Department of Education Panel Reaches Agreement on Proposed Workforce Pell Grant Regulations

Last week, the Department of Education (ED) began negotiated rulemaking, a process ED uses to review and seek stakeholder consensus on proposed regulations, with the Accountability in Higher Education and Access through Demand-driven Workforce Pell (AHEAD) Committee. In its first of two scheduled week-long negotiating sessions, the AHEAD Committee considered ED’s proposed regulations to implement changes Congress made to the Pell Grant program, primarily the extension of Pell Grants to short-term job training programs. The AHEAD Committee is the second rulemaking committee tasked with implementing the higher education provisions included in the 2025 budget reconciliation law, the One Big Beautiful Bill Act (H.R.1). Our summary of the student loan and repayment changes approved by the Reimagining and Improving Student Education (RISE) Committee is available here.

Despite an unorthodox process that shortened consideration of the Pell related issues to only one of the two scheduled weeks of negotiation, the AHEAD negotiators were able to reach consensus on ED’s modified regulatory package, with all committee members giving the regulations a thumbs up vote except for the negotiator representing state higher education officers and regulators, who abstained from voting. ED will issue a proposed rule for public comment that matches the agreed-upon text. ED will likely publish that rule in early 2026 and allow 30 days for written public comment before publishing a final rule that will take effect on July 1, 2026.

As with the RISE Committee, ED again refused to permit students, federal loan borrowers, or members of the public to give oral comments to the AHEAD negotiators. Despite three student veterans travelling from out of state to be present on the first day of the negotiating session, ED did not permit the negotiators to hear about their experiences.

The topics laid out below were the primary areas of discussion between negotiators and the Department over the course of the week.

Topic One: Ineligibility for Federal Pell Grants Due to Receipt of Non-Federal Financial Assistance

ED’s regulatory proposal included one change to the Pell Grant program unrelated to implementing Workforce Pell. H.R.1 excludes students who receive nonfederal grant aid in excess of their cost of attendance (i.e., tuition and fees and all non-tuition costs of attendance including room, board, books, etc.) from also receiving Pell Grants. ED’s initial proposal specified that if a student has received their entire Pell Grant award in addition to nonfederal assistance, such as grants or scholarships, that exceeds their exact cost of attendance, institutions must either reduce the nonfederal assistance to below the cost of attendance or return all Pell funds the student received during the award year.

Negotiators representing nonprofit and for-profit colleges raised concerns about the challenges institutions would face if required to monitor students’ aid throughout the award year, as students may receive additional scholarships or grants after the school has disbursed their Pell award. Negotiators representing enrolled students, veteran and military students, and legal assistance organizations representing students asked ED to further clarify the types of nonfederal assistance included in this provision. In response to negotiator concerns, ED specified that emergency assistance and state subsidies that reduce cost of attendance are excluded from financial aid calculations for this purpose. The Department also updated its regulatory proposal to clarify that institutions must either reduce nonfederal aid or return all Pell Grant funds and cancel future Pell disbursements for that award year if the institution becomes aware that a student’s aid exceeds cost of attendance prior to their final Pell disbursement for the award year.

Topic Two: Workforce Pell Overall Administration, Structure, and Limitations

This section of the regulation focused on how Workforce Pell Grant programs will be defined, approved, and administered within existing Title IV (federal financial aid) structures. ED clarified that Workforce Pell Grant awards are Pell Grants with different eligibility criteria, not a new funding instrument, and that institutions must apply for state and federal approval before packaging aid, with no self-certification allowed.

Several provisions addressed program structure and institutional partnerships. Negotiators deliberated on ED’s proposal to limit instruction provided by unaccredited, non-Title IV-eligible entities to 25 percent, which would apply when an outside organization controls course design, administration, or instruction. ED intended the limit to balance risk management with flexibility for programs that might benefit from such partnerships, such as truck driving or clinical training. Although several negotiators wanted changes to that percentage (for example, the representative of proprietary institutions wanted to allow schools to outsource more than 25 percent of their programs while the legal aid negotiator argued that schools not be permitted to outsource any part of their program), ED kept the limit at 25 percent.

ED also confirmed that eligible Workforce Pell programs are subject to the existing Gainful Employment (GE) accountability framework. For program eligibility, ED clarified that Workforce Pell programs may be noncredit clock-hour programs but may not be noncredit credit-hour programs, and that remedial coursework cannot be added to credit-hour programs. Accreditation and state authorization remain required, and programs must be included within an institution’s accredited scope.

ED also clarified student eligibility and payment rules, stating that individuals with bachelor’s or first professional degrees may be eligible for Workforce Pell if they have not earned a graduate credential and are not enrolled in a graduate-level program. Negotiators raised questions about how this could affect earnings metrics used for eligibility, as well as how graduate credentials are defined. ED also confirmed that Pell Grants cannot be paid concurrently for enrollment in a Workforce Pell program and another Title IV program, even under consortium or written arrangement scenarios.

