Accountability in Higher Education and Access Through Demand-Driven Workforce Pell: Pell Grant Exclusion Relating to Other Grant Aid; and Workforce Pell Grants

DEPARTMENT OF EDUCATION

34 CFR Parts 600, 668, and 690

[Docket ID ED-2026-OPE-0133]

RIN 1840-AD99

Accountability in Higher Education and Access Through Demand-Driven Workforce Pell: Pell Grant Exclusion Relating to Other Grant Aid; and Workforce Pell Grants

AGENCY:

Office of Postsecondary Education, Department of Education.

ACTION:

Final rule.

SUMMARY:

The Secretary of Education (Secretary) amends the regulations governing institutional eligibility, general provisions, and the Federal Pell Grant (Pell Grant) Program under title IV of the Higher Education Act (HEA) of 1965, as amended (the title IV, HEA programs). The final regulations implement statutory changes to the title IV, HEA programs included in the Working Families Tax Cuts Act (WFTCA), signed into law by President Trump on July 4, 2025. In the NPRM, we referenced the WFTCA as the “One Big Beautiful Bill”; however, for clarity and consistency in this final rule, we will instead use WFTCA. The WFTCA made numerous changes to the HEA, including changes to student eligibility requirements for the Pell Grant Program and the establishment of Workforce Pell Grants for students who enroll in a new type of eligible program called an “eligible workforce program,” intended to be a high-quality, performance-based, short-term program that supports America's workforce needs.

DATES:

This rule is effective July 20, 2026, except for amendatory instructions 10 and 13, which are effective May 19, 2026.

FOR FURTHER INFORMATION CONTACT:

Aaron Washington, Office of Postsecondary Education, 400 Maryland Ave. SW, 5th Floor, Washington, DC 20202. Telephone: (202) 987-0911. Email:

aaron.washington@ed.gov.

If you are deaf, hard of hearing, or have a speech disability and wish to access telecommunications relay services, please dial 7-1-1.

A brief summary of these final regulations is available at

www.regulations.gov/docket/ED-2026-OPE-0133.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Abbreviations

II. Executive Summary

1. Summary of Major Provisions

2. Summary of Costs and Benefits

III. Purpose of Regulatory Action

IV. Background

V. Authority for the Regulatory Action

VI. Analysis of Public Comment and Changes

1. Process for Out of Scope Comments

2. Public Comment Period

VII. Regulatory Analyses

1. Regulatory Planning and Review Including Regulatory Impact Analysis

a. Need for Regulatory Action

b. Summary of Comments and Changes From the NPRM

c. Discussion of Costs, Benefits, and Transfers

d. Accounting Statement

e. Alternatives Considered

2. Regulatory Flexibility Act

3. Paperwork Reduction Act of 1995

4. Congressional Review Act Intergovernmental Review

Assessment of Education Impact

Federalism

List of Subjects

VIII. Paperwork Reduction Act

I. Abbreviations

Department of Education (Department)

Working Families Tax Cuts Act (WFTCA)

Secretary of Education (Secretary)

Federal Pell Grant (Pell Grant) Program

Title IV of the Higher Education Act (title IV, HEA)

Cybersecurity and Infrastructure Security Agency (CISA)

Cost of Attendance (COA)

Inspector General (OIG)

Department of Labor (DOL)

Federal Information Technology Acquisition Reform Act (FITARA)

Eligibility and Certification Approval Report (ECAR)

Eligible Training Provider List (ETPL)

State Authorization Reciprocity Agreement (SARA)

Historically Black Colleges and Universities (HBCUs)

Tribal Colleges and Universities (TCUs)

Hispanic-Serving Institutions (HSIs)

Workforce Innovation and Opportunity Act (WIOA)

Prison Education Program (PEP)

Classification of Instructional Programs (CIP)

Online Program Management (OPM)

On-the-Job Learning (OJL)

II. Executive Summary

The Secretary codifies two changes made to the HEA by the WFTCA through these regulations. The two changes are:

1.

Pell Grant Ineligibility When Other Aid Covers Full Cost.

The WFTCA prevents students from qualifying for Pell Grant funds during any period for which they also receive grant or scholarship assistance from non-Federal sources—including States, eligible institutions, or private sources—that equals or exceeds their cost of attendance (COA) for such period.

2.

Workforce Pell Grants.

The WFTCA allows students to receive Pell Grants for eligible workforce programs that are 150-599 clock hours in length or an equivalent number of credit hours and that take at least 8 weeks but less than 15 weeks of instructional time to complete (also referred to as “Workforce Pell Grants”). The WFTCA establishes several other eligibility requirements for such programs, including approval by a Governor and the Secretary, and annual outcome metrics.

1. Summary of Major Provisions of This Regulatory Action Pell Grant Ineligibility When Other Aid Covers Full Cost

These final regulations:

• Unreserve § 690.5 and add language to prohibit a student from receiving a Pell Grant if the student received grant or scholarship assistance from non-Federal sources that equals or exceeds the student's COA for the award year.

• Add § 690.80(d) to require an eligible institution, in such cases where a student would receive non-Federal grant or scholarship assistance that equals or exceeds the student's COA, either to reduce that student's non-Federal grant or scholarship assistance, insofar as such grant or assistance is within the institution's control, or to return all Pell Grant funds disbursed to the student for the award year (if any funds are still undisbursed) and cancel any future disbursements of such funds.

Workforce Pell Grants

These final regulations:

• Amend § 600.10 to require the Secretary's approval of each eligible workforce program in order to establish Pell Grant eligibility.

• Amend § 668.5 to limit the amount of an eligible workforce program that can be offered by an ineligible institution or organization through a written arrangement to 25 percent or less, unless the written arrangement is part of a Registered Apprenticeship.

• Amend § 668.8 to add eligible workforce programs as a new type of Pell Grant eligible program.

