Workforce Pell Negotiated Rulemaking Recap
The committee reached consensus; here is where everything landed.
Photo of the negotiated rulemaking committee consensus vote by Wesley Whistle.
After five intense days of negotiated rulemaking—compressed into a single week, despite the scale of the policy changes—the U.S. Department of Education and negotiators reached consensus on the full Workforce Pell regulatory package. While many issues will continue to spark debate in the months ahead, the consensus package now provides a clear picture of how Workforce Pell programs will function under the regulations that will be presented in the Notice of Proposed Rulemaking (NPRM).
As promised, this newsletter breaks down where the major provisions ended up and what they mean for states, institutions, employers, and—most importantly—students.
Requirements for an Eligible Workforce Pell Program
As a reminder, to be an eligible Workforce Pell program under the law, a program must meet all statutory requirements:
150–599 clock hours;
8–14 weeks in length;
Training aligned to high-skill, high-wage, or in-demand occupations;
Must articulate into a related certificate or degree at the same or another institution;
Must lead to a recognized postsecondary credential; and
Programs must have been operating and meeting all criteria for at least 12 months before approval.
Under the law, workforce Pell programs must show completion and job placement rates of at least 70 percent. Additionally, programs must pass a value-added earnings test. Under this test, the “value-added earnings” students receive must be greater than the published tuition and fees of a program, with the definition of value-added earnings being the median earnings of completers of a program minus 150 percent of the federal poverty line. (These metrics are discussed in further detail later.)
Governor Approval: A State-Centered Quality Gate
States play a front-line role in ensuring Workforce Pell programs advance state and local workforce goals. Under the law and proposed regulations, each state’s governor must approve any Workforce Pell program.
What Governors Must Determine
Governors must certify that the program:
Prepares students for high-skill, high-wage, or in-demand occupations as defined by the state (in line with Perkins and WIOA);
Meets employer hiring needs;
Awards academic credit that meaningfully applies toward a related credential;
Has met all requirements for the prior 12 months.
Transparency and Equity Requirements
To carry out the state role, the regulations provide that states must establish transparent, consistent, and equitable approval procedures and make those processes public.
High-Skill, High-Wage, or In-Demand
The regulations also require governors to base their approval decisions on each state’s own definitions of high-skill, high-wage, or in-demand occupations—definitions that already exist under Perkins and WIOA. This means Workforce Pell programs must directly align with the state’s established economic and workforce priorities rather than a generic or federally defined list. Not every state has defined these terms, so it will be important for states to be thoughtful when doing so.
States must also review and update these determinations regularly, not less than every two years, in sync with their WIOA state plan cycle, ensuring that their Workforce Pell approvals reflect current labor market data, emerging industries, and evolving employer needs. In practice, this creates an ongoing responsibility for states to maintain accurate, data-driven workforce demand assessments as the foundation for approving and monitoring Workforce Pell programs.
Required Articulation Into Credit
The law requires that programs articulate into academic credit for a student to pursue a related certificate or degree. It says that the Governor must determine that each program:
“prepares students to pursue 1 or more certificate or degree programs at 1 or more institutions of higher education (which may include the eligible institution providing the program), including by ensuring—
“(aa) that a student, upon completion of the program and enrollment in such a related certificate or degree program, will receive academic credit for the Workforce Pell program that will be accepted toward meeting such certificate or degree program requirements; and
“(bb) the acceptability of such credit toward meeting such certificate or degree program requirements; and”
Building on that statutory requirement, the regulations establish a clear, enforceable expectation that Workforce Pell programs must articulate into academic credit, ensuring that they are genuinely aligned with Congress’s vision. Under the final consensus language, states must verify—through written agreements such as articulation agreements, transfer-of-credit agreements, consortia agreements, or similar documented arrangements—that the academic credit earned in a Workforce Pell program will be accepted either by the same institution or by one or more other institutions. This shifts the expectation from aspirational to concrete: institutions must be able to demonstrate, in writing, that students can build on their short-term credential toward further education.
At the state level, there is an opportunity to strengthen this by ensuring that the credit articulates into a related program and it meets those requirements so students don’t just receive elective credit, but actually are making progress toward another credential.
Completion and Job Placement Rates (The 70/70 Rule)
The law requires the Secretary to verify this, but the regulations make this the job of the states. There are two good reasons why this is the case. First, unlike the Department, states will be able to calculate these rates for all students, not just those who receive Workforce Pell grants. Second, when calculating job placement, states have better administrative data that will make this requirement more meaningful.
