By Stephanie Hall | July 9, 2025

Since the beginning of the second Trump Administration, the EdTech industry has been conspicuously silent as its college and university clients face escalating financial and ideological attacks. One reason for this deafening silence could be the industry’s anticipation of supercharged access to federal education funds now that the Republican-controlled Congress has passed its massive budget reconciliation bill. 

We’ve written extensively on how the reconciliation bills introduced in the House and the Senate are bad news for students and families. Among other things, the bill guts critical financial aid programs, making college even more expensive and forcing millions into the riskier and more expensive private student loan market, and will spike monthly payments for millions of student loan borrowers. 

Troublingly, the bill opens up the Pell Grant program to support extra-short workforce training programs, potentially including those at institutions of higher education that are offered by third-party online program management companies (OPMs). An earlier version of the bill would have allowed these OPMs to become direct Pell Grant recipients without the need for external quality assurance checks from an accreditor. OPMs—private companies that design, market, and often teach courses under traditional colleges’ brand names while taking a substantial cut of tuition revenue—have historically relied on universities as accredited client-intermediaries for federal funds. OPMs harm students by using deceptive white labeling, inflated job outcomes, and high-pressure sales tactics, only to leave them burdened with debt and without the success they were promised.   

For a moment, there was a glimmer of hope when the Senate Parliamentarian nixed the entire short-term Pell program from the Senate bill during the so-called “Byrd bath,” which is when the nonpartisan Senate official strikes provisions deemed to be more about policy than budget. Unfortunately, instead of abandoning this troubling proposal altogether, Senate Republicans updated their language to exclude unaccredited providers, which allowed it to ultimately be included in the final passed bill. 

What to know about the new Short-Term Pell Program.

Now that the “One Big Bill” is law, it appears the EdTech industry’s bet to remain under the radar paid off. While unaccredited providers are no longer directly eligible, they will continue to be able to partner with institutions of higher education to offer these same shady online programs and profit off of students. Besides accreditation, eligibility requires very short-term programs to be aligned with “high-skill, high-wage, or in-demand” jobs in the state where they are offered. The bill also includes completion and job placement rate requirements, though critics argue the bill only requires weak, self-reported measures.

Deregulatory reforms like this are billed as “market-driven” and promise to “increase student choice,” but instead invite predatory practices and funnel public funds into private hands with insufficient oversight. History shows that stripping accountability erodes educational quality, exacerbates inequities, and prioritizes profit over students, all while advancing a broader agenda to privatize public goods. 

The bill delegates some program quality verification to states. Unfortunately, when it comes to alternative, short-term, and other non-degree programs, neither states nor the institutions they oversee have a promising track record of protecting students from predatory third-party managed programs. Historically, non-degree programs that are marketed as training for in-demand fields have skirted real academic or consumer protection scrutiny, because state regulators and university governing boards may assume accreditor reviews of institutions and programs suffice, and vice versa. Meanwhile, neither do a thorough review of these types of programs offered under the school’s name. For example, instructors at a 2U-run bootcamp offered by the University of California, Santa Barbara were hired by the OPM, and the instructors’ qualifications were not reviewed by the school—in violation of accreditor guidance.

Even without the allure of federal funding, the non-degree, short- term credential and training sector has been a lawless land, and that dynamic is sure to worsen when easy access to direct federal funds is at stake. 

For example, Make School, an unaccredited for-profit coding school, contracted with Dominican University in 2018 to offer degrees and certificates under the university’s name with the blessing of its accreditor, the Western Association of Schools and Colleges. Despite accreditor approval, the partnership collapsed in 2021 after students complained the institution used illegal lending practices and Make School subsequently closed, leaving students drowning in debt.

In a more recent example, Caltech faced backlash after revelations that it outsourced tech bootcamps to Simplilearn, a for-profit company, while marketing them as prestigious Caltech programs. Students paid up to $14,000 for courses taught by Simplilearn contractors, and some found the curriculum and career counseling lacking. In response to a legal complaint last year, a California judge agreed that Caltech and Simplilearn’s manner of promoting the bootcamps was deceptive and misleading. The scandal highlighted broader concerns about universities’ “white labeling” programs to third parties, risking their reputations and exploiting students in exchange for millions in revenue. In a pending settlement agreement, Caltech and Simplilearn would be required to change how the bootcamp is advertised. Rather than do that long-term, Caltech announced it plans to exit its contract with Simplilearn.  

