In recent years, policymakers and researchers have given new attention to the value of short-term postsecondary certificate programs that promise students better job placement and earnings. But a subset of “very short” programs, which typically require less than 600 hours and offer technical certificates in professions like cosmetology and truck driving, have largely flown under the radar. In August, the Brookings Institution published a new report that considers these quick programs and finds that earnings potential for graduates is shockingly low. This raises alarms for watchdogs, since the programs can access federal student loans under the Higher Education Act, and current proposals could expand their access to include Pell Grants.
“I’m worried that students will invest their time, invest their resources, and take on debt without getting the earnings gains that we expect from other types of college programs,” said Stephanie Riegg Cellini, a professor of public policy and economics at George Washington University who co-authored the report. Cellini used data from the Department of Education to learn more about quick college programs, how many are accessing federal student loans, and the outcomes they provide for students. She pointed, as an example, to cosmetology, the largest field in the study, whose programs often lead to job placement in unlicensed positions like nail technician; short-term cosmetology programs all report average earnings of less than $25,000. Findings like these demonstrate the serious risks of opening up Pell Grants to these programs. We spoke to Cellini about her research and the measures policymakers can take to protect students.
This conversation has been edited and condensed for clarity.
Arnold Ventures
We hear a lot about “short-term” programs, and it’s not always clear what that means. What kinds of programs are you looking at?
Stephanie Cellini
There are many different types of short-term programs, but for this project I’m looking at very short programs that require between 300 and 600 clock hours, with a minimum of 10 weeks required for completion. You can think of them as maybe a semester long — under a year. The programs are all in vocational fields, like truck driving, cosmetology, and welding and these particular programs are eligible to get federal student loans for their students.
Arnold Ventures
There’s not very much research on the impacts of these types of programs. Why is that, and how were you able to do this project?
Stephanie Cellini
These programs fall under different rules in the Higher Education Act than most other Title IV programs, so they’re not separately identified in most public datasets. I began this project by focusing on the one provision in the Higher Education Act that specifies how these types of very short programs can access loans. When these programs apply for federal student loans, they have to self-report job placement and completion rates. I asked for those data through a Freedom of Information Act request to the Department of Education. Then I cross-checked those data and merged them with other public datasets, like the one for the gainful employment rule.
Arnold Ventures
Your research shows that a lot of these short-term programs would fail even a quite low accountability measure based on graduates’ earnings.
Stephanie Cellini
In the study, I found that average earnings for these programs were pretty low at about $24,000 a year. One thing that policymakers have been talking about is an earnings benchmark where one might compare the earnings of graduates to the earnings of young adults with only a high school diploma. I went ahead and tried to make that comparison using a very low benchmark of about $25,000 per year, which is the current average for high school dropouts and about 200% of the poverty line. About 70% of the programs I looked at would fail the very low benchmark of $25,000, and about 96% of those programs are in the for-profit sector.
Arnold Ventures
How do you think policymakers should take these findings into account?
Stephanie Cellini
That’s a tough question that a lot of people are interested in answering right now as the Biden administration looks toward either reinstating or changing the gainful employment rule that was instituted under the Obama administration. An earnings benchmark could be added to other measures, such as earnings-to-debt ratios, or other potential metrics based on loan repayment. If these institutions are getting federal money for postsecondary education, and if students are taking out federal student loans under Title IV of the Higher Education Act, then it seems fair that students who complete these programs should make at least what a high school graduate would make — and hopefully more.
Arnold Ventures
You also found that job placement rates are basically not related to graduates’ earnings.
Job placement rates really caught my eye, because they’re one of the benchmarks used to allow these very short programs to access federal student loans. They can easily be manipulated by schools, since they are essentially self-reported and each individual school can determine what qualifies as a “placement” in their field. For example, a school could say that working at a cash register or being a receptionist at a salon is a job placement for a cosmetology student, even though that job has very little to do with the nail technician program that a student completed. This makes job placement rates incredibly difficult to use for accountability. It can also be very misleading for students, who are using job placement rates as an indicator for quality, when in fact they can be gamed.
Arnold Ventures
What does that mean for policy?
Stephanie Cellini
The rules that govern participation in federal student loans for these very short programs need to be adjusted, or we should consider strengthening accountability for these programs. Right now, it seems like they’re flying under the radar and not subject to existing accountability metrics. One big finding from my research is that the 70 – 70 rule, under which programs’ job placement and completion rates must be above 70%, is not reliable for accountability. In terms of students’ earnings, some of these programs should be held to the earnings and debt thresholds of the gainful employment rule, but they didn’t appear in those data because they are so small and therefore exempt. We need stronger metrics, potentially related to earnings. These programs continue to get federal student loans and there is some discussion about providing short-term Pell grants for these programs in the future. We need strong accountability policies in place to ensure that students get value from the programs that they enter.
Arnold Ventures
In what ways are students affected negatively as a result of these programs failing to provide strong earnings potential?
Stephanie Cellini
It worries me that students’ earnings are so low after they attend. They’re also spending their time, which is valuable. If they are paying out of pocket, they’re spending their own hard-earned money to attend a program, but in the end they might not reap the benefits that they were hoping for — or that they had been promised. They may be taking on some federal debt, and there may be other types of debt that we’re not seeing, which may come with very high interest rates.
Arnold Ventures
Some might argue that even if these programs’ graduates have low earnings relative to others, the programs could still be helpful, especially if graduates are earning more than they did before. What do you think?
Stephanie Cellini
If we had data on the earnings of each student before and after they attended college, then we could compare those before and after earnings to get a measure of the benefits that students are gaining from attendance. But getting data on the earnings of students before they attend college is very difficult. I have done that in other research and been able to see more detailed outcomes. But without those data for very short programs, we just don’t know what they were making before. The proposed earnings benchmark in my report is an effort to get at that question. I use the $25,000 average earnings of a high-school dropout as a stand-in for the “before” earnings of a typical student, and I compare it to the average post-college earnings of graduates of these programs. I’m trying to mimic what I would do if I had more data.
Arnold Ventures
What impact do you hope your report will have?
Stephanie Cellini
The report has several goals. I wanted to raise awareness of these very short-term programs. A lot of us in the higher education research community weren’t really paying attention to these programs in the past, and we didn’t have a good count of them. I wanted to find out how many there were, look at the patterns over time, and think through accountability for them in the future, especially because they’re getting access to federal student loans and might get access to Pell grants. Another major goal was to compare and contrast the current accountability metrics with the proposed accountability metrics of gainful employment, and then to think through additional metrics that could be useful in regulating these institutions and programs in the future. Ultimately, we want to protect both students and taxpayers.
