How States Can Use Short-Term Workforce Pell Grants to Help Students Succeed
Key Findings
- Pell Grants have been the primary source of financial aid for low-income college students since 1973.
- Only half of the students who use Pell Grants for four-year programs earn a degree.
- Short-term credential programs boost earnings and are more affordable and attainable than other degree programs.
- Congress has created a new Workforce Pell Grant program and states should ensure local students and employers benefit.
Overview
In 1973, Pell Grants were established as one of the primary sources of financial aid for low-income college students.1 Currently, students can receive up to $7,395 annually toward direct costs of education like tuition, and indirect costs like transportation and housing.2 The amount a student receives is variable based on the level of need and cannot exceed a students’ cost of attendance.3 There is a lifetime cap equal to six years of eligibility, or 12 full-time semesters.4
Ninety-three percent of Pell Grant recipients have a household income under $60,000.5 Unlike student loans, Pell Grants do not need to be repaid, and other forms of financial aid are calculated and awarded after the Pell Grant, making it the foundation of financial aid for low-income students.6
The Pell Grant program has grown substantially since its creation. In 2023, 39 percent of first-time, full-time undergraduate students received Pell Grants.7 There are currently more than 6.5 million recipients and for the 2024-2025 academic year, students received nearly $38 billion in grants.8-9
Prior to the passage of the reconciliation legislation in July 2025, Pell Grants could only be used for a degree or credential from a program that lasts the length of a typical college semester—at least 600 clock hours or 16 semester hours offered over a minimum of 15 weeks, or eight semester hours over 10 weeks if an associate’s degree is required for admission to the program.10
The One Big Beautiful Bill Act created a new Workforce Pell Grant program, which allows the use of Pell Grants for high-quality short term credential programs that are aligned with local, well-paying jobs.11 This type of credential is typically more affordable and attainable than a traditional degree.
Traditional Pell Grants limit students to degrees that may not pay off
Pursuing a college degree may be the best path for some students, but it is not a golden ticket to success. Overall, only 64 percent of students who start a four-year program graduate within six years.12 Students who receive Pell Grants graduate from four-year colleges at an even lower rate, with just 53 percent graduating after six years.13 Associate degree programs only have a 34 percent completion rate.14
Meanwhile, the cost of a four-year degree has skyrocketed. In 1975, the average cost of tuition and fees for a public in-state school was $540 annually, and Pell Grants covered nearly 80 percent of the cost of attendance.15-16 In 2023, tuition and fees for a public four-year university averaged more than $9,750 for an in-state student and more than $28,000 for an out-of-state student.17
Prices are even more astronomical for private four-year institutions, with an average annual tuition of more than $38,000.18 Including room and board and other college expenses, the average cost of attending a four-year degree program in 2023 was $38,270 annually.19
Since 2000, the cost of attending college has jumped by 60 percent.20 In the same time period, wages for those with bachelor’s degrees have only risen by five percent.21 While those who graduate with a four-year degree still have higher earnings on average than those who do not, it is highly dependent on field of study.22 Forty percent of recent college graduates are underemployed, which means that they are employed in jobs that do not require the degree that they hold.23 Those who major in fields such as social work or the arts have lower average lifetime earnings than those who pursue careers in computer and mathematical fields with only a high school education.24
On average, Pell Grants cover just 24 percent of the cost of college attendance.25 More than 70 percent of student debt holders also received a Pell Grant and typically have higher debt amounts than their counterparts who did not receive a Pell Grant.26 There are currently 42.3 million people with outstanding federal loans, totaling $1.67 trillion.27
Workforce needs are changing rapidly, and job opportunities do not always align with four-year degrees. An estimated 60 percent of jobs created between 2020 and 2030 will not require any type of college education, and many of these jobs have higher earnings than the median annual salary.28 Just 20 percent of new jobs created this decade will require a bachelor’s degree.29 A fast-growing alternative to traditional degrees that offer workers the ability to quickly gain new skills that are valuable to local employers are short-term credential programs.
