Guaranteed Talent Pipeline

WGU and Social Finance want $100M to finance degrees and a path to good nursing jobs for working learners, with employers paying off the loans. Also, experts weigh in on the state of U.S. apprenticeships after Multiverse’s exit.

A Pay-It-Forward Fund for Nurses

As U.S. healthcare systems grapple with severe labor shortages, a growing number are backing experiments to create on-ramps for working learners. These programs pay for participants’ education and training as they pursue jobs as nurses or other better-paying roles in the industry.

The largest-scale project is the development of 10 healthcare-focused high schools with $250M in seed funding from Bloomberg Philanthropies. This career-connected learning model is market driven and potentially transformational, Bain & Company says in a new analysis. 

Another recently launched experiment to watch is Intermountain Healthcare’s plan to recruit workers for frontline roles and then guide them along a clear, stackable path to nursing jobs. 

Likewise, Grand Valley State University in 2022 teamed up with Corewell Health to create a nurse scholar program. Qualifying students receive a scholarship to help cover a nursing degree, in exchange for agreeing to work as a registered nurse for the regional healthcare system for two years after graduation.

A novel twist on the work-requirement strategy comes from Western Governors University and Social Finance, a nonprofit that offers “pay it forward” financing for education and training in high-demand fields. Unveiled this week during the annual meeting of Jobs for Future, the partnership seeks to raise $100M to train aspiring nurses.

The ReNEW Fund will offer zero-interest loans for students in the nonprofit mega-university’s prelicensure nursing program, initially across 24 states. The loans will finance an estimated $35K for each participants’ core nursing education—the last two years of tuition for an online bachelor’s degree, wraparound supports, and last-mile training costs, like those associated with in-person labs and clinical placements.

For it to work, the fund will need healthcare employers to pay back the loans in exchange for a three-year work commitment from nursing graduates.

It’s a “trifecta benefit” that will pay off for students, the university, and employers, says Scott Pulsipher, WGU’s president. “They get a guaranteed job,” he says of graduates. Employers get a “guaranteed talent pipeline” with nurses who are more likely to stick with the job.

The university’s massive reach means it has the potential to make a significant dent in the nation’s nursing crunch, says Tracy Palandjian, the CEO and co-founder of Social Finance. Also, fully half of WGU’s nursing students are Black or Hispanic. Palandjian says “culturally competent care” is crucial for a profession that’s just 10% Black and 7% Hispanic in the U.S.

In addition, all participants in the program will be eligible for federal Pell Grants as well as state aid, she says, meaning they should be able to graduate holding only debt that their employers will pay down.

Students who fail to complete the nursing program would be required to pay back the disbursed loan amount, but without interest, and only while they’re earning at least $60K a year. Graduates would face similar repayment terms if they take a nursing job outside of the employer-partner network or leave their jobs at one of those systems before three years have passed.

The loan pool also should replenish itself as employers pay it back. Palandjian says the impact on this sort of pay-it-forward fund is 20 times that of a traditional scholarship program.

Getting employers to sign up—and foundations to kick in the $100M for the fund—is the project’s biggest challenge. WGU, which is contributing an initial $10M investment, and Social Finance are seeking those partners.

Palandjian is hopeful that healthcare companies will see the value, pointing to the differential between a $35K no-interest loan and the sky-high costs hospitals face with workforce gaps.

The Kicker: “For the employer, you’re completely derisking it,” says Palandjian. This is “getting the employer to pay for the benefit that they receive.” 

Temperature Check on U.S. Apprenticeships

Multiverse’s move to hit pause on federally registered apprenticeship programs in the U.S. has been the talk of the training world. It comes as the Labor Department is considering significant changes to the rules around apprenticeship, and the same week the Biden administration announced the largest-ever federal investment in apprenticeships.

For now, the U.K.-based company will focus on offering customized training programs for employers. We talked with four experts about what the news says about the current state of apprenticeship in this country:

Deborah Kobes, senior fellow for apprenticeship and workforce in the Center on Labor, Human Services, and Population at the Urban Institute

Though registered apprenticeships have existed in the U.S. for almost 90 years, the market for such apprenticeships is still new, says Kobes. The federal government only started investing in registered apprenticeships in earnest under the Obama administration, with new grants reaching a record $244M this month. And U.S. employers have been slowly warming to the idea.

