Aiding and Abetting: State Innovations in Financing Education for Working Adults

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Aiding and Abetting State Innovations in
Financing Education for Working Adults

• CAEL Conference
• November 9, 2007

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The Need

• One in five adults ages 18-64 earn lt200 of
  poverty
• 61 percent of US residents with less than a 9th
  grade education live in households that earn less
  than 200 percent of poverty
• 43.2 percent of workers without a HS degree are
  not participating in the workforce, compared to
  20.7 percent with some college, and 17.3 percent
  with an AA degree.
• 9 million jobs expected to be created by 2014 in
  US will require some level of postsecondary
  education

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(No Transcript)
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Breaking Through Initiative

• Goal to connect adults with skill levels lt8th
  grade with college-level certificate and degree
  programs
• Partners Jobs for the Future and National
  Council for Workforce Education
• Funders The C.S. Mott, Ford, and Annie E Casey
  Foundations
• Participating Colleges 7 leadership colleges and
  19 learning colleges
• Website http//www.breakingthroughcc.org/

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Research Brief

• Financing Education for Workers Who Study
• (forthcoming)
• By
• Heath Prince and Radha Roy Biswas
• Jobs for the Future

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The Financial Aid Policy Context

• Federal funding of financial aid has fallen far
  behind the demand for post-secondary
  education--it far outstrips, for example, annual
  appropriations for the Pell program
• At the same time, many states have increased
  tuition rates and other charges in response to
  budget deficits
• As a result, individuals are assuming an ever
  greater share of the increasingly burdensome cost
  of education

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Adults in Post-Secondary Institutions

• For adults with low skills, post-secondary
  means community colleges
• Students in community colleges
• 90 non-traditional
• 75 have two or more of these characteristics
• attend part time
• work full time
• financially independent
• Have dependents
• That is, are workers who study, not students who
  work

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Sources of Government Student Aid

• Federal Pell Grants
• Federal Student Loans
• Perkins
• Subsidized
• Unsubsidized
• State Grants
• State Loan Programs

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Federal Student Financial Aid - Barriers for
Working Adult Students

• Rooted in serving traditional students
• Requires FAFSA student aid cycle
• Need formula COA - EFC student need
• Funds only credit courses in programs leading to
  a degree
• Formula geared to very low-income students
• Income Protection Allowance (part of EFC)
• Formula favors traditional enrollment pattern
• Favors students enrolled at least 6 credit hours
• Only for two semesters/year
• Students must make satisfactory progress

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State Grants and Loans -Barriers for Working
Adult Students

• State grant programs generally follow federal
  rules and formulas
• Most states limit grant aid to students enrolled
  half-time or more
• Few state student loan programs

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State Programs That Help Working Adult Students

• AR Workforce Improvement Grant Program
• IL MAP
• IN Part-Time Grant Program
• KY Ready to Work Initiative
• MA Ed Rewards
• OH Part-time Student Instructional Grant/OCOG
• OH TANF Educational Rewards Program
• PA WAGE
• ME LiLA
• MI Adult Part-time Grant
• WA Worker Retraining Program
• WV HEAPS

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Audience Participation

• Which States would you
• like to learn more about?

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What are LiLAs?

• Lifelong Learning Accounts (LiLAs)
• Individual education accounts
• Matched by the employer
• Finance lifelong learning
• Similar to 401(k)s in concept but for education
  and training
• Key Characteristics of LiLAs

• Voluntary Participation
• Broad Use of Funds
• Portable (Employee Owned)
• Career Education Advising

• Sponsored by Employer
• Employer Matched
• Optional 3rd Party Matches
• Universal

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LiLAs On The Ground

• CAEL Demonstration (2001 2007)
• Chicago - restaurant industry 127 employees
• Northeast Indiana - 79 manufacturing employees
  76 public sector employees
• San Francisco healthcare 77 employees
• New Programs
• Maine launched in 2006
• Illinois launch in 2007
• Bay Area (older worker)
• Kansas City (WIRED)
• NYC (planning)
• Michigan (planning)
• State Legislation
• Illinois
• Hawaii

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Federal LiLA Legislation

• January 4, 2007- S. 26 introduced by Senators
  Maria Cantwell (D-WA) and Olympia Snowe (R-ME)
• June 28, 2007 - H.R. 2901 introduced by Rep.
  Thomas Allen (D-ME)

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LiLA Bill Features

• Amend the IRC to establish a LiLA demonstration
  program for up to 200,000 workers in up to 10
  states
• Participating states selected in a competitive
  process
• Tax credit equal to the amount contributed into a
  LiLA up to 500 per tax year (refundable credit
  and additional deduction for individuals in the
  House bill)
• Distributions excluded from gross income
• Targets tax incentives to lower and middle-income
  earners
• Employer option to match workers contributions
  tax credits of up to 500/tax year

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What More Can be Done?

• Rethink federal and state aid programs for
  contemporary students
• Federal government partner with states to test
  innovative approaches
• State and institutional student aid programs
  fill gaps in federal student aid for working
  adult students
• Stronger awareness and advocacy efforts

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Discussion Questions

• Do you see these issues in your
  institution/state?
• Have you seen innovations in your
  institution/state that benefit working adult
  students?
• What role can you play in your state to expand
  student aid to working adult students?

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Contact Information

• Vickie Choitz
• Senior Policy Analyst
• Jobs for the Future
• vchoitz_at_jff.org
• Amy Sherman
• Associate Vice President
• Council for Adult and Experiential Learning
• asherman_at_cael.org