By Aissa Canchola Bañez | February 27, 2024
This week, the House of Representatives is scheduled to consider an updated version of H.R. 6585, the Bipartisan Workforce Pell Act. Despite the seemingly harmless title of the bill, the Bipartisan Workforce Pell Act is a rotten deal for our most vulnerable students and future student loan borrowers.
The proposal would open up the Pell Grant program to extra-short-term workforce training programs—as short as 8 weeks long. It will also endanger the Pell Grant program and give the green light to some of the most shady and predatory for-profit schools and entirely online programs offered by private-sector tech companies to pad their bottom lines.
The bill advanced out of the Committee on Education and Workforce late last year by a vote of 37-8 despite warnings by advocates, including SBPC, as well as members of Congress sounding the alarm. These groups warned of the dangers posed by allowing for-profits and entirely online programs to cannibalize already limited Pell dollars. They also raised major equity concerns about the bill’s original pay-for, which would have cut off federal student loan access to low- and middle-income students hoping to attend ultra-wealthy schools that are subject to the endowment tax.
Despite these problems, the bill’s architects are moving full steam ahead to the House floor where the bill will be considered under “suspension of the rules” (a fast-track process that provides only limited debate time and prohibits any and all amendments). This time, the bill includes a new pay-for with many of the same major equity ramifications as the original bill and could even jeopardize the spirit of the Public Service Loan Forgiveness Program (PSLF) and benefits of the Biden Administration’s new Saving on a Valuable Education (SAVE) repayment plan.
To make matters worse, revelations have surfaced that the Pell Grant program is heading straight into a major funding shortfall. In the past, this has led lawmakers to limit eligibility and make other cuts to the program. HR. 6585, despite its current pay-for, would only cover a tiny fraction of the costs of expanding Pell to cover extra-short programs and will exacerbate the program’s financial challenges.
Put differently, if the Bipartisan Workforce Pell Act becomes law, future low-income college students could have fewer resources to pay for college degrees—the sole purpose of the Pell Grant program for the past half-century.
The Bipartisan Workforce Pell Act will further expand the Pell Grant Program to extra-short programs at some of the shadiest schools and online programs.
Despite the fact that the Pell Grant program already supports short-term workforce training programs as short as 15 weeks (or one semester in length), with H.R. 6585, policymakers will further expand the program to support programs as short as 8 weeks long and open the door for programs at for-profit schools and entirely online programs, including Online Program Managers (OPMs). The data available on these very short-term workforce credentials (below 15 weeks) is already grim, with graduates earning poverty-level wages and Black and Latino/a students faring the worst, earning $10,000-$20,000 less than their white counterparts. Adding programs at for-profit schools and entirely online programs to the mix is a recipe for disaster.
Adding extra-short programs at for-profit schools and entirely online programs to the mix is a recipe for disaster.
We have written at length on the dangers of the shady for-profit college industry and the growth of online EdTech companies known as OPMs. For-profit colleges have had a long history of deploying predatory and deceptive practices, including aggressive recruiting and poor-quality training programs that left students with worthless degrees and mountains of debt. While OPMs—for-profit companies that aim to help colleges expand their online course offerings—are certainly newer to the game, they have become some of the biggest abusers of the federal student aid programs. A growing body of evidence shows that OPMs use deceptive marketing and lofty, frequently hollow promises to drive students into massive debt for low-quality educational programs.
While most OPMs have been concentrated in the graduate degree space, many have been salivating at the chance to cash in on offering short-term programs as a way to boost revenues. Unsurprisingly, in light of growing skepticism, class action lawsuits, and calls for more oversight, the last couple of years have not been great for OPMs. In fact, according to news reports, one of the largest players in the market—2U Inc. is “hanging on for dear life,” which will have massive ramifications for tens of thousands of students across the nation. Allowing OPMs to gain unfettered access to Pell Grant funds would be a gift from the heavens and allow them to continue to prey on the most vulnerable students.
The updated version of the Bipartisan Workforce Pell Act will undercut the spirit of the Public Service Loan Forgiveness Program and the Biden Administration’s new SAVE Plan.
The bill’s new pay-for would require ultra-wealthy schools that are subject to the endowment tax to “reimburse” the federal government for unpaid student loan balances, including unpaid interest and balances cancelled under the PSLF program and income-driven repayment (IDR) plans. Advocates argue that this unfairly targets these schools. But the students could pay the price as institutions could be financially incentivized to wind down service-oriented programs that funnel students into public service careers—like social work, education, and nursing programs—in order to avoid these financial penalties. Just as President Biden is making critical progress towards fulfilling the promise of the PSLF program, H.R. 6585 could undercut these goals and ultimately reduce the number of graduates looking to enter into the public service fields and serve high-need communities.
Further, as the Biden Administration has been working to fix the broken student loan repayment system, address runaway interest, and ensure that borrowers are able to access their right to an affordable monthly payment through its new SAVE plan, H.R. 6585 could disincentivize institutions from working to ensure that students receive adequate loan counseling and other information necessary to understand their right to an affordable monthly payment under IDR. Additionally, the bill could push schools away from recruiting and admitting low-to-middle-income students who may need to borrow federal student loans. At a time when the Supreme Court has blocked avenues of opportunity for students of color through bans on affirmative action, this bill’s pay-for further threatens to cut off access for Black and brown students, who are more likely to need to rely on federal loans in order to access wealthier institutions.
The timing to expand Pell to even shorter workforce training programs could not be any worse…literally.
In light of the news that the Pell Grant program surplus is on track to turn into a shortfall by 2026, there could not be a worse time to consider further expanding the program to include even shorter programs—particularly at for-profit schools and online programs. For-profits have a notorious track record of exploiting federal funding. Between 2001 and 2010, as the overall Pell Grant program cost tripled from $8 billion to $30 billion, the slice going to for-profits ballooned more than six-fold, from $1.1 billion to $7.5 billion. We’re talking about a whopping 25 percent of overall Pell spending! For-profit schools have also consistently played a role in driving up the cost of previous Pell Grant expansions, and frequently offer more expensive programs than their public counterparts. When the Pell Grant program last faced a shortfall, in 2011 and 2012, Congress made cuts to the program that limited the number of semesters that low-income students can receive grants, and also cut subsidies to subsidized student loans for undergraduate students, making college less affordable, and exacerbating the student loan debt crisis.
Additionally, claims that the bill’s pay-for will cover the full cost of the bill are false and will only affect costs accrued on the mandatory side (which make up only 16 percent of all Pell funding). Despite the fact that the Pell Grant program functions as an entitlement, the majority of the program’s funding derives from discretionary funds (84 percent) which are not touched by the bill’s pay-for. As a result—and in light of the impending shortfall crisis and harsh budget caps set by the Fiscal Responsibility Act—Congress will need to make drastic cuts or somehow find the funds to make significant increases through the annual appropriations process. If history is any indication, policymakers could be poised to fund this expansion on the backs of our most vulnerable students.
Don’t be fooled! The Bipartisan Workforce Pell Act is a rotten deal for our most vulnerable students.
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Aissa Canchola Bañez is the Senior Advisor for Policy and Strategy at the Student Borrower Protection Center. She brings a decade of experience in Congress, Executive Agencies and advocacy working to advance policy solutions to improve the lives of workers and families and create a more just and equitable society. Prior to joining the SBPC, she served as Deputy Chief of Staff and Legislative Director for Congresswoman Ayanna Pressley (MA-07) where she led the Congresswoman’s policy work, including efforts to protect borrowers and make student loan debt cancellation a reality.