Topic Three: Workforce Pell Grant Defined Terms

The committee discussed how to define key Workforce Pell Grant terms in the regulations and how to align those definitions with existing federal workforce statutes, particularly the Workforce Innovation and Opportunity Act (WIOA), while allowing states flexibility in implementation. Questions centered on the definition of a “recognized postsecondary credential,” especially for nondegree programs, with ED clarifying that eligible programs must culminate in one of the credential types specified in regulation. ED declined to define “stackability” at the federal level, noting that WIOA assigns this responsibility to states with Department of Labor (DOL) guidance, though ED indicated openness to clarifying language on oversight and consistency. ED also confirmed that program tuition and fees include all mandatory charges, both general and program-specific.

Registered apprenticeships and industry-recognized credentials were a focus of significant discussion, and ED clarified that the regulatory text refers only to apprenticeships that are registered under DOL regulations in 29 CFR Part 29. DOL confirmed that registered apprenticeships lead to a certificate of completion, which qualifies as a recognized postsecondary credential, and that required related technical instruction hours may be distributed across the year rather than delivered consecutively. DOL further clarified that institutions are not required to directly award the credential, as eligible programs may prepare students to obtain industry-recognized credentials or licenses. Participants raised concerns about consistency across federal definitions used by ED, DOL, and ED’s gainful employment rule; ED acknowledged differences while reiterating its intent to maintain alignment where possible.

Topic Four: Process for State Governors to Approve Workforce Pell Grant Programs

Negotiators discussed regulations outlining the role of state governors in determining whether workforce programs meet statutory requirements prior to ED’s evaluation. Governors, in consultation with state workforce boards, must determine whether programs align with high-skill, high-wage or in-demand occupations, meet employer hiring requirements, lead to a recognized postsecondary credential that is either stackable and portable or a single recognized credential, and prepare students for further education through transferable credit or applicable program requirements. Governors must also establish and publish a formal process for making these determinations, including the state’s methodology for defining high-skill, high-wage occupations, policies for assessing employer hiring needs and competencies, consideration of registered apprenticeship programs, criteria for stackable and portable credentials, and standards for academic credit awarded at the completion of the program to be accepted in a subsequent program through written agreements, such as an articulation agreement.

Participants asked how this approval process would function alongside existing higher education authorization systems and workforce governance structures. ED explained that states will continue to operate under current authorization frameworks and may choose which agencies—such as workforce boards—review Workforce Pell programs, as long as the process is clearly documented. DOL emphasized the importance of preserving state flexibility, including in defining “real-time” labor market information, stackability, and portability. The negotiator for state grant agencies raised questions about changes in gubernatorial leadership leading to changes in state-level program approval and the absence of explicit grandfathering provisions for students if a program loses eligibility across administrations; ED responded that existing Title IV rules allow currently enrolled students to continue receiving aid if a program loses eligibility.

Negotiators raised concerns about states’ capacity to produce wage and labor market data, the feasibility of guaranteeing transferable credit—especially for noncredit providers—and how stackable and portable credentials should be defined as labor markets evolve. ED acknowledged these challenges, noted limits on available funding, and expressed openness to clarifying language through regulation or guidance. ED and DOL reiterated that transparency requirements and documented state policies are intended to mitigate arbitrary decision-making while preserving state discretion.

Topic Five: Process for Secretary of Education to Approve of Workforce Pell Grant Programs

Per H.R.1, the Secretary of Education must determine that an eligible Workforce Pell program: (i) has been offered by the institution for at least one year, (ii) for each year, has a verified completion rate of at least 70 percent within 150 percent of normal completion time, (iii) for each year, has a verified job placement rate of 70 percent measured 180 days after program completion, and (iv) that the program’s tuition and fees do not exceed its value-added earnings.

Acknowledging that not all institutions and states will have the necessary data infrastructure to inform these determinations when the Workforce Pell program takes effect on July 1, 2026, ED proposed using flexible definitions for the completion and job placement rate requirements in 2026-27 and 2027-28 before requiring programs to meet more specific standards in 2028-29 and beyond. In 2026-27 and 2027-28, programs would need to demonstrate a 70 percent job placement rate overall; in 2028-29 and after, 70 percent of students must be employed in the occupations for which the program prepares students or in a comparable high-skill, high-wage, or in-demand occupation as determined by the Governor.

Negotiators representing nonprofit institutions students, state higher education executive officers, state workforce boards, and accrediting agencies expressed concerns about the job placement rate measurement, particularly for students who pursue a stackable credential immediately after completing the Workforce Pell program. They argued that because H.R.1 specifically requires Workforce Pell programs to prepare students to pursue one or more additional certificate or degree programs, job placement rates should exclude enrolled students rather than counting them as not working. Additionally, negotiators representing legal assistance organizations and taxpayers pushed ED to further define “comparable occupation” to reduce ambiguity for students, institutions, and states.