• Amend § 668.20 to prohibit an eligible institution from taking into account any noncredit, remedial, or reduced credit remedial coursework outside of required coursework (including a course in English as a second language) when determining enrollment intensity and COA for a student enrolled in an eligible workforce program, as defined under 34 CFR 690.92.

• Amend § 668.32 to prohibit an individual that is enrolled or accepted for enrollment in a program that leads

to a graduate credential or has attained a graduate credential from receiving a Pell Grant to enroll in an eligible workforce program.

• Add a definition of an eligible workforce program to § 690.2.

• Amend § 690.6 to allow an otherwise eligible student with a bachelor's degree to receive a Pell Grant to enroll in an eligible workforce program.

• Amend § 690.11 to prohibit a student from receiving concurrent Pell Grant awards for two or more different eligible programs.

• Add § 690.90 to provide a high-level scope and purpose of eligible workforce programs and clarify that eligible students in these programs are only eligible to receive Pell Grants and not any other title IV aid.

• Add § 690.91 to define key terms, including “cohort period,” “earnings measurement period,” “in-demand industry sector or occupation,” “Governor,” “recognized postsecondary credential,” “State board,” and “tuition and fees.”

• Add § 690.92(a) to establish that an eligible workforce program is an undergraduate program that is at least 8 but less than 15 weeks of instruction.

• Add § 690.92(b) to establish that an eligible workforce program is 150-599 clock hours, 4-15 semester or trimester hours, or 6-23 quarter hours.

• Add § 690.92(c) to prohibit correspondence courses, study abroad, or direct assessment in eligible workforce programs.

• Add § 690.92(d) to require program approval by the Governor of a State.

• Add § 690.92(e) to require program approval by the Secretary.

• Add § 690.92(f) to require eligible workforce programs to pass the value-added earnings metric.

• Add § 690.92(g) to prevent an eligible institution from offering an eligible workforce program if it has been subject to any suspension or emergency or termination action by the Secretary during the five years preceding the date of the determination.

• Add § 690.93(a) to codify statutory requirements for Governor approval, including that the eligible workforce program provides an education aligned with the requirements of high-skill, high-wage, or in-demand industry sections or occupations, meets the hiring needs of employers, leads to a recognized postsecondary credential that is stackable and portable (or prepares students for employment for which there is only one recognized postsecondary credential), and ensures that a student receives academic credit for the program for at least one certificate or degree program at one or more eligible institutions.

• Add § 690.93(b) to require Governors to establish written policies and processes to evaluate whether a program meets the requirements under § 690.93(a), which includes requirements for institutions to submit the necessary information for the Governor to assess a program's completion rate and job placement rates; involve a process for an institution to appeal the Governor's determination; and require the Governor to submit an attestation that the State board was consulted when evaluating whether a program is an eligible workforce program.

• Add § 690.93(c) to prohibit the Governor from approving the program until it meets all the requirements under § 690.93(a).

• Add § 690.93(d) to require the Governor to provide the Secretary with a certification, including the components outlined in regulation, that an eligible workforce program was approved by the Governor and meets the requirements.

• Add § 690.93(e) to clarify that a Governor's approval expires with the expiration of the eligible institution's Program Participation Agreement.

• Add § 690.93(f) to establish a process in which a Governor provides a certification of continued approval of each eligible workforce program offered by the eligible institution prior to the expiration of an eligible institution's Program Participation Agreement.

• Add § 690.93(g) to treat a program that serves as a related instruction component of a Registered Apprenticeship Program as meeting the requirements of providing an education aligned with high-skill, high-wage, or in-demand industry sectors or occupations, and meeting the hiring needs of employers.

• Add § 690.93(h) to allow the Governors of two States to enter into a bilateral agreement regarding the enrollment of students located in one of those States into some or all the programs located in the other State.

• Add § 690.94(a) to require the Secretary to approve each program, after the Governor has approved the program. The program must meet the conditions under § 690.92(a) and (b) for the 12 months preceding the date on which the eligible institution applied for eligibility for the program. The program must also meet completion and job placement rates prior to application to the Department and each year subsequent to the eligible workforce program's approval.

• Add § 690.94(b) to require an eligible institution to submit to the Governor a list of students that completed the program in each award year, provide the necessary information to verify the job placement rate, and report the published tuition and fees for the eligible workforce program through a process the Secretary determines.

• Add § 690.94(c) to allow the Secretary to waive some or all the proposed requirements under § 690.94(a) and (b) related to submission of completion rates and the Governor's certification of job placement rates.

• Add § 690.94(d) to prohibit an eligible workforce program's tuition and fees from exceeding the value-added earnings of the program.

• Add § 690.94(e) to exclude certain categories of students from the numerator and denominator of the completion and placement rate calculations.

• Add § 690.95(a) to codify the value-added earnings process. An eligible workforce program's total published tuition and fees may not exceed the value-added earnings of students who are working, who received a Pell Grant for enrollment in the program, and who completed the program during the cohort period.

• Add § 690.95(b) to establish that an eligible workforce program's value-added earnings are determined by calculating the difference between the adjusted median earnings of student completers during the earnings measurement period as defined in § 690.91 and 150 percent of the U.S. Federal Poverty Guidelines applicable to a single individual for such tax year.

• Add § 690.95(c) to require the Secretary to publish the value-added earnings that will apply to the eligible workforce program for the upcoming award year no later than three months prior to the beginning of the award year.

• Add § 690.95(d) to require that an eligible institution keep published tuition and fees at or below the value-added earnings calculated for the program for all students who received a Pell Grant and first enroll in the eligible workforce program during the award year that begins following the annual release of the program's value-added earnings.

• Add § 690.95(e) to establish that programs that have a calculated value-added earnings of zero or a negative value are not eligible programs.

• Add § 690.95(f) to require an eligible institution to provide evidence, upon request, to the Secretary that its published tuition and fees do not exceed the published value-added earnings for that award year.

