For decades, the federal government has helped millions of Americans climb the opportunity ladder by financing their postsecondary education and training. But it’s paid too little attention to whether the credentials actually moved them up that ladder toward better jobs and higher earnings.
This spring, the U.S. Department of Education undertook its most serious effort to solve that problem. It issued three separate regulatory packages that, taken together, point in a single direction. Community colleges have a lot at stake in what Washington is doing.
The Workforce Pell final rule opens the Pell Grant program for the first time to short-term workforce training programs. The proposed Student Tuition and Transparency System (STATS) ties every program’s access to federal loans to a test of whether graduates out-earn people who never enrolled. The proposed Accreditation, Innovation, and Modernization (AIM) rule will dramatically rewrite the rules under which accreditors judge colleges. All three packages came from negotiated rulemaking committees that reached consensus, giving these changes unusual staying power.
Taken together, they describe an approach that redistributes power across American higher education. And that redistribution runs in one direction. It’s away from the institutions and accreditors that have long governed quality, toward three new centers of power: an earnings-accountability system measuring what graduates actually earn, state governments whose governors decide which workforce programs deserve federal aid, and students with new rights to information about costs, outcomes and transfer credit.
Netting weak programs
These shifts have their strengths but leave some issues unresolved.
The first shift is to an earnings-accountability system. Under the proposed STATS framework, every institutional degree program faces the same test. Completers must earn at least as much as the typical high school graduate aged 25 to 34 (for undergraduate programs) or the typical bachelor’s degree holder (for graduate programs). Programs that fail in two of three consecutive years lose federal loan eligibility. No accreditor, institutional reputation or glossy brochure can overrule the number.
Higher education analyst Beth Akers of the American Enterprise Institute calls this the “value era” of higher education policy, the completion of a 60-year arc from access, to affordability, to completion, and now to value. A recent Texas study tracking value-added earnings for nearly one million public college students shows that the measurement infrastructure now exists to do this. And that most programs, measured honestly, do deliver.
The department’s own projections suggest that only about 5% of programs would fail the new earnings test. That’s a sign that the accountability bar is set to catch genuinely weak programs. The point is not to shrink higher education. It’s to make the opportunity ladder trustworthy.
A new on-ramp
The second shift is to state governments. Under the new Workforce Pell rules, Pell grants now follow students into short-term job training programs of eight to 14 weeks. But this applies only to those a governor has certified as serving in-demand occupations, leading to credentials that are stackable and portable across employers, and carrying academic credit toward further education, while also meeting demanding completion and placement benchmarks. So while Washington sets the floor, states, through governors, pick the programs.
For community college leaders, this is a boutique-to-baseline story playing out in federal aid policy. Earn-and-learn pathways that were once peripheral experiments are becoming standard infrastructure. For working adults who can’t step away from a paycheck for two years, this lowers the first rung of the career ladder closer to the ground. For an institution whose students are disproportionately working adults, first-generation learners and transfer students, that matters more than anywhere else.
Robust info for students
The third shift is to students themselves. The accreditation consensus includes student course transfer transparency rules that should have existed decades ago. Before a student signs with or makes a nonrefundable commitment to an institution, that institution must disclose, course by course, in writing, which prior course credits earned by a student will transfer, which won’t and why, with a right to appeal.
Paired with a new federal program-data website showing costs, debt and earnings for every program, this is the most significant expansion of student information rights in decades. Lost transfer credits have always fallen hardest on students with the least margin for error, students of color, adult learners, veterans and community college transfers. Connecting the rungs of the opportunity ladder means treating that loss as the consumer harm it is.
Mind the gaps
Here are three gaps in this current approach.
First, there’s the Pell loophole. Under the proposed Pell rules, certificate programs that fail the earnings test lose only loan eligibility but keep Pell grants, often their largest revenue source. New America’s public comments to the department document that college certificate programs leaving graduates earning less than high school graduates enrolled more than 827,000 students and collected over $3.4 billion in federal aid in a single recent year. Letting failing programs keep Pell protects an institution’s finances, not students.
Second, there’s the missing data. By the department’s own estimate in the STATS proposed rules, it lacks the earnings data needed to evaluate roughly three-quarters of current programs eligible for support. A system that stakes everything on data must answer for the missing data. That means the system, as currently designed, is unable to evaluate most of the programs it’s meant to hold accountable, at least until the data infrastructure catches up.
Third, there’s the floor problem. As Akers argues, “do no economic harm” is a floor, not a measure of value. A program can clear the eligibility bar while charging far more than its outcomes justify. That’s because the financial test counts earnings but ignores price.
For example, a program charging $20,000 that leaves graduates earning just above the high school benchmark technically clears the accountability bar, even if the return on investment is poor by any reasonable measure. Community colleges, the best value proposition in American higher education, should welcome a day when cost enters the accountability equation and say so publicly.
The test of major federal changes like the ones proposed is whether they outlast the administration that started them. These rules have a better chance than most since they emerged from negotiated consensus. They also rest on a principle that commands support across party lines. Programs that take public money should leave students better off.
5 priorities for community colleges
Community colleges are the institution best positioned to take advantage of what’s been set in motion. What should its leaders do while the concrete is still wet? Here are five priorities.
- Audit every program now against the metrics that are coming — completion, placement and earnings against the high school benchmark — and strengthen or sunset the programs that won’t clear them before Washington does it for you.
- Build your relationship with your governor’s office and state workforce board today. They are about to become the gatekeepers of Workforce Pell, and the institutions at the table early will shape the approval criteria.
- Fix your transfer pipelines before the disclosure rules force the issue. Publish course-by-course transfer guides and treat lost credits as the equity failure they are.
- Get your data house in order. Under the new regime, the institutions that can measure their own value will be the ones that keep proving it.
- Tell your value story publicly and push for closing the Pell loophole. The era when access alone justified federal investment is ending. The era in which community colleges can demonstrate, with data, that their rungs hold weight is just beginning.
The opportunity ladder is being rebuilt by consensus in the new rules. That’s usually how durable change happens. Community colleges have long been the most important rung on the opportunity ladder. Whether these reforms genuinely serve the students the old system failed depends on whether the people running those colleges treat what Washington has started as an invitation to lead.
