Published on 2013/09/16

Determining the Appropriateness of Public Funding for Non-Degree Students

AUDIO | Determining the Appropriateness of Increased Public Funding for Non-Degree Students
More public funding for non-degree programming is critical, but it is equally important for students to ensure they are finishing their programs and can translate their education into a job.

The following interview is with Stephen Rose, professor and senior economist at Georgetown University’s Center on Education and the Workforce. Rose’s main research is on the interactions between formal education, training, career movements and earnings. In this interview, Rose discusses the costs associated with earning different higher education credentials and the impact these costs can have on prospective and current students. He also shares his perspective on the present and future availability of financial assistance for non-degree students.

1. When considering financial assistance for students pursuing certifications and other forms of non-degree higher education, why do you think so little funding is made available?

Well, there’s two important divides in this space. One, in the U.S. context, there’s a thing called certificates which aren’t certifications. So, certificates are actually a degree program … and students in those programs are eligible for Pell Grants. Certifications aren’t course-based, they’re skill-based; they’re just examinations in which you pass or don’t pass. So, certificates: if you go to a public community college — which represents about half [of students] — then there’s not that much of a financial strain other than being in a program and not necessarily working full-time. So, you won’t be able to cover all your costs for making up any lost earnings.

The other half go to for-profit schools — technical and business schools — and they’re much more expensive because they’re not subsidized as much. Therefore, even though they’re eligible for Pell Grants, the students are taking on loans. So, that opens them up, obviously, to more financial problems if they don’t get a good job or if they quit early. So that’s a big problem.

And, then, certifications are a different ball of wax in that, often times, there’s a training program associated with that — and those aren’t eligible for Pell Grants — so therefore they’re mainly paid by the students and many fewer students just take courses or they just do some online thing. Some of the certifications are things like automotive safety excellence (ASE), which is something where if you go to a garage in the United States, you’ll see these little signs up, ASEs, and they only apply for about five years. They have to be retaken. … There’s a lot of on-the-job learning there. And, again, these aren’t eligible for financial assistance.

2. Especially when we’re talking about certifications, what impact does the lack of financial assistance have on non-traditional students pursuing higher education?

It’s hard to know. A lot of people go out and take the chance. I don’t know how much is holding them back. There are some estimates but we don’t have natural experiments. …

Another important thing in this space is that opposed to a two- or four-year degree which kind of gives you some general skills, getting a certificate and a certification is very specialized and, therefore, you don’t have a lot of general learning and skill acquisition. What that means is it’s very important to be placed in the field in which you’ve trained. And that, by the way, is only in the level of about just over 50 percent get placed in the field, so it’s important to not only finish a program — that’s the first hurdle; finish the program — the second hurdle is to get placed.

We’re trying to get more data on the basis, per program, in each of all the institutions that offer these kinds of trainings, to give students information to encourage institutions to realize if some of their programs aren’t successfully placing their students. … Especially for-profit institutions, they have high default rates on their loans and this puts a lot of pressure on students because, as opposed to other loans, student loans aren’t like that in bankruptcy.

It’s not so much getting the aid, it’s making sure you can repay the aid that is much more of a negative effect in this space and, unfortunately, a number of people who drop out and they’ve gone to a for-profit school, or if they don’t get placed, will be put in a bad situation.

3. Along the same lines, do you think increased amounts of funding should be made available for non-degree students to pursue higher education?

That’s an interesting question and how much is appropriate and how you should use your funding.

We subsidize public schools — public two-year schools — a lot. And, so, to the degree that students are able to go to public two-year schools, I don’t think they need more funding, especially if they get Pell Grants.

But, in the midst of this financial crisis, states haven’t increased this funding and that means that many of the programs are either full or you can’t get the classes you when you want and so students end up going to private, for-profit schools.

Now, private, for-profit schools are very consumer oriented. They have a lot of success in getting students through, but they spend a lot of money recruiting students and are making a fair amount of profit. And, so, you have a problem here and it’s kind of like ‘feast or famine’ with the private non-profits. When it works well, a number of these students really advance and their costs are really paid off. But when it doesn’t work well — if they don’t finish or if they don’t get placed or if they’re really in a very low-paying thing, like cosmetology — then students can be put in a bad situation and giving them more money isn’t necessarily  what’s going to make it more effective.

So, if we were to spend more money in this space, I think that what we should do is stop the trend of getting less funding for the public programs.

4. Are there are any other steps that you think could be taken to reduce costs for students when it comes to non-degree programming?

The non-degree programming in the public space is quite cheap; a couple of thousand dollars a year and sometimes that’s covered by the Pell Grant. In some studies, the average net cost is negative because the program is even bigger than the tuition and fees. Now, mind you, the Pell Grant is also supposed to — in cases where students aren’t working — support living expenses. This is not inappropriate and Pell Grants are tapped off at $5,400 so it’s not like they’re super generous either.

So, I don’t think that in that regard, there’s that much room for reducing the cost, given how much subsidies there are and a lot of these programs really aren’t dealing with tenured faculty that have PhDs, so they tend to be pretty bare-boned things. In the for-profit sector now, they are pretty bare boned also, but their motto is, “Recruit a lot,” so estimates are they spend close to, certainly, over 20 percent on just recruitment and then of course they’re doing this to make money, so it’s probably having a 10 to 20 percent surplus on it. So it’s not the cost per se, it’s the recruitment and profits — because they’re not subsidized — that drag the prices to be where they are.

5. Is there anything else that you’d like to add about the costs that non-traditional students incur when enrolling in higher education institutions, specifically for non-degree programming, and the types of funding that might be made available to them to reduce those costs?

This is a space in which, more and more, older people are coming back. They’re coming back often times after they have gotten another degree. Relatively small numbers even have a BA and larger numbers have an [Associate of Arts degree].

So this is something that is very useful for our economy; to retool people in the midst of change. In the midst of this environment in which funding has gone down, that puts more pressure on the students, and makes it harder for more people to do that and these really should be considered as an investment.

It’s likely to have a fairly sizeable pay off so, I think, the main issue in this space to make sure it works more effectively is to encourage more public funding.

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Readers Comments

Yvonne Laperriere 2013/09/16 at 7:43 am

I don’t understand the argument for more public funding for certificate students. It seems the programs Rose is talking about are aimed at mid-career adults. If so, they should be able to fund most, if not all, of the program on their own. It’s not cheap, for sure, but it’s also significantly lower than the cost of an undergraduate degree.

Cindy Lauer 2013/09/16 at 11:10 am

I agree with Rose’s point that there is no clear answer right now for the most effective funding formula. Instead, institutions should take up Rose’s suggestion to conduct “natural experiments” — perhaps focus groups, or surveys with outgoing adult students — that aim to track these students’ career trajectories and objectives for seeking non-degree programming. Only then will we be able to say more definitively how we should fund this type of education.

Kendra Willis 2013/09/16 at 4:54 pm

Rose presents an inaccurate analysis of why costs can be so high among for-profit schools. It’s true they are looking to turn a profit, but to suggest these schools attach high premiums to the cost of programming just to make a buck is rather unfair.

One needs to consider that many for-profit schools receive no state funding whereas their public counterparts are often heavily subsidized. In cases where for-profits are left on their own, the tuition they charge goes toward not only the student’s program, but to overall school operations. Comparing public and for-profit schools is like trying to compare apples to oranges.

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