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Financial Aid

The Push to Retrain Unemployed Workers

How the Obama administration is encouraging the unemployed to go to college
University Business, Jul 2009

IN AN EFFORT TO GET AMERICA’S recently unemployed workers back to work, the Obama administration has implemented several initiatives to encourage them to learn new job skills through postsecondary education. These initiatives are likely to affect higher education institutions and provide additional opportunities to educate workers who have been negatively impacted by the economic downturn.

The administration’s effort really began with the American Recovery and Reinvestment Act, which provided $17 billion to expand Pell Grants for all students. The next step: ensure that unemployed workers could and would access these funds.

On April 2, the U.S. Department of Education posted a letter online to remind financial aid offices of their authority to use “professional judgment” to make adjustments to students’ student aid eligibility to accommodate circumstances not reflected in the Free Application for Federal Student Aid (FAFSA). Written on behalf of Education Secretary Arne Duncan by Daniel T. Madzelan, the letter stated that when families experience a layoff, face a costly medical situation, or lose a house to foreclosure, it is unlikely they will know about their right to request an adjustment to one or more of the components that determine their eligibility for financial aid.

“It is for this reason that I encourage you to do more than provide good service to the students who request that you make an adjustment,” Madzelan states. “I would ask you to reach out to your students (and prospective students), particularly those who seem to have hit a rough patch, to make sure that they know there may be ways that you can help.”

Families are unlikely to know about their right to request an adjustment to components that determine aid eligibility.

Madzelan noted that the loss of a job, a reduction in work hours or wages, income loss associated with a prospective student’s decision to leave the workforce, or the need to reduce work hours to return to school could all be reasons to adjust students’ aid eligibility.

A month after this first letter was posted, Arne Duncan communicated to financial aid officers that they may use a letter from the unemployment agency of the student’s state or other evidence that a student is receiving unemployment benefits to document that the student’s earned income is zero.

Duncan wrote that unemployment benefits would not have a material impact on what students are expected to pay for college in the financial aid eligibility formula.

“Unemployment benefits can also be considered zero as the Department of Education, in consultation with the Department of Labor and the Office of Management and Budget, has determined that the maximum unemployment benefits available would not have a material impact on the Expected Family Contribution of an independent student. If there are other members of the student’s family for whom you may have evidence of their receiving unemployment benefits, we encourage you to examine the totality of the family’s economic situation and make any appropriate adjustments,” Duncan wrote.

The U.S. Department of Labor sent a letter on May 8 to state workforce agencies, administrators, liaisons, board chairs, directors, and commissioners urging them to notify unemployment insurance (UI) beneficiaries of their potential eligibility for Pell Grants and other student aid and to help individuals apply for Pell Grants through One-Stop Career Centers.

The One-Stop Career Centers are designed to provide a full range of assistance to job seekers under one roof. Established under the Workforce Investment Act, the centers offer training referrals, career counseling, job listings, and similar employment-related services. The Labor Department has notified states that they should ensure that all One-Stop Career Centers are prepared to assist UI beneficiaries in applying for Pell Grants and other financial aid. One-Stop Career Centers have also been encouraged to collaborate with local financial aid offices to ensure unemployed workers get the information they need.

To help workforce agencies notify UI beneficiaries of their potential eligibility for Pell Grants, the Department of Labor distributed a draft letter for agencies to use as a template. The letter notifies recipients that “President Obama announced that workers like you who are getting unemployment insurance (UI) benefits will receive special consideration for financial aid to pay for job training or education. You may also be able to keep your UI benefits while enrolled.”

In early May, President Obama announced that he intends to “change senseless rules that discourage displaced workers from getting the education and training they need to find and fill the jobs of the future.”

Obama’s goal was to address some states’ requirements for receiving unemployment benefits. States generally require people who collect unemployment to be actively looking for work, which can make it difficult to sign up for school or job training. Obama directed the Departments of Education and Labor to work closely with states and institutions of higher education and encourage states to allow unemployed workers to receive benefits while working toward a postsecondary degree. In addition, these entities were encouraged to inform all workers receiving unemployment benefits of the training programs and financial support open to them.

“The idea here is to fundamentally change our approach to unemployment in this country so that it’s no longer just a time to look for a new job but is also a time to prepare yourself for a better job,” Obama said. “That’s what our unemployment system should be not just a safety net but a stepping stone to a new future. It should offer folks educational opportunities they wouldn’t otherwise have, giving them the measurable and differentiated skills they need not just to get through hard times but to get ahead when the economy comes back.”

'Our unemployment system should be not just a safety net but a stepping stone to a new future.' -President Barack Obama

In its letter to workforce agencies and liaisons, the Department of Labor urges states to make it easier for unemployed workers to attend college and still receive unemployment benefits.

“States are strongly encouraged to widen the types of training and the conditions under which education or training are considered ‘approved training’ for purposes of the state’s UI law during economic downturns,” the letter states.

Specifically, the Department of Labor asks states to allow residents to continue to receive unemployment benefits while attending programs at community colleges with job skills components, courses leading to general equivalency degrees, courses in adult basic education, language courses, or other courses of study, including degree and certificate programs, that are likely to increase the individual’s long-term employability.

In early June, Arne Duncan announced a $7 million special competitive grant to establish innovative and sustainable community college programs that prepare displaced workers for second careers. The goal of the new grant program is to develop national models that can be replicated across the country, especially in communities where autoworkers have lost their jobs.

The grant will provide seed funding for model programs in community colleges that help adults develop the skills they need to succeed in a new career. The programs could provide services such as tutoring, academic and career counseling, and assistance with the registration process. The programs could also help remove financial constraints for adults returning to school, including child care, transportation, and textbooks. These innovative new programs must be sustainable beyond the three-year grant period.

The Department of Education anticipates awarding approximately 28 grants by mid-September, with projects beginning on or about Oct. 1. The estimated range of the grant awards is $300,000 to $750,000 over a three-year period.

Duncan also joined Secretary of Labor Hilda Solis, Secretary of Housing and Urban Development Shaun Donovan, and Secretary of Energy Steven Chu in announcing that their departments will collaborate to make institutionalizing cross-agency communication about private sector jobs created as the result of federal action a top priority. The goal of this collaboration will be to connect newly created jobs to training programs and career pathways that can provide transitions for adults between employment and for students from high school to postsecondary education and into careers.

Through this partnership, the Department of Energy will identify ways to notify the Department of Labor as funding commitments are made and jobs are created. The Department of Labor will, in turn, provide the information to local One-Stop Career Centers that will connect unemployed workers with jobs, training, and education opportunities. The Department of Education will help identify the educational resources for training to ensure that educational opportunities linked to job creation are comprehensive.

Haley Chitty is director of communications at NASFAA,