In the discussion around the job placement rate calculation, many negotiators wanted to ensure that certain students were excluded from the calculation. Based on the language that reached consensus, the only students who are excluded as those who die, develop a documented medical condition preventing work, or are called to active-duty military service. The Department rejected calls to exclude students who continue their education. To many, including myself, this was a reasonable ask, given that the law had requirements to ensure students could continue their education.
In the early years of Workforce Pell implementation, the job placement rate calculation will operate under a transitional structure. During the first few years, states may rely on less granular occupation-specific job placement data as they build the technical capacity to calculate program-level placement rates aligned to each approved high-skill, high-wage, or in-demand occupation. This on-ramp recognizes that not all states currently have the infrastructure to generate occupation-specific placement metrics immediately.
At the same time, the regulations allow states to use their existing administrative data systems and gradually phase in the full requirements. States must still calculate completion and job-placement rates each year, but the methodology is more flexible early on, and states may continue using the simplified method through the 2028–29 award year if they demonstrate progress toward full implementation. After that point, states are expected to meet the more rigorous standard, providing job placement rates tied specifically to the occupations for which each program prepares students.
This phased approach gives states time to update data systems, clarify agency roles, and align Workforce Pell oversight with WIOA and Perkins processes, while still ensuring that programs are held to meaningful performance expectations from the start.
Approval for Out-of-State Online Programs
The proposed regulations addressed the issue of out-of-state institutions offering online Workforce Pell programs to students in another state. As I mentioned in my earlier recaps of the negotiating rulemaking committee, there were questions about whether a governor’s approval of a program in the institution’s state allowed them to enroll students in another state via distance education. Some argued that state authorization for distance education, either through direct authorization or through a state authorization reciprocity agreement, would allow institutions to offer these programs out of state.
Luckily, the Department and negotiators landed in the right place. The proposed regulations on which the committee reached consensus require that governors must approve all distance education Workforce Pell programs for them to enroll students located in that state through distance education. This is in line with the intent of the law, and the language recognizes that program approval differs from state authorization.
However, the regulations did make it easier for states to have some reciprocity, which might make sense for border states where there is fluidity across lines in terms of workforce and economic need.
Secretary Approval: The Federal Quality Screen
Under the Workforce Pell regulations, the Secretary of Education serves as the second and final gatekeeper before a program becomes eligible to receive federal Workforce Pell funds. After a governor approves a program, the Secretary conducts a federal review to verify that the program has met all statutory and regulatory requirements for at least the prior 12 months. The Secretary also reviews documentation from institutions and states to ensure programs adhered to these requirements consistently—not just at the moment of application.
Value-Added Earnings
The Secretary is also responsible for overseeing the value-added earnings (VAE) test. The regulations require the Department to use federal earnings data and determine whether a program’s tuition and fees exceed the program’s demonstrated economic value. If tuition surpasses VAE, the program becomes ineligible.
The regulations measured earnings differently than most had envisioned. The comparison of VAE to tuition is done based on the cohort of students who completed three years prior, but the earnings are measured for graduates one year after completion. So, for example, the cohort of students who complete in year 2026 would have their earnings measured in 2027, and the VAE calculation and comparison to tuition and fees would be done in 2029.
This likely makes this a higher bar because those students will have less time in the labor market. However, research shows that very-short job training programs often show an earnings boost one and two years after completion, but that boost often levels out or fades.
Loss and Restoration of Eligibility
Failing Completion and/or Job Placement Requirements
When Workforce Pell programs fail either the completion or job placement rate requirement, the program is subject to loss of eligibility. Once a state submits its rates and the Secretary confirms that a program has fallen below either threshold, the program becomes ineligible for Workforce Pell funds. Importantly, the Department will not take action while an appeal is pending at the state level, but once a final determination is made, the Secretary may also assess institutional liability for Pell funds disbursed during the award year in which the program failed, ensuring that programs cannot continue drawing federal dollars while performing well below statutory expectations. This was a win for taxpayers.
Programs that lose eligibility face a two-award-year waiting period before they may reapply. The institution also cannot apply for program eligibility for a program that is “substantially similar” to the one previously deemed ineligible, preventing institutions from circumventing accountability by renaming or minimally altering unsuccessful programs. This safeguard ensures programs cannot evade consequences and that students are protected from cycling into rebranded versions of offerings that failed to produce meaningful labor-market outcomes.
Failing the VAE Requirement
When a program fails the VAE requirement, the consequences operate on two levels: immediate limits on student charges and, ultimately, loss of Workforce Pell eligibility if the issue persists.
