In Our Short-Term Credential Era

Short-term credentials. Microcredentials. Sub-baccalaureate credentials. Nondegree credentials.

No matter what you call them, they have been rising in popularity in recent decades. As enrollment in four-year degree programs continues to decline nationwide, consumer demand for shorter-term programs and workforce pathways is strong and growing. In 2010, 41 percent of credentials awarded by community colleges across the U.S. were short-term and nondegree certificates. By 2019 that figure had increased by 30 percent. In fall 2023, the number of students pursuing short-term credentials increased by almost 10 percent over the previous year alone.

In response to growing consumer interest in short-term credential programs, states have begun allocating money toward initiatives that make these programs more affordable and responsive to the needs of students and local economies. A 2023 50-state analysis by HCM Strategists shows that, to date, states have launched around 60 short-term credential initiatives, on which they have spent at least $3.81 billion—nearly double the money spent by the federal government on its WIOA Adult and Dislocated Worker programs combined. These state-funded programs—most of which were introduced within the last five years—provide student financial aid, dedicated formula funds and/or resources to enhance institutions’ capacity to offer noncredit and short-term credential programs that lead to good-paying jobs in high-demand industries.

In light of this growing interest in sub-baccalaureate credentials, what can states do to ensure that they are spending money wisely and developing strong policies that equitably support students who pursue short-term credentials?

State Value Frameworks

First and foremost, states can establish value frameworks that, among other things, define the value of nondegree credentials. The relative novelty and rapid evolution of shorter-term programs means their value is still murkier than traditional degree programs. By assessing what makes a short-term credential valuable—to individuals and employers—states can better position themselves to strategically allocate resources to programs that offer a better ROI. This approach not only guides financial resources toward high-value programs, but it can also serve as a clear indicator to credential seekers and employers about which credentials are most likely to enhance learners’ job prospects, facilitate economic mobility, lead to family-sustaining wages and align with state and regional workforce demands.

Alabama is one state that has embraced this approach. According to Governor Kay Ivey, “a currency of credentials of value will create a reciprocal feedback loop between employers and the workforce by signaling progressive wage increases, upward mobility within a firm and the potential for lateral transfers within and between industry sectors." Consequently, Alabama has emerged as a leader in credential valuation, establishing a highly structured process for identifying credentials of value. At the core of their efforts is the Alabama Compendium of Valuable Credentials, the state’s official repository of high-value educational programs that functions as an encyclopedia of credentials in the state, each mapped to relevant in-demand occupations by the Alabama Committee on Credentialing and Career Pathways (ACCCP). To secure a place on this list, each credential must undergo a rigorous two-tier process and demonstrate necessity, stackability, alignment with a career pathway, industry endorsement and/or a minimum 20 percent wage premium.

The state requires employers to assist in identifying high-value credentials to help boost employers’ interest in hiring credentialed individuals who have the skills reflected in the sequences vetted by the ACCCP. In recent years, Alabama has had a laser focus on recruiting new employers to the state and equipping its residents for good-paying jobs at these companies; to this end, since launching its credential value framework in 2018, Alabama has attracted several billions of dollars in private-sector investments, which has resulted in the creation of tens of thousands of new jobs. It has made significant progress toward its attainment goal—adding nearly 215,000 newly credentialed workers, which puts Alabama “well on [its] way to surpassing the goal of adding 500,000 additional credentialed individuals to [its] workforce by 2025.” Alabama’s comprehensive approach to credential valuation demonstrates the potential for other states to boost its skilled workforce through similar initiatives.

Data Collection and Analysis

The second thing states can do is improve their data collection and analysis of short-term programs. This is particularly the case with noncredit programs—long deemed the “hidden college” at two-year institutions for being siloed from the credit side. Only a handful of states currently gather data on the noncredit side, and a proposal to start collecting such data at the federal level was denied last July due to concerns about associated administrative challenges. As a result, we lack credible data on the scope and expansion of noncredit programs. The absence of such data presents several challenges:

1. Employers face difficulties in identifying trained and skilled employees.
2. Federal and state governments lack essential information to pinpoint areas requiring targeted support and accountability measures.
3. Institutions cannot accurately assess the success of various programs, making it difficult to refine and enhance offerings.
4. Students must navigate a fragmented postsecondary environment, where noncredit programs are typically segregated from credit-bearing offerings, resulting in missed opportunities to create innovative learning pathways that cater to diverse student needs.

Ultimately, the lack of data makes it challenging for both policymakers and the general public to fully grasp the ROI generated by noncredit programs. To safeguard the interests of both students and taxpayers, it is crucial that state governments allocate resources to develop strong data systems. These systems will help us gain a better understanding of the benefits of higher education in all its forms. Prioritizing these investments is essential for transparency and informed decision-making in education.

Intentional Equity-Centered Policy Design

Data shows that short-term credential earners tend disproportionately to be individuals of color and/or low income. And among the 30 to 40 percent of all individuals who earn short-term credentials and subsequently pursue further education (typically a degree), a significant portion are students who likely would not have otherwise considered enrolling in a degree program. Short-term programs play a vital role in providing a point of entry to higher education for diverse populations who might otherwise face exclusion from the system. Yet the ROI of these programs varies among student populations, and outcome disparities persist by gender, race/ethnicity and prior level of educational attainment.

To better promote equitable student outcomes, states can implement policies designed with an intentional focus on equity. One state-funded program that has seen equity gaps shrink is Virginia’s New Economy Workforce Credential Grant (WCG), a short-term workforce training aid program that operates on a pay-for-performance model with educational costs split among students, the state and institutions. The program’s outcomes are monitored closely, and the State Council of Higher Education for Virginia must submit annual reports to the General Assembly and the Virginia Board for Workforce Development. To date, WCG has achieved remarkable success, with more than 44,000 participants and an impressive 96 percent completion rate. Of those who have completed their courses, more than 32,000 (76 percent) have advanced to earn a credential or license. And most of WCG’s completers have seen wage increases of 25 to 50 percent.

In terms of WCG participant demographics, the program serves a large number of historically underserved populations, such as students with financial need, adult learners, parenting students and underrepresented minority groups. Two-thirds of participants are first-time postsecondary students, 40 percent are students of color and most are older, with an average age of 36. Compared to Virginia’s degree-seeking population, WCG participants are more likely to receive support through programs like Temporary Assistance for Needy Families and the Supplemental Nutrition Assistance Program, highlighting the diverse and unique characteristics of this student cohort.

Remarkably, the positive impact of the WCG on low-income students, adult learners, parenting students and historically underrepresented minority populations—despite being undeniable—has been fortuitous. The program was not originally designed with these specific populations in mind. Nevertheless, it has played a pivotal role in helping them achieve educational and economic success.

As states develop and refine their own programs, it is imperative that these initiatives are intentionally structured to promote inclusivity and equity by designing them to ensure equitable access to individuals from diverse backgrounds. To do this, states can (1) target financial aid for low-income or un- and underemployed students, (2) orient funding to institutions in ways that prioritize both high-value credentials and the success of underserved populations in these programs, and (3) improve data collection, reporting and transparency. Being intentional about equity in the design of these policies can help ensure that funding reaches those who need it most and align policies with broader goals of advancing student success in education and workforce development.