Market Dynamics: Given that context, she says, Multiverse’s exit isn’t a shock. New markets tend to see a lot of variability and change.

“Now is a time that I expect a lot of different organizations, including for-profit companies, to be finding their footing, and I don’t expect all of them to land,” she says.

Kobes does think that federal funding needs to increase to develop a truly viable market—“more investment leads to more growth”—and she favors the kinds of steady, bipartisan increases the system has seen so far.

Role of Intermediaries: She believes that intermediaries, like Multiverse and the Urban Institute, have an important role to play in ensuring quality and making the highly fragmented apprenticeship system easier for employers to navigate. But she says a big question mark is what kinds of intermediaries—for-profit or nonprofit, college-based or not, focused on the start-up phase or providing ongoing management—are most viable.

“When I think about what the market looks like for providing postsecondary education and training in the US, a lot of those are nonprofits,” Kobes says. “So it is an interesting place to say, where are the profits in this market?”

John Pallasch, founder and CEO of One Workforce Solutions and a Labor Department assistant secretary during the Trump administration

Pallasch would like to see more of the funding that comes through the Workforce Innovation and Opportunity Act used on apprenticeships, which have stronger work outcomes than many other forms of training. Doing so wouldn’t necessarily require a change in federal legislation—states and local workforce boards already have the authority to route WIOA funding, totaling about $3.3B a year, to apprenticeships if their leaders choose to.

“We all want to talk about, ‘We don’t fund apprenticeships enough,’” he says. “Yes, we do—we provide $3B-plus a year that is eligible to be used for apprenticeships.”

Focus and Oversight: As it stands now, only a fraction of WIOA money in most states is used on training, though Congress is debating a minimum threshold. The House proposed a requirement that 50% of funds go to training, including apprenticeship, in its version of the WIOA reauthorization bill, but the Senate version released in June stripped that out.

In many states, much of the funding currently goes to job placement, a range of other support services, and administration, and the Labor Department’s Office of Inspector General has found that oversight in some cases is inappropriately lax.

At the end of the day, Pallasch says, too few dollars go to retraining workers through apprenticeship or other effective programs. “Everybody in workforce development gets paid except for the jobseeker,” he says.

Eric Seleznow, Labor Department official during the Obama administration and member of the Biden-Harris transition team

Like Kobes, Seleznow says the “renaissance” of interest in apprenticeship in the U.S. is a recent development. Total annual funding for the federal office that oversees apprenticeship was just $27M when Seleznow arrived a decade ago.

“There were no grants to states,” he says. “It was a sleepy little stepchild system.”

Engaging Business: In that context, the more than $1B in federal funding for apprenticeship over the last decade is serious progress. But while government support is important, Seleznow says employer buy-in is the key to growing registered apprenticeship.

“If employers are beneficiaries, why should the government pay for it?” he says.

Several major companies see apprenticeship as a business necessity, most notably Aon, IBM, and Zurich North America. And while it’s been a “slow, grinding advancement,” more firms are coming to that conclusion. Research has shown that apprenticeship has a positive ROI for companies. But registered apprenticeships aren’t short-term training programs, and the gains aren’t immediately apparent.

“You’ve got to give it some time to take root,” says Seleznow.

Standards and Partnerships: Businesses tend to be cautious about new ways of recruiting and training workers. Seleznow argues that the rigor of a federally registered program helps eliminate risks as firms take the leap.

“Registration gets you the quality control and oversight you need so companies can’t put out poorly constructed apprenticeships,” he says.

Seleznow says intermediaries like Multiverse will remain a key part of the mix. Yet he argues that they need to partner with a player that has deep connections across the various systems apprenticeship touches. These collaborators include workforce boards, unions, community colleges, and employers.

Even with a strong partner, however, Seleznow shares Kobes’s skepticism about the money being enough for investor-driven intermediaries.