• Add § 690.95(g) to establish that the Secretary will calculate the value-added earnings for an eligible workforce program using the student completion data the eligible institution reported.

• Add § 690.95(h) to establish the number of students needed for the Secretary to calculate the value-added earnings for the program.

• Add § 690.95(i) to establish that the Federal agency with earnings data will provide the Department with median annual earnings of the students whom the Federal agency has matched with earnings data.

• Add § 690.95(j) to require the Secretary to include completers from all eligible workforce programs with the same six-digit Classification of Instructional Programs (CIP) code when calculating value-added earnings.

• Add § 690.95(k) to clarify that, if more than 50 percent of students in the eligible workforce program are not located in the State in which the eligible institution offering the program is located, the Department will not adjust the program's median earnings by the State and metropolitan area regional price parities of the Bureau of Economic Analysis.

• Add § 690.95(l) to exclude a student from the value-added earnings calculation if the student was enrolled in any other educational program during the calendar year for which the Secretary obtains earnings information.

• Add § 690.96(a) to establish a process for programs that lose eligibility. A program will become ineligible at the end of the payment period that begins following the date that the Governor acts to withdraw approval or the Governor fails to reapprove the program.

• Add § 690.96(b) to provide that, except in limited circumstances such as a pending appeal, a program will become ineligible at the end of the payment period that begins after the date that the Secretary determines that the eligible institution failed to meet the completion rate or job placement rate requirements.

• Add § 690.96(c) to provide that, if an eligible workforce program fails to meet the value-added earnings requirements, the program will become ineligible at the beginning of the award year following the release of the value-added earnings, and the Secretary will assess a liability to the eligible institution.

• Add § 690.97(a) to establish a process for an eligible workforce program to regain eligibility once it has lost it. This process would prohibit an eligible institution from reestablishing the eligibility of a failing program or establish eligibility for a substantially similar program until two years following the date the program loses eligibility or the date the eligible institution voluntarily discontinues the failing eligible workforce program, whichever date is earlier.

• Add § 690.97(b) to establish that, if an eligible workforce program loses eligibility due to a loss of Governor approval, the program may reestablish eligibility after the Secretary receives the Governor's certification that the program has been approved, and after the Secretary determines the program has met eligibility criteria.

• Add § 690.97(c) to allow an eligible institution to request that a program's eligibility be reinstated if the program loses its eligibility due to the published tuition being higher than its value-added earnings.

2. Summary of Costs and Benefits

As further detailed in the

Regulatory Impact Analysis,

the Department estimates that the regulations will have significant impacts on students, educational institutions, employers, taxpayers, State governments, and the Department.

Under the final regulations, students will benefit from expanded access to Federal grant funds for new workforce programs that institutions are likely to offer—or may already offer—but that were previously ineligible for such funding. Students will also experience higher wages due to the skills and credentials they gain by attending eligible workforce programs, including receiving stackable credentials that will allow them to pursue further postsecondary education and workforce training. Employers will benefit from the final regulations because the regulations will increase the number of skilled workers in the labor market. Institutions will benefit from new enrollments and the resulting tuition revenues. State governments and taxpayers will also benefit from greater tax revenues and reduced expenditures on public assistance programs because of the higher wages experienced by those completing eligible workforce programs.

The Department will incur new costs to finance Pell Grants for eligible workforce programs, which are funded as part of the existing Pell Grant Program. The Department will incur new costs to implement the changes to the Pell Grant Program and monitor eligibility, as will State governments, who, if they or institutions within their State choose to participate, must certify eligible workforce programs and monitor their completion and job placement outcomes. While taxpayers will bear the cost of financing Pell Grants to eligible workforce programs, they will also benefit indirectly from the earnings gain that Pell Grant recipients receive, such as through reduced use of public benefits programs for low-income households.

III. Purpose of This Regulatory Action

This action establishes regulations that address statutory changes to the HEA made by the WFTCA related to eligible workforce programs and a new limitation on Pell Grant eligibility for students who receive non-Federal grant or scholarship assistance that equals or exceeds their cost of attendance. The Department refers to these provisions as a whole as “Workforce Pell.”

Through this action, the Secretary seeks to faithfully implement the statutory requirements for eligible workforce programs while limiting administrative burden for institutions and providing flexibility for States to determine whether eligible workforce programs are adequately serving students and promoting regional economic growth. We also seek to provide simple and clear regulations for institutions to implement the new limitation on Pell Grant eligibility that will enable the Department to oversee those requirements effectively.

IV. Background

The WFTCA, which President Trump signed into law on July 4, 2025, made important changes to the title IV, HEA programs, including one of the most significant changes to the Pell Grant Program in its history to address America's workforce needs.

Specifically, the WFTCA expanded Pell Grant eligibility to eligible workforce programs. These programs are shorter in duration than the undergraduate programs currently eligible for Pell Grants, and they must meet specific accountability metrics related to graduate earnings, as well as indicia of employer demand—requirements that are not applicable to other eligible programs.

The WFTCA also added a new criterion for Pell Grant eligibility that prevents students from receiving Pell Grant funds if they also receive grant or scholarship aid from non-Federal sources—including States, institutions of higher education, and private sources—in a total amount that equals or exceeds their cost of attendance (COA). Eligible institutions determine the COA by establishing a budget for tuition and fees, books, supplies, housing, food, and other costs.

This final regulation complies with Section 492 of the HEA, which requires the Secretary to obtain public input and conduct negotiated rulemaking before issuing proposed regulations for the title IV, HEA programs. To meet those requirements and implement the new statutory directives provided for in the WFTCA, the Department convened the Accountability in Higher Education and Access through Demand-driven Workforce Pell (AHEAD) negotiated rulemaking committee, which reached consensus agreement on the entirety of the regulatory text that was included in the Notice of Proposed Rulemaking (NPRM).