In response to this feedback, ED extended the relaxed job placement rate calculation requiring programs to meet a 70-percent job placement overall rather than a 70-percept occupation-specific job placement rate through the 2028-29 academic year. ED also clarified that students are excluded from the job placement rate calculation in the following circumstances: dying, facing the onset of a medical condition that prevents employment, being ordered to military service for more than thirty days, and becoming incarcerated. Despite negotiator concerns, the Department felt an exclusion for full-time enrollment did not align with Congressional intent given the employment-oriented goals of Workforce Pell. ED offered the same rationale against excluding all incarcerated and disabled individuals from job placement rate calculations.

Topic Six: Value-Added Earnings Requirement Calculation

The Secretary’s determination of program eligibility for Workforce Pell includes the evaluation and publication of what H.R.1 calls “value-added earnings,” which calculates the difference between the median earnings of students who are working, received a Pell Grant for enrollment in the program, and completed during the applicable cohort period (adjusted by state and metro area price parities) and 150 percent of the federal poverty line. Institutions must set a program’s tuition and fees at or below its value-added earnings. Programs with value-added earnings of zero or less are ineligible for Workforce Pell Grants.

ED’s initial proposal outlined the process by which institutions would measure the completer cohorts used in the value-added earnings calculation. Cohorts would include at least fifty students who completed in the award year three full award years prior to the award year for which value-added earnings is being calculated. If a program has fewer than fifty completers in the prior three years, the Secretary would add completers from additional prior years until the cohort reaches fifty completers. ED also clarified that the value-added earnings calculation aims to limit the tuition of individual workforce programs, not the tuition of all programs at an institution.

Negotiators representing nonprofit institutions and employers expressed strong concerns that ED’s initial draft language describing the value-added earning calculation could inadvertently cause completers to have their wages assessed based on income data captured before the three-year post-completion timeline required by H.R.1. The negotiator representing taxpayers also noted that because the value-added earnings calculation measures earnings three years after completion (i.e., value-added earnings can first be calculated in the 2029-30 award year based on students who completed during the 2026-27 award year), programs could potentially receive Workforce Pell Grants for several years even if they do not deliver value-added earnings. Negotiators representing state workforce boards and state grant agencies flagged the burden states would face to report this data, especially with respect to students employed outside the state where the institution offering the Workforce Pell program is located.

To address these concerns, ED clarified it will measure value-added earnings for the award year that ends three full award years prior to the beginning of the award year for which value-added earnings are being determined. The Department also specified that the earnings measurement period corresponds to the first full tax year following the award year in which the student completed the eligible workforce program (e.g., ED will use 2028 tax year data to measure the earnings of student who completes in December 2026 during the 2026-27 award year). If more than fifty percent of a program’s students are not located in the state in which the institution is located, ED will not adjust the program’s median earnings by state and metropolitan area regional price parities and committed to requesting additional information from states to better understand and support the earnings data collection process.

Topic Seven: Losing and Regaining Eligibility to Participate in Workforce Pell Grant Program

The committee addressed proposed regulatory provisions related to institutions’ programs losing and regaining eligibility for Workforce Pell Grants. Under this section, a program will become ineligible at the end of the payment period following the Governor’s withdrawal of approval or failure to reapprove a program or the Secretary of Education’s determination that the institution failed to meet the completion or job placement rate requirements. Also, if tuition exceeds the valued added earnings, a program loses eligibility at the beginning of the award year following the release of the value-added earnings, even retroactively. The Department’s negotiator made clear that ED intends to assess liabilities against schools for Pell Grant funds disbursed during the award year for which the value-added earnings were calculated.

A school that loses eligibility may not seek to reestablish the failing program or establish a “substantially similar” program until two years after the loss of eligibility or the date that the school discontinued the program. Based on feedback from various negotiators including those representing legal assistance organizations, taxpayers, and state higher education executive officers, ED agreed to add language clarifying that “substantially similar” includes programs with the same 4-digit Classification of Instructional Program (CIP) code and identical Standard Occupational Classification (SOC) codes according to the CIP SOC Crosswalk. Many negotiators and ED agreed that this language will prevent institutions with failing programs from “gaming” the system by establishing eligibility for a similar program.

Looking Ahead

Following the successful consensus vote, ED must release a proposed rule, accept and review thousands of comments, and publish a final rule well in advance of July 1, 2026. States will then need to set up processes to implement the Workforce Pell Program, at the same time that institutions are seeking to obtain eligibility.

ED will convene the same group of negotiators again from January 5 through January 9, 2026, to discuss institutional and programmatic accountability metrics during the second half of the AHEAD Committee. TICAS will publish another recap blog after the completion of that session.

To view materials provided to the committee and the public, visit the Department of Education’s negotiated rulemaking website.