The strength of the U.S. higher education system is its diversity. Americans have multiple pathways to extend learning beyond high school, pursue a fulfilling career, and earn a living wage. Most seeking higher education will choose a four-year higher education institution. In 2016-17, post-secondary institutions awarded 2 million bachelor’s degrees, vs. 1 million associate degrees and 945,000 nondegree certificates.
But while the bachelor’s degree still produces a good return on investment for the majority of students, many others seeking to enter the workforce are turning to alternative methods of securing credentials due to rising college costs and labor market changes that require new skills.2 Between 2000 and 2017, the number of certificates awarded below the associate’s level increased by 71 percent, a growth rate that outpaces every other post-secondary credential. Meanwhile, the National Skills Coalition predicts that nearly 50 percent of the job openings in the U.S. over the next several years will be middle-skill (requiring some post secondary education but not a four-year degree).
Most certificates or industry-recognized credentials are conferred by community colleges, private for-profit schools, industry associations and private certifying bodies. Certificate programs focus on specific occupational skills and are typically shorter in length than the two-year associate degree. In 2014–15, 24 percent of all credentials awarded by community colleges were certificates of less than one year.6 These programs vary greatly in length, but for students to secure federal student loans to pay for the credential, the program must be at least 300 hours of instruction during a minimum of 10 weeks. Similarly, to be eligible for federal Pell Grants, a form of need-based federal financial aid that currently can be as much as $6,195 annually and does not need to be paid back, certificate programs must be at least 600 hours or 16 semester credit hours over a minimum of 15 weeks. Graduate and professional students may use Pell Grants for programs as short as 300 hours and eight semester hours.
Certificates can be used as a standalone qualification to gain the skills needed to land a job or a promotion, or they can be used as a stackable credential on the path to a college degree or to supplement an existing degree. Professions with the highest use of certificate programs are in health care, the trades (construction, mechanic/repair technologies) and business and finance, with smaller percentages given out in STEM fields, personal care, public and social services, and teaching.
Although certificates and industry-recognized credentials can offer students a faster, cheaper track to career, these programs can still be out of reach for students with the greatest financial need. Recognizing that short-term certificate seekers often have no solution but to pay out-of-pocket or enroll in a longer than necessary program just to receive federal aid, in recent years there has been growing momentum among business leaders, higher education groups, student advocates and policymakers to expand Pell usage to shorter-term programs. But as of yet, Congress has not passed legislation to authorize the change, as they grapple with concerns about rapid expansion and quality of certificate programs, depletion of Pell surplus, reaching the limits of Pell eligibility, opening federal higher education financing to bad actors, and a host of other concerns. With the reauthorization of the Higher Education Act underway, it’s time to take a closer look.