1

1

NPRM—Accountability in Higher Education and Access through Demand-Driven Workforce Pell: Pell Grant Exclusion Relating to Other Grant Aid; and Workforce Pell Grants—

https://www.Federalregister.gov/documents/2026/03/09/2026-04520/accountability-in-higher-education-and-access-through-demand-driven-workforce-pell-pell-grant.

HEA section 482(c)(2) permits the Secretary to designate a regulation as one that an entity subject to the regulations may choose to implement earlier and outline the conditions for early implementation. The Secretary is exercising her authority under HEA section 482(c) to permit early implementation of all regulations pertaining to eligible workforce programs beginning July 1, 2026. The Secretary will assume that any institution that selects to participate in Workforce Pell through a qualifying program on the ECAR between July 1, 2026, and July 20, 2026 has elected to implement the provisions early.

V. Authority for This Regulatory Action

The WFTCA amended portions of the HEA related to the title IV, HEA programs administered by the Department. The Secretary has been granted broad authority by Congress to implement Federal student aid programs under title IV of the HEA, including amendments made by the WFTCA. See 20 U.S.C. 1221e-3,

see also

20 U.S.C. 1082, 3441, 3471, 3474. In order to carry out functions otherwise vested in the Secretary by law or by delegation of authority pursuant to law, and subject to limitations as may be otherwise imposed by law, the Secretary is authorized to make, promulgate, issue, rescind, and amend rules and regulations governing the manner of operations of, and governing the applicable programs administered by, the Department.

See

20 U.S.C. 1221e-3. These programs include the Federal student financial assistance programs authorized by the HEA, as amended by the WFTCA.

Waiver of HEA Master Calendar Requirements

The Harmonious-Reading Canon provides that statutes should, when possible, be interpreted in a way that renders them compatible, not contradictory, but such an approach is not always possible if context and other considerations (including the application of other canons) make it impossible to do so, another approach to statutory interpretation, such as the General/Specific Canon must be applied.

See

Scalia & Garner,

Reading Law,

155 (2012). The General/Specific Canon of statutory construction dictates that, in cases where a general prohibition is contradicted by a specific permission or a general permission that is contradicted by a specific prohibition, the more specific of the two provisions controls.

See

Scalia & Garner,

Reading Law,

158 (2012). Because, as discussed below, the WFTCA contains provisions with effective dates that cannot possibly be implemented in regulation in accordance with the HEA's master calendar requirements, the WFTCA implicitly provides a limited waiver of the HEA's master calendar requirement, so far as it is necessary to promulgate regulations that give effect to those provisions.

See Dorsey

v.

United States,

567 U.S. 260, 274 (2012) (stating that an agency's compliance with an existing statute “cannot justify a disregard of the will of Congress as manifested either expressly or by necessary implication in a subsequent enactment” (

quoting Great Northern R. Co.

v.

United States,

208 U.S. 452, 465 (1908)).

Here, the WFTCA was enacted on July 4, 2025. The WFTCA directs the Department to implement roughly a dozen provisions by July 1, 2026. Many of these provisions are not self-executing and could not be implemented absent the Department promulgating regulations to provide details for institutions on how to comply with the WFTCA. Congress gave the Secretary discretion within the WFTCA to implement the provisions impacting the title IV, HEA programs and knew that its commands were not self-executing when directing the Secretary to take action. Congress expected the Secretary to act via rulemaking before July 1, 2026, to enable these provisions to actually go into effect.

The master calendar in the HEA provides that regulatory changes initiated by the Secretary affecting the title IV, HEA programs must be published in final form by November 1st in order for them to go into effect by July 1st of the following year. 20 U.S.C. 1089(c)(1). Section 492 of the HEA requires the Department to undertake negotiated rulemaking as part of any regulation under title IV of the HEA. In order to conduct negotiated rulemaking and meet Administrative Procedure Act (APA) requirements, the Department must have a public hearing (providing notice to the public), solicit nominations from the public to serve on a negotiated rulemaking committee, select non-Federal negotiators, hold negotiations, develop an NPRM, publish an NPRM (with at least a 30-day comment period), and then publish a final rule that responds to any substantive comments received. The fastest possible timeframe in which the negotiated rulemaking process for the rulemaking packages assigned to the AHEAD Committee could have occurred is 149 days, which is irreconcilable with the timeline allowed by the enactment of the WFTCA, due to the fact that there were 120 days between July 4, 2025, (the day the WFTCA was enacted), and November 1, 2025 (the publication date of the final rule required by the master calendar).

It would not have been possible for the Department to undertake every step of the negotiated rulemaking process by November 1, 2025, in order to implement the provisions that become effective in the WFTCA by July 1, 2026, which is the statutory effective date. Congress was aware of this temporal impossibility when they passed the WFTCA, yet Congress decided that these provisions would still go into effect on July 1, 2026. Because these provisions are not self-implementing and cannot go into effect unless the Department promulgates a final rule, the WFTCA implicitly waives the master calendar.

With important details unanswered by the plain text of the WFTCA, it is clear that the policy scheme set forth in the HEA made by the WFTCA cannot be implemented absent regulatory action by the Department. At the same time, even though the requirements of negotiated rulemaking are onerous, it is possible to undergo negotiated rulemaking and publish a final rule at least 30 days prior to the effective date of these WFTCA provisions on July 1, 2026. Therefore, the WFTCA does not waive negotiated rulemaking nor any provision in the APA. For provisions in the WFTCA that become effective July 1, 2027, and beyond, Congress did not implicitly repeal the master calendar because it is possible for the Department to publish a final rule that complies with the master calendar to implement those provisions.

Severability

“It is axiomatic” that a regulation may be invalid in part but not in whole or as applied to one set of facts but not another.

Ayotte

v.