First, once the Secretary determines that a program’s tuition and fees exceed its value-added earnings, the institution must immediately lower its tuition and fees to no more than the VAE figure for any future students. If the school continues charging above that amount—or if ED discovers that it has done so—the program becomes ineligible for Workforce Pell for the entire award year, retroactive to the beginning of that year. This protects students from programs that cost more than the economic value they provide and prevents institutions from raising prices once they know their VAE results.
If a program fails the VAE test for the award year and the Secretary confirms the result, the program also becomes subject to the loss-of-eligibility framework. That means the program is removed from Workforce Pell, and institutions may be held liable for Pell funds disbursed during the year in which the failing VAE determination was made. Institutions must then wait the required two award years, improve the program, and reapply with evidence that it now meets all Workforce Pell requirements—including setting tuition within the VAE limit—before eligibility can be restored
Limits on Outsourcing
The Workforce Pell regulations establish strict limits on outsourcing to protect students from low-quality instruction provided by unaccredited or unvetted third parties. Under the rules, an ineligible entity may not provide more than 25 percent of a Workforce Pell program through a written arrangement. This cap ensures that institutions maintain direct responsibility for designing and delivering the bulk of the instructional content—critical for quality control, faculty oversight, and student protections.
In practice, this framework prevents institutions from handing off large portions of instruction to unaccredited partners, OPMs, staffing firms, or bootcamps without meaningful oversight. It also helps ensure that Workforce Pell dollars do not flow to entities that Congress never intended to participate in Title IV.
What Happens for Registered Apprenticeship Programs
Under the regulations, Registered Apprenticeship (RA) programs can participate by only counting the related technical instruction (RTI) components of the apprenticeship. However, that program must meet all the other requirements, except for one. These requirements include completion, job placement, and that the program leads to a recognized postsecondary credential. Again, the RTI has to be able to meet these requirements on its own outside of the full Registered Apprenticeship program. The one exception is that Registered Apprenticeship programs automatically meet the statutory requirements around “high-wage, high-skill, or in-demand. As promised, later this week, I will be releasing a piece going deeper into this issue specifically.
What Happens Next: The NPRM and the Department’s Obligations After Consensus
Reaching consensus during negotiated rulemaking has important legal consequences. Because the committee agreed on the full Workforce Pell regulatory package, the Department is now required under the Higher Education Act and ED’s negotiated rulemaking procedures to use the consensus language as the basis of its Notice of Proposed Rulemaking (NPRM).
What ED Must Do in the NPRM
When consensus is reached:
ED must publish the exact agreed-upon regulatory text (or language that is consistent with it) in the NPRM.
ED cannot make substantive changes to any consensus provision in the NPRM unless the change:
is necessary to conform to law,
corrects a technical or drafting error, or
implements something the negotiators clearly intended but did not perfectly capture in text.
This means the NPRM you’ll see later in 2026 will track very closely to the consensus package negotiated last week.
What ED Can Change in the NPRM
Even with consensus, ED still has technical flexibility:
ED may reorganize, clarify, or clean up language so long as the policy substance remains the same.
ED may add preamble explanations that guide interpretation or implementation.
ED may incorporate cross-references, definitions, or conformity edits drawn from elsewhere in Title 34.
But ED cannot add new policy requirements or weaken negotiated provisions at this stage.
What Can Change in the Final Rule After Public Comment?
The moment the NPRM is published, the consensus constraints disappear. Once the public comment period begins, ED regains full discretion to change the regulations in response to feedback, regardless of what the negotiating committee agreed to.
During the Final Rule Stage, ED May:
Strengthen or weaken provisions in response to evidence, comments, or legal concerns.
Add entirely new requirements that were not in the NPRM, as long as they are a “logical outgrowth” of the proposal.
Modify definitions, metrics, timelines, or approval processes.
Expand or narrow obligations on states or institutions.
The only legal requirement is that changes must be reasonably connected to issues raised in the NPRM and the comments received. Courts apply a “logical outgrowth” standard: the public must have had fair notice that the final rule could adopt the position ED ultimately chooses.
What ED Cannot Do in the Final Rule
ED cannot adopt a position that is completely unrelated to the NPRM or comments.
ED cannot violate statutory constraints in the underlying Workforce Pell legislation.
ED must respond to major comments, explain the rationale for its decisions, and justify any changes with evidence.
But importantly, ED is not bound by the negotiated consensus at the final rule stage.
That’s all for now. Stay tuned for more as the Department moves forward with its process.
Did I miss something or get something wrong? (It’s very possible; it was a long week!) Reach out and let me know!