Giving Compass' Take:

• Alana Dunagan argues that extending  Title IV funding to alternative credentials may actually hurt the programs it is intended to help. 

• How can donors best support funding for these institutions? Should this be an area of focus for policy and donors, or is the market sufficient? 

• Learn about a program in Atlanta that is helping individuals get and keep jobs.

The alternative credential market is picking up steam. There is tremendous potential for this growing ecosystem of new, innovative providers to benefit students, taxpayers, and the workforce. Some of these models even have disruptive potential. But despite this promise, we don’t advocate extending current Title IV programs to cover alternative credential programs. Here’s why:

1.) The market for alternative credentials is growing—in a healthy way.

There are signs that providers with strong outcomes are growing, and that providers who can’t help students get ahead in the labor market are being winnowed out. This is a good thing; it means that market is working, and that providers are being forced to compete on outcomes. Students who have to plunk down their own cash are less likely to pay for programs that don’t yield return on investment and help them make progress in their lives.

2.) The Title IV system lacks good quality control mechanisms.

Traditional college, on the other hand, doesn’t operate as a free market. Federal financial aid programs play an important role in helping millions of students to access college. However, without systems in place to ensure that schools are consistently producing strong outcomes for students, Title IV money can enable bad actors to stay afloat.

3.) Designing a new funding system for these emerging providers could transform how we fund traditional college.

Any initiative to provide federal funding for alternative credential programs should require audited outcomes around learning, program completion, job placement, earnings, and graduate satisfaction, as Entangled Solutions has proposed.

Read the full article about Title IV funding by Alana Dunagan at Christensen Institute.