Planned Parenthood of N. New England,

546 U.S. 320, 329 (2006). If a court finds one part of a regulation is unlawful, the “normal rule” is to enjoin only that part.

Id.

(quoting

Brockett

v.

Spokane Arcades, Inc.,

472 U.S. 491, 504 (1985)).

It is the Department's intent that if any provision of this subpart or its application to any person, act, or practice is held invalid, the remainder of the subpart or the application of its provisions to any person, act, or practice shall not be affected thereby.

Statutes and regulations are severable if the separate provisions are “wholly independent of each other” and can operate independently.

Brockett

v.

Spokane Arcades, Inc.,

472 U.S. 491, 502 (1985). That is the case here. No part herein will be affected if another part is found to be unlawful. Nor does the Department believe courts or regulated parties would be unable to apply the rule if one part is held invalid.

C.f. Dep't of Educ.

v.

Louisiana,

603 U.S. 866, 868 (2024) (per curiam) (denying the government's request to stay a preliminary injunction against an entire rule where only parts were found to be invalid because “schools would face in determining how to apply the rule for a temporary period with some provisions in effect and some enjoined”).

VI. Analysis of Public Comment and Changes

On March 9, 2026, the Secretary published an NPRM for these regulations in the

Federal Register

(91 FR 11378). The Department received 440 comments on the proposed regulations.

The Department has grouped the comments by the regulatory section and by similar themes. We discuss substantive issues under the sections of the regulations to which they pertain. In instances where individual submissions appeared to be duplicates or near duplicates of comments prepared as part of a write-in campaign, the Department posted one representative sample comment along with the total comment count for that campaign to

www.Regulations.gov.

We considered these comments along with all the other comments received. In instances where individual submissions were bundled together (submitted as a single document or packaged together), the Department posted all the substantive comments included in the submissions along with the total comment count for that document or package to

www.Regulations.gov.

Generally, we do not address minor, non-substantive changes (such as renumbering paragraphs, adding a word, or typographical errors) within this final rule.

1. Process for Out-of-Scope Comments

The Department does not typically address comments that are out of scope. For purposes of this final rule, out-of-scope comments are those that are not addressed in the NPRM altogether. Generally, comments that are outside of the scope of the NPRM are comments that do not discuss the content or impact of the proposed regulations or the Department's evidence or reasons for the proposed regulations.

2. Public Comments

Responses to Comments Received on Directed Questions Written Arrangements To Provide Educational Programs (§ 668.5(c))

In the NPRM, the Department proposed to permit ineligible organizations to provide only 25 percent of an eligible workforce program under the written arrangement regulations under § 668.5(c). For other programs, ineligible organizations may offer up to 50 percent of a program through a written arrangement with an eligible institution. This may only occur if the ineligible organization and institution meet certain conditions and the institution's accrediting agency has specifically determined that the institution's arrangement meets the agency's standards on written arrangements with ineligible organizations. The Department sought public comment regarding whether it should consider alternatives to the 25 percent limit.

Comments:

Several commenters agreed with the Department's proposed limitation on written arrangements with ineligible institutions or organizations. One commenter expressed support for the Department's conservative approach while it awaits additional information in public comments. Other commenters stated that some institutions have outsourced large portions of academic programs to the online program management (OPM) industry. OPMs provide services including student recruitment, curriculum development, and even instruction, in the name of client institutions. The commenter stated that OPMs fail consumer protection standards, market aggressively, and target vulnerable students. The commenter stated that accreditors lack the capacity to effectively monitor OPMs.

Other commenters stated that eligible workforce programs should only be able to have written arrangements with ineligible institutions for between 0-10 percent of the eligible workforce program. Several commenters believed that because local and area employers are the intended beneficiaries of trained skilled workers, they should not also profit from tuition revenue derived from written arrangements with institutions. The commenters believed that for-profit companies in education and workforce development are known for higher prices and costs, lower quality and learner experiences, lower completion rates, and more student complaints.

Discussion:

The Department thanks commenters who provided views on its directed question, including commenters who support its proposed regulations. However, the Department's views do not align with all the reasons stated for agreement with the provision. We reiterate that we recognize the potential value in partnerships between eligible institutions and certain ineligible organizations, such as employers and unions or non-title IV eligible Registered Apprenticeship related training instruction providers, that result in the enhanced quality of eligible workforce programs. We also do not agree that ineligible organizations should be limited to providing only a tiny fraction of the program, such as 10 percent, particularly in this context where employers should play a large role. Such an amount would be so small as to be used infrequently, if ever, by outside entities seeking to enter into an arrangement with an institution. The existing 25 percent threshold is well-understood by institutions and would be consistent with the basic threshold for other types of postsecondary programs.

Our concern is that the 49 percent allowance does not provide the same level of quality assurance for eligible workforce programs as it does for traditional academic programs, given the broad lack of experience in the accreditation industry in evaluating agreements for short-term programs. Moreover, the Department is concerned that the provision of eligible workforce programs by ineligible institutions and organizations could rapidly expand far beyond the intent of the statute. The Department's regulations seek to achieve a balance between supporting valuable partnerships between industry and higher education to provide eligible workforce programs and prevent the rapid proliferation of low-quality programs that are not assessed carefully

by the traditional gatekeepers of eligibility for title IV, HEA funds.

Changes:

None.

Comments:

Many commenters stated that the proposed 25 percent limitation on instruction delivered through written arrangements with ineligible institutions or organizations unnecessarily restricts partnerships between eligible institutions and workforce training providers where much of the applied learning occurs. Several commenters offered the example of truck driving and the commercial driver's license (CDL) process, explaining that the CDL process often includes access to equipment, certified instructors, and training facilities that institutions cannot provide independently. Commenters also stated that careers in healthcare, construction, defense, national security, and office operations often require a significant amount of applied learning. For example, in the arboriculture industry, training is offered related to climbing systems, aerial lift operations, chainsaw safety, arboricultural practices, and electrical hazard awareness.