“I don’t know how companies are going to get rich on this,” he says.

Jennifer Carlson, CEO and executive director of Apprenti

Carlson is bullish on registered apprenticeships. The nonprofit Apprenti, which specializes in tech training, saw a significant dip in demand with the upheaval among tech companies in late 2022 and early 2023 but has made up for it with stronger demand from businesses in financial services, healthcare, and higher education. Participation in Apprenti programs that were funded by a major Good Jobs Challenge grant also has been strong, with 1K apprentices currently in the pipeline.

Employer Demand: In the eight years since launching Apprenti, she’s seen employers experiment with a lot of different training models and believes more are now settling on registered apprenticeship. In her view, the idea of working outside the system more or less died with the scuttled federal experiment with Industry-Recognized Apprenticeship Programs. The system needs improvements, she says, but with the right approach can offer the flexibility in timing and content that employers need.

Apprenti, for example, regularly works with outside training providers or company-specific curriculum and then designs and manages the apprenticeship wraparound.

“There are challenges in the U.S. system, just like there are in all systems,” Carlson says. “But if you are here and you understand how this system works, I don’t agree that it doesn’t work in its current form.”

Recruitment Models: Employment law in the U.S. likely presents a bigger challenge to the business and recruitment models of international companies, she says.

Many intermediaries, Apprenti included, are working to diversify the talent pool for employers. And the practices allowed under U.S. employment laws are more restrictive than in places like the U.K. or the European Union—with targeted recruiting of workers in specific racial, ethnic, or gender groups generally forbidden in this country.

Fragmentation: The biggest challenge for all intermediaries, she says, is how fragmented the system is, with much of the decision-making devolved to the states. That creates large inefficiencies and makes it hard to secure consistent funding, even if the dollars are there. This is particularly true, she says, for employers and apprenticeship intermediaries looking to use training dollars through WIOA.

The country has 590-plus local workforce boards, all with different rules, who ultimately control those funds. In a single city like Boston, she says, you might have to work with six different boards to fund a relatively modest program.

“Our concern is that there is a 100% lack of consistency,” Carlson says. —By Elyse Ashburn and Paul Fain

Open Tabs

State Data
A major barrier for states in creating quality education-to-employment data systems is their lack of dedicated capacity to analyze data, according to Jon Furr, chief data ecosystem officer at Strada Education Foundation. These functions typically aren’t the day jobs of state officials who are tasked with them. Furr describes how Kentucky, Nebraska, and Virginia are developing focused government units for these data systems.

Short-Term Training
With a new set of grants, the Lowe’s Foundation has awarded $25M to a network of 35 community colleges and nonprofits across 27 states. The funding is aimed at expanding career paths in the skilled trades for 50K students, through help with building facilities, hiring instructors, and creating accredited programs. Awards from the foundation are focused on carpentry and construction, HVAC, electrical, plumbing, and appliance repair training.

Free Certificates
IBM rolled out two SkillsBuild certificates in cybersecurity and data analytics, which were piloted and designed with community colleges. The free online training leads to college credit recommendations from the American Council on Education. They will be available to students across two-year college systems in Alabama, Colorado, Louisiana, and the Bay Area this fall. The colleges can integrate the certificates into existing curricula.

AI and Student Success
It’s not enough to treat AI as a tool for reactive, just-in-time intervention with college students, according to a new report from Mainstay, a student success company with a track record in higher education. AI can and should engage with students proactively, including with working learners who are less likely to ask for help. The report includes questions leaders should ask to lay the foundation for a more strategic, outcomes-oriented approach to AI.

Job Moves
Marty Alvarado has been hired as a partner by Sova, a higher education firm focused on student success. Alvarado is the former executive vice chancellor of the California community college system and most recently was a vice president at JFF.

Dave Treat has been appointed chief technology officer at Pearson, where he will lead tech innovation, including the lifelong learning company’s presence in the AI community. Treat leaves his role as senior managing director at Accenture.

Sorry about all the words this week—July has been busy. A bunch of news landed on the cutting room floor. Catch you next week. —PF