Problem
Economic downturns are a good time for newly unemployed workers to reskill or obtain additional training. However, the same weak economic conditions make it difficult for individuals to finance postsecondary investments, and the two public policies that could facilitate such investments—federal financial aid and unemployment insurance—are poorly aligned. As a result, eligibility for financial aid does not match the current circumstances of the newly unemployed, and prospective students receive limited information about which programs of study have the best labor market outcomes.
Proposal
The author proposes an Enrollment for Employment and Earnings policy that would make income support and student financial aid available to unemployment insurance recipients, replacing Pell Grants and tuition tax credits for these individuals. Receipt of assistance would be conditional on satisfactory progress as well as completion of an enrollment choice module and academic and financial planning module, ensuring that students have the baseline skills to complete the program and the prospect of employment upon completion. In addition, states would develop a decision support tool to provide adult potential students with a clear comparison of costs, program duration, completion rates, and expected labor market outcomes associated with different postsecondary choices. Finally, federal support for postsecondary institutions would increase during recessions to meet rising demand.
Abstract
While periods of weak labor market demand and high unemployment may be a good time for newly unemployed workers to invest in their educations, the same weak economic conditions make it difficult for individuals to finance worthwhile postsecondary investments. The two types of public policies that could facilitate such investments—federal financial aid and unemployment insurance—are poorly aligned, making it difficult for newly unemployed workers to identify high-quality postsecondary options and to finance such investments. Current policy infrastructure presents newly unemployed workers with a complicated labyrinth that may contribute to missed opportunities for skill attainment and poor outcomes for those who do enroll. Recommendations for policy reconfiguration include: (1) Restructure federal financial aid for workers who experience job loss; (2) Provide systematic, customized guidance to help newly unemployed workers choose (and complete) postsecondary programs; (3) Limit access to postsecondary programs with poor performance. Not only are government institutions at the intersection of postsecondary and workforce policy in need of reform, but the evidentiary base is woefully inadequate to support the public and private investment. There is potential to not only improve outcomes for individuals through high return postsecondary programs, but to also increase the efficiency of federal and state expenditures by better aligning workforce and postsecondary policies.