Many commenters also stated that the 25 percent cap is not required by statute and asserted that the Department is holding eligible workforce programs to a different standard than all other title IV, HEA eligible programs. Commenters recommended a broad range of options for the percentage of an eligible program that can be offered by an ineligible entity, ranging from 35-100 percent. Other commenters conditioned arrangements between 30-75 percent depending on how high-wage, high-skill, or in-demand the occupation is. They also recommended conditioning based on whether the institution offering the eligible workforce program was in good standing with the Department, the geographic location of the institution, if the ineligible organization is the employer for which the program prepares students, the program trains in artificial intelligence, if the program is in a correctional facility, if the program is endorsed by the State board, if the program partners with cohort-based workforce training organizations, and the accrediting agency's support for the program.

Several commenters recommended that the Department permit greater portions of programs to be offered by an ineligible entity through a written arrangement. These commenters suggested that if a program is part of a Registered Apprenticeship, the ineligible entity should be permitted to offer up to 100 percent of an eligible program.

Discussion:

The Department is persuaded by the commenters that written arrangements with certain types of ineligible organizations should not be limited to providing only 25 percent of an eligible workforce program. The commenters make a strong case that certain arrangements and partnerships can greatly improve the likelihood that eligible workforce programs will lead to high-wage, high-skill, or in-demand jobs.

In the case of Registered Apprenticeships, we are also persuaded by commenters that the requirements and oversight for these industry-driven, high quality career pathways address the Department's concerns about quality assurance of services provided under written arrangements. We agree with the commenters who stated that Registered Apprenticeships already have a framework for oversight, clear definitions, and rigorous program parameters. The Department's proposed regulations, agreed upon by the entire negotiated rulemaking committee, already included a provision that acknowledges quality assurance checks intrinsic to Registered Apprenticeships. Registered Apprenticeships include a work process schedule co-designed with employers and approved by DOL's Office of Apprenticeship or a State Apprenticeship Agency and WIOA permits Registered Apprenticeships to be automatically included on the State and local Eligible Training Provider Lists. Indeed, for this reason, the Department already proposed regulations under § 690.93(g) that would allow a Governor to treat a program that is part of a Registered Apprenticeship as automatically meeting the hiring needs of employers.

However, the Department disagrees with commenters' assertion that written arrangements should be used to provide 50 percent or more of an eligible program. In order to participate in the title IV, HEA programs, an entity must meet the definition of institution of higher education under Section 101 or Section 102 of the Higher Education Act.

2

There are different types of institutions of higher education under these provision, but all institutions must “provide [ ] an educational program”

3

or provide a “program of training”

4

to students. And in all these instances, the subject the statute is referring to is the institution—meaning the institution must provide the program or training to students. If the eligible institution enters into a contract that calls for 100 percent of the program or training to be provided by an ineligible third-party, the institution itself is not providing the training or program as required by Section 102. And as we have said in past regulations, “[t]he Department agrees that using written arrangements for all or nearly all of a program could raise questions about which entity confers the credential.”

5

The Department has previously explored the possibility of allowing an ineligible entity to offer up to 100 percent of a program through a written arrangement, most recently in the September 2, 2020, regulations related to Distance Education and Innovation. However, the Department ultimately agreed with non-Federal negotiators that doing so would raise the question of whether the eligible institution was really offering the program, as opposed to an unaccredited partner entity.

6

2

Section 102 of the HEA includes institutions of higher education that are covered under Section 101. (“the term “institution of higher education” for purposes of subchapter IV includes, in addition to the institutions covered by the definition in section 1001 of this title. . .”) 20 U.S.C. 1001-1002.

3

20 U.S.C. 1001(a)(3)

4

20 U.S.C. 1001(b)(1); 1002(b)(1); 1002(c)(1).

5

Distance Education and Innovation, 85 FR 54742, 54772 (Sept. 2, 2020).

6

See 85 FR 54804.

At the same time, the Department does not believe that Congress implicitly meant to (within Section 102) inhibit an institution from entering into written arrangements to provide some portion of the program or training. Some functions of the program and training can be provided by third parties as demonstrated by the current existence of written arrangements in other programs qualifying for title IV, HEA program funds. This may include written arrangements to provide technological services to students, or specialized training for students that the institution does not have the experience or ability to provide.

The Department believes that when at least half the program or training is provided by an ineligible provider, that the eligible institution ceases to functionally control most of the program. When 50 percent or more of the training is being provided by an ineligible entity, the institution ceases to offer the majority of the programming. The Department acknowledges that maintaining written arrangements for more than 50 percent of a program does not mean the institution is ceding all control to the ineligible provider. But at the same time, supervision alone is not enough. The HEA requires the

institution

to provide the training or program, not the ineligible provider. Written arrangements cannot be used as an end-around to evade the requirements of the

HEA that institutions provide the training or program.

Given all of the above, the Department has determined that ineligible institutions or organizations that provide training as part of Registered Apprenticeships should not be subject to the strict 25 percent limitation on providing an eligible workforce program. Instead, in these circumstances, ineligible institutions or organizations will be permitted to provide more than 25 percent, but less than 50 percent through a written arrangement. For all other fields of study and program types mentioned by the commenters, the Department remains concerned that allowing institutions to contract up to 49 percent of the eligible workforce program may be an indication that the institution does not have the capacity to offer the program fully had that written arrangement not been in place. The recommendations from other commenters, while in some cases providing a good rationale for the value of institution/employer partnerships, did not sufficiently address these concerns. Therefore, aside from the allowances we are providing for Registered Apprenticeships, we believe that this limitation is effective in assuring the quality of eligible workforce programs.