Short-term credential programs offer an alternate path to fulfilling careers
Short-term credential programs offer students the opportunity to learn an in-demand skill and quickly join the workforce and begin earning. This type of education takes just a few weeks to complete, and credentials are recognized in many fields, from construction to medicine.30 Since 2000, there has been an 89 percent increase in the number of short-term credentials earned by students.31
While the cost of a certificate varies based on the field of study and length of the program, short-term credential programs typically cost much less than traditional degrees.32 The lifetime cost of a four-year degree can easily top $500,000, whereas many short-term credentials cost just a few thousand dollars to complete.33-34 Students can work while earning a credential, which benefits those with low household incomes the most.35 Those receiving short-term credentials are also not less likely to go on to complete associates degrees, showing that credentials can be the first step in the education process.36
Jobs that require certificates offer higher salaries than jobs that do not, raising full-time wages between $4,000 and $18,700 per year.37 However, not all credential programs are high-quality, and it’s important that programs match local employer needs for students to see a payoff in the form of higher earnings.38 Congress recently passed legislation that allows Pell Grants to be used for this type of short-term credential, and it is critical that states work to implement the legislation correctly to ensure that residents can access the new Pell Grants and move into successful career pathways.
States should implement the One, Big, Beautiful Bill by approving quality workforce credential programs
The One, Big, Beautiful Bill included a provision that expands the use of Pell Grants to include short-term credential programs.39 To qualify for Workforce Pell Grants, a program must be between eight and 15 weeks in length and lead to a postsecondary credential.40 The credential must be stackable with other certificates or degrees and portable, meaning that it is recognized by multiple employers.41 Only institutions that meet the requirements of Title IV of the Higher Education Act are eligible.42 To qualify, a program must also have at least a 70 percent completion rate, a 70 percent job placement rate, and be aligned to the needs of local employers.43 The One, Big, Beautiful Bill also includes a value-added earnings test that requires the credential program to ensure that only those programs that lead to higher wages can be covered by the Pell Grant.44
The earnings test considers the median earnings of those who completed the certificate program, adjusted for regional differences. Then,150 percent of the federal poverty line is subtracted from this amount to calculate the maximum cost of a credential. For example, if the median earnings of certified nurse assistants who completed a particular program were $3,000 higher than 150 percent of the federal poverty line, the program could not cost more than $3,000 to qualify for short-term Pell Grants.45
Some states already have state-level programs to support short-term credentials. For example, in Virginia, the FastForward program provides state-funded grants for students earning short-term workforce credentials through community colleges.46 The program is closely aligned with local employers and provides credentials in the most in-demand occupations.47 Students receiving the grant were much more likely to complete a credential program than comparable students without a grant, and industry-recognized credentials raised wages by $4,000 annually and led to higher employment rates among graduates.48
Florida’s Get There, Florida initiative has leveraged community and technical colleges to implement hundreds of short-term credentials that are aligned with employers’ needs.49 More than one million Floridians are enrolled in a career and technical education pathway.50 Florida’s Open Door grant program, which was established in 2021, also provides state funding for short-term, high-demand credentials.51
To ensure that states can access new Workforce Pell Grants, governors must work with workforce development agencies, community colleges, and employers to approve short-term credentials that meet the standards outlined by the One, Big, Beautiful Bill. States should develop a streamlined approval process for programs and ensure that data is collected to demonstrate successful outcomes.
The Bottom Line: States should approve short-term workforce programs for Pell Grants to improve student outcomes and meet local workforce needs.
The new Workforce Pell Grant program gives students a new opportunity to pursue short-term credentials that allow them to learn a skill and immediately start earning. Low college graduation rates and sluggish wage growth for graduates demonstrate that pursuing a traditional degree is not the pathway to success for everyone. Allowing low-income students to use Pell Grants to pay for short-term credentials allows these individuals the chance to participate in a growing sector of the economy while avoiding the pitfalls of high student debt. Employers, states, and community colleges should work together to ensure that Workforce Pell Grants are leveraged to help students and the economy thrive.