In another example, the Lambda School (later rebranded as BloomTech) faced multiple scandals, including operating without California state approval and using deceptive practices like inflating job placement rates and misrepresenting income-share agreements that included hidden financial charges. Over the course of a few short years, BloomTech received penalties from state and federal regulators and its founder received a 10-year ban on operating in the student lending sector, yet BloomTech continues to operate with its founder still at the helm—it skirts the ban by outsourcing its lending while continuing to run the same exact program. 

In 2024, the California State Auditor released findings from its review of the UC system’s agreements with third-party companies, including some that provide bootcamp-like programs on behalf of their college clients. The audit found many programs failed to disclose the third party’s role in instruction, overstated the value of the credentials, or enticed students by using misleading job placement claims. The audit highlighted how these particular providers (in this case, OPMs) exploited lax oversight, especially in continuing education programs. In a scenario where very short-term workforce training programs are eligible for federal funds, third-party providers will have a renewed interest in expanding contracts, aggressively recruiting students, and minimizing institutional or state oversight—especially given the new pot of federal funds at stake. 

In the case of the bootcamps mentioned above that were offered by OPMs through arrangements with accredited state institutions, it should be noted that the quality and consumer protection issues that eventually came to light were not identified by their respective accreditors. Now that this bill has been signed into law, a new, massive pot of Pell Grant money is available and will entice OPMs, other private providers, and institutions alike to set up such programs. If so, it will be imperative for accreditors and state regulators to improve their oversight, lest they risk wasting thousands of students’ time and money. 

Now that this bill has been signed into law, a new, massive pot of Pell Grant money is available and will entice OPMs, other private providers, and institutions alike to set up such programs.

Diploma mills on steroids? 

Finally, the Short-Term Pell Grant program that is now law should be considered alongside an overlooked proposal in the radical right-wing Project 2025 agenda that targets the “regular and substantive interaction” regulation. This regulation requires exactly that: regular and substantive interaction between instructors and students in education programs that receive federal funds. Things like live discussions and hands-on practice may seem like obvious components of an academic or training course, but these features differentiate legitimate programs from diploma mills. Previous versions of short-term Pell bills had been promoted as supportive of workers who wish to enter not just information technology roles, but also jobs like nursing assistance, welding, and commercial truck driving. Removing financial barriers to these fields (i.e. the cost of training) is a worthwhile cause, and regular and substantive interaction is essential for workplace and public safety. However, Project 2025 described the rule as overly prescriptive, leaning on the idea that regulation stifles innovation by limiting institutions’ ability to use self-paced or even automated training models, despite the fact that scrapping it will almost certainly enable predatory programs that exist only to separate students from their tuition dollars. The Trump Administration is likely to take aim at the regular and substantive interaction requirements, which means future short-term Pell dollars could flow to OPMs and similar non-school providers that do nothing more than serve students pre-packaged and automated content. 

The relaxation of regulatory requirements in the “Big Bill” is not about innovation or student choice. It is about dismantling accountability, diverting public funds to private interests, and ensuring education remains just another extractive industry. The new law, combined with efforts to dismantle oversight agencies like the Consumer Financial Protection Bureau and the U.S. Department of Education, creates the perfect storm, leaving students exposed to predatory practices and diminishing safeguards against fraud and financial exploitation. Federal policymakers just made a huge mistake opening the Pell Grant program to unaccountable, profit-driven providers, and students and families will pay the price.

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Stephanie Hall is a fellow at the Student Borrower Protection Center. Dr. Hall is a leading expert on college accountability and the for-profit education industry who began her more than 20-year career in education as a middle and high school teacher, first in her hometown of Atlanta, Georgia, and then in the Brazilian cities of Porto Alegre and Belo Horizonte. She has spent the past decade focused on issues including the governance of education policy and institutions, teacher education policy, undergraduate pathways, and workforce development, most recently as the senior director for higher education policy at the Center for American Progress (CAP). Prior to CAP, Dr. Hall worked with The Century Foundation and the University System of Maryland Office of Academic and Student Affairs.