Changes:

The Department has rewritten the regulations under 34 CFR 668.5(c)(3)(ii) to add a new paragraph (D) following paragraphs (A) through (C) in the current regulations. The new paragraph (D) would allow an ineligible institution or organization, if the other conditions in 34 CFR 668.5(c) were met, to offer more than 25 percent, but less than 50 percent of an eligible workforce program, if the program qualifies as a related instruction component for a Registered Apprenticeship, as defined in 29 CFR part 29.

Comments:

Several commenters asked for guidance clarifying how the written arrangement percentage is calculated across instruction, curriculum, and support services.

Discussion:

The regulations under 34 CFR 668.5(g) provide a clear and specific method for calculating the percentage of a program that is offered by an ineligible organization or institution. To determine that percentage, an institution must divide the number of semester, trimester, or quarter credit hours, clock hours, or the equivalent that is provided by the ineligible organization or organizations by the total number of semester, trimester, or quarter credit hours, clock hours, or the equivalent required for completion of the program. A course is provided by an ineligible institution or organization if the organization with which the institution has a written arrangement has authority over the design, administration, or instruction in the course, including, but not limited to—

(1) Establishing the requirements for successful completion of the course;

(2) Delivering instruction in the course; or

(3) Assessing student learning.

For more information on written arrangements please see the most recent version of the Federal Student Aid Handbook that discusses written arrangements.

In reviewing public comments on this topic, the Department noticed that some commenters may be confused about the extent of the limitation on the amount of a program that can be offered by an ineligible institution or organization under 34 CFR 668.5(c). If a program that is eligible for title IV, HEA funds is combined with job training as part of a broader training experience, such as an apprenticeship, only the portion of the experience that comprises an eligible workforce program and qualifies a student for Pell Grant funds is subject to the limitation. Hours spent on job training that is not part of the eligible workforce program, and therefore does not qualify for Pell Grant funds, are not subject to any limitations.

For example, one commenter, arguing for an increase in the allowable percentage, indicated that related instruction in their Registered Apprenticeship program occurs at the beginning and is provided entirely by the institution, with the remaining job training conducted by other entities, including employers. In that situation, using the criteria described above, the Department would view the program as being provided entirely by the institution, and not subject to the written arrangement limitations.

Changes:

None.

Ineligibility Due to Non-Federal Grant or Scholarship Assistance (§ 690.5)

The Department proposed to add language to prohibit a student from receiving a Pell Grant if the student received grant or scholarship assistance from non-Federal sources that equals or exceeds the student's COA for the award year. The proposed regulatory language was very similar to the statutory language. In the NPRM, the Department expressed concern about the potential for abuse of this provision, particularly when an institution has the ability to alter institutional aid or a student's cost of attendance by a very small amount in order to avoid causing the student to become ineligible for Pell Grant funds. The Department sought public comments about potential options to prevent such gaming, including oversight mechanisms.

Comments:

Many commenters stated that the Department's regulations, which mirrored the statute, should not be altered, including to prevent gaming or abuse of the provision. Other commenters appeared to be confused by the provision, and a large number of questions were submitted. These commenters believed that the provision would unfairly limit a student's aid such that the student would no longer be able to receive a Pell Grant if the student received any amount of grant or scholarship assistance, as opposed to only losing Pell Grant eligibility for the award year. Two commenters were concerned that if the Department were to implement a new oversight mechanism to prevent gaming that it could impose burden on institutions and students. They suggested that it would be sufficiently cautionary to affirm that professional judgment (PJ) adjustments to COA must meet existing case-by-case documentation standards under the HEA and that the Department considers such adjustments during program reviews.

One commenter concluded that institutions using PJ to boost COA by a small amount was less likely to occur than simply reducing institutional or other aid by a small amount. They noted that in cases of PJ, the statutory documentation standards govern such decisions, which can be easily audited. They suggested that the Department consider using available student aid data to identify institutions that appear to be systematically tailoring non-Federal aid to be within $50 (or some other small amount) of meeting COA. The commenter stated that the Department could also require institutions to document the methodologies used to determine non-Federal aid and then conduct risk-based audits of institutions that appear to use gaming practices.

Discussion:

The Department stated in the NPRM, and we reiterate here, that if a student's entire COA for an award year is met with non-Federal grant or scholarship aid, that student is not eligible for a Pell Grant for that award year. However, the student would retain Pell Grant eligibility for subsequent award years if the student has remaining lifetime eligibility.

The Department disagrees with commenters who argued that additional oversight of this provision is not warranted. Although we agree that the provision will only affect a small

number of individuals, it is the Department's responsibility to ensure the integrity of the title IV, HEA programs, including all statutory requirements.

We appreciate the suggestions from commenters regarding ways that the Department could evaluate implementation of this provision using administrative data or other oversight tools. The Department plans to establish an oversight process to identify cases in which institutions are abusing the provision and will take commenters' suggestions into account as it does so.

Unfortunately, commenters were unable to offer suggestions for regulatory changes that could prevent or reduce the likelihood of abuse, and the Department continues to interpret the statutory language as not expansive enough to allow the Department to limit a student's Pell Grant eligibility to the student's COA minus the total amount of the student's non-Federal grant aid. Therefore, we have made no changes to this regulatory language, but, as described above, we will develop oversight procedures to monitor its implementation at postsecondary institutions.

Changes:

None.

Components Determined by Governors: Bilateral Agreements (§ 690.93(h))

The Department proposed during negotiated rulemaking to allow two Governors to enter into a bilateral agreement for an eligible institution in one State to offer an eligible workforce program to students in another State through distance education so that students may use Pell Grant funds to attend a program located in another State. Bilateral agreements allow the Governors of two States to determine that an eligible workforce program meets the workforce needs of both States while also preventing the rapid proliferation of such programs among States where the program's training is not as valuable. The Department included a directed question about how to balance its concerns without making it overly burdensome to create and expand high-quality programs.

