available to student loan borrowers.”

This could be a substantial contributor to debt held by millions of Americans, which is particularly concerning for lower-income people, who are most likely to pursue shorter-term workforce credentials.

Workforce Pell: A third of Americans (34%) have earned one of the credentials included in the Pew analysis, which found a tripling from 2009 to 2021 of the annual rates at which people recalled attaining them.

State governments are paying more for these programs. HCM found that 32 states invested $5.6B on short-term credentials in 2024, up $1.8B from the previous year. Yet students themselves likely are still covering most of the expanding price tag for this education and training. (BTW, states have latitude to lower costs for professional licenses.)

The U.S. Congress recently voted to make shorter-term programs eligible for federal Pell Grants. Many experts hope this shift will help close the nondegree financing gap. But most expect that Workforce Pell subsidies will be limited, in part because of robust eligibility requirements. 

Notably, the nonpartisan Congressional Budget Office in May projected just $300M in federal spending on those grants over the next decade. Obviously, $30M a year would barely be a drop in the bucket.

Much work remains to be done before Workforce Pell is slated to go live next summer. Broadly speaking, states will be responsible for determining which programs count as career-aligned and stackable in high-demand fields. The feds are tasked with monitoring graduate earnings and ROI as part of program eligibility rules.

Several organizations are trying to help states and institutions prepare, with new resources from the National Skills Coalition, New America, the Institute for College Access and Success, and the National College Attainment Network.

If implemented well and monitored with appropriate data analysis and guardrails, Workforce Pell is an opportunity for states to help students access funding for nondegree credentials that give them a leg up in the labor market, says Elizabeth Morgan, NCAN’s chief external relations officer. And the stakes are particularly high for people who enroll in short-term programs right after high school.

“If not administered well, students will just run out their lifetime Pell Grant eligibility, leaving them no better off and leaving the U.S. economy and taxpayers worse off,” says Morgan.

Smith says that, ideally, she’d like to see the U.S. get closer to parity on federal funding for workforce and higher education. But she acknowledges that’s magical thinking during a government shutdown and with such a huge gap. The primary federal workforce system gets $7B annually—just $1B for training—while federal spending on registered apprenticeships has been less than $300M.

The Kicker: “The issue of learners financing these programs through loans isn’t going away,” Smith says. “With skyrocketing interest in these pathways, debt will only grow.”

The ‘Hidden’ Economic Developers

As the need for skilled technicians in manufacturing grows in the U.S. alongside advances in robotics and other forms of high-tech automation, community colleges are playing an important role in providing training and coordination in their regions. 

The Big Idea: A new set of reports from the Rutgers University Education and Employment Research Center found that community colleges generally have been responsive to local labor market needs in turning out credentialed technicians. And beyond training, the researchers found, colleges play an important—and often overlooked—role in organizing economic development activity.

The primary study began over five years ago, looking at advanced manufacturing associate degree programs at eight community colleges in Arizona, Florida, Ohio, and Wisconsin. Michelle Van Noy, a co-author of the report, says the goal of the study was to look beyond individual outcomes and at colleges’ role in the health of an entire industry or region.

“There’s been a good amount of work trying to look at how those kinds of programs lead to wage and employment outcomes for individuals, but the idea here was to take a look at that at a different scale, at the regional level, and look at what's happening from an economic development lens,” Van Noy says. 

The report concludes that the colleges act as a convener for regional manufacturers, filling in knowledge and coordination gaps and playing a larger role in overall economic development. The authors claim that colleges’ contributions to high-tech manufacturing are often “hidden” and should be a bigger part of economic development planning. 

Among the findings are that colleges engage with their labor market in many ways to provide technician training, not just through curriculum. They also set up advisory boards, regularly reach out to employers, and focus on meeting students’ as well as employers’ needs. “Learn and earn” models, for example, benefit students and employers equally and are often initiated by the colleges.

On the Ground: Clark State College in Springfield, Ohio, was one of the institutions studied. With a Honda auto plant located nearby, the college offers 14 manufacturing certificates that are all stackable into an associate or bachelor’s degree. 

Jo Blondin, president of Clark State, says paid internships and work-based learning experiences are key to responding to labor market needs in the field. In addition to employers, the college regularly reaches out to the state’s economic development corporation, legislators, and organizations like the National Council for Workforce Education, which Blondin also leads.

“Generally there are a number of quarterbacks throwing us the ball,” Blondin says. “We have a process on campus to set in motion how we will respond and who we will bring to the table. Sometimes the solution is literally a two-week robotics refresher, and other times it’s a yearlong training around different types of welding. We will do whatever the business needs are.”

Like Clark State, all the institutions studied were responding to multiple groups, including students seeking economic mobility, employers, regional industries, and communities, Van Noy says. She pointed to growing efforts to elevate community colleges’ role among these groups, including Achieving the Dream’s “community vibrancy framework,” which targets students who have traditionally been left behind in higher education and emphasizes working with community organizations and employers to zero in on the community’s biggest needs.

“The lesson here is that partnerships are essential for colleges to know where their programs fit and then to have an influence on some of those regional activities,” Van Noy says. —By Colleen Connolly

Open Tabs

AI-Related Layoffs
UPS this week disclosed the elimination of 48K jobs across operations and management, saying it had benefited from increasing automation. Amazon announced that it will lay off 14K corporate workers, citing a push to hire in strategic areas, including the deployment of generative AI and agents. In a corporate filing, PwC said it had cut 5,600 workers globally while scaling back global head-count goals as the company ramps up its AI-related investments.

Factory Jobs
Manufacturing accounts for a shrinking share of the U.S. economy, with the industry shedding jobs after a modest post-pandemic recovery, Farah Stockman reports for The New York Times. The semiconductor, auto parts, and aerospace sectors have seen some of the steepest losses. Uncertainty about the Trump administration’s tariffs and the immigration crackdown may be contributing, while productivity growth in manufacturing remains a concern.

Nondegree Credentials
The Higher Learning Commission unveiled its process for evaluating and endorsing providers of short-term credential programs, including non-college organizations that issue certificates or alternative credentials. The institutional accrediting agency says its endorsement will recognize providers that meet HLC’s standards, helping them to stand out as trustworthy in a growing marketplace. The application process can be completed in no longer than five months.

Veteran Skills
The technical, mechanical, construction, and logistics skills taught in military jobs are a good fit with well-paying careers in sustainable energy and infrastructure, research from RAND finds, with 55 military occupations matching 57 roles in those industries. The report calls for targeted transition programs to help service members acquire certifications and other training, with an emphasis on community college partnerships and providing information about credentials.

Job Preparation
Young Americans say higher education should focus on helping students develop critical thinking skills and job preparation and be accessible, according to a survey of 19- to 34-year-olds from American University’s Sine Institute. Landing a good job with a high salary was the top reason cited for attending college. A majority of respondents were worried about AI limiting their career opportunities, but regular users of the tech were less pessimistic.

Job Moves
Taylor Hansen has been hired as the principal of the Achievement Wallet strategy and ecosystem at Western Governors University. Hansen previously was executive director of policy and programs at the U.S. Chamber of Commerce Foundation, where he managed the T3 Innovation Network.

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