Comments:

A few commenters agreed with the Department's proposal because a multilateral approach risks allowing programs to operate in States where they offer limited workforce value, undermining the program's foundational purpose. The core eligibility criteria for eligible workforce programs—alignment with high-skill, high-wage, or in-demand occupations; meeting the hiring needs of employers; and preparing students for a stackable credential—are inherently local determinations that reflect State-specific labor market conditions. The commenters asserted that bilateral agreements ensure that a State Governor executes a meaningful check that a given program meets that State's workforce needs.

Discussion:

The Department agrees and thanks the commenters for their support.

Changes:

None.

Comments:

Many commenters disagreed with the Department's prohibition of multi-lateral agreements. Commenters believed that guardrails already exist through current reciprocity frameworks and this prohibition is applied unnecessarily to eligible workforce programs. One commenter stated that the Department created a policy separate from the realities of budgets and staffing, and the WFTCA offered no new resources to States to build or operate the Department's proposed framework for bilateral agreements to offer eligible workforce programs to students located in other States. The commenter recommended that the Department partner with State authorization experts, consider a separate rulemaking, delay this component of the regulations, bundle it into a future rulemaking session, and rely on NC-SARA in the meantime.

Several other comments stated Governors should be given discretion to determine the most effective structure for interstate agreements to meet the needs of their States. They asserted that bilateral agreements are unnecessarily limiting, in part because State boundaries do not neatly align with or adequately capture the nuances of workforce needs. The commenters argued that a bilateral agreement structure risks imposing additional layers of bureaucracy that could stifle innovation and limit opportunities for students.

Some other commenters offered alternatives, such as allowing multilateral agreements that have documented success, offering national portable credentials, allowing multilateral agreements for programs in national defense training or programs that have high-demand sector placements, automatically allowing multilateral agreements after three years after the program was approved, automatically allowing multilateral agreements after 2029, or allowing multilateral agreements between institutions that are within a specific region of the United States. Another commenter requested that the Department create and manage a multilateral eligible workforce program reciprocity agreement.

Discussion:

As explained in the NPRM, the Department has concerns regarding the potential for rapid proliferation of eligible workforce programs offered through distance education (§ 600.2) and the need for appropriate safeguards. The NC-SARA framework, in which a non-governmental organization oversees multi-lateral agreements among many States, does not currently provide adequate safeguards to prevent this kind of rapid expansion, particularly given the potential for eligible workforce programs to be offered to students in States where the training is not needed for the regional economy. Eligible workforce programs are unique in that the Governor must certify that the program provides an education aligned with the requirements of high-skill, high-wage, or in-demand industry sectors or occupations and that the program meets the hiring requirements of potential employers in the sectors or occupations. Under currently established multilateral agreements for State authorization generally, an institution based in one State could offer an eligible workforce program through distance education to an individual residing in a State with completing different needs. For example, in-demand sectors or occupations in Alaska may be different from in-demand sectors or occupations in Puerto Rico. Students should not exhaust their limited Pell Grant funds on programs that will not result in entry into the workforce in a field in which the program was preparing them. Bilateral agreements are necessary to ensure that a Governor has reviewed and certified eligible workforce programs offered to students through distance education in different States.

The commenters also did not sufficiently address the Department's primary concerns related to inter-State offerings of eligible workforce programs;

i.e.,

the fact that the law requires each State to make a determination about whether a program meets the job training needs of the regional economy, and an agreement like NC-SARA—even if provided only for a particular industry—would not obligate each State to make that determination. Likewise, the Department generally cannot develop and manage a model like NC-SARA; because nothing in the WFTCA would permit such a framework and would therefore be an overreach of the Department's authority.

Nothing in this rule prohibits State Governors from entering into bilateral agreements with numerous other States. We believe that bilateral agreements are a reasonable undertaking and the

burden associated with establishing such agreements has value of its own, improving the likelihood that the programs qualifying for Pell Grant funds are in high-skill, high-wage, and in-demand sectors or occupations. Additionally, once established, the bilateral agreements may be maintained indefinitely, so long as the States continue to agree that the programs meet the statutory and regulatory requirements. This would allow industries, such as defense, to work within that framework as long as necessary.

We decline the commenters' recommendations to delay implementation of these provisions. The WFTCA has a statutorily mandated effective date for eligible workforce programs of July 1, 2026. We are unable to postpone the specific regulations surrounding bilateral agreements, as we do not have the authority to do so.

Changes:

None.

Comments:

One commenter asked whether programs approved in one State may receive reciprocal recognition in partner States.

Discussion:

Programs approved in one State do not automatically receive reciprocal recognition in partner States and may only receive such recognition if a bilateral agreement also exists between Governors of each State. In order for an institution to establish eligibility for title IV, HEA funds for a student located in another State enrolled through distance education, the Governors of both States need to fulfill all the requirements described in § 690.93(h).

Changes:

None.

Comments:

One commenter recommended that the Department publish a public-facing registry of Governor-approved programs under bilateral agreements searchable by State, occupation, and credential type.

Discussion:

The Department declines to regulate itself by establishing a requirement to publish Governor-approved programs, in particular because it will not have information about these programs prior to an application to the Department for the program to become eligible for title IV, HEA funds. However, we will consider publishing a list of eligible workforce programs that includes the States where they are located. Under § 690.93(h), the rule already requires Governors to publicly publish bilateral agreements.

Changes:

None.

Comments:

A few commenters were opposed to bilateral or multilateral agreements. One commenter stated that the WFTCA requires States to play an active role in assessing programs in the higher education sector to safeguard critical student financial aid and ensure the goals of the Workforce Pell Grant program are met. Commenters stated that allowing bilateral agreements risks dilution of local labor-market relevance and that the WFTCA neither contemplates nor provides exceptions to the general rule that Governors must assess labor markets and workforce programs in their States.

Discussion:

The Department does not believe that the bilateral framework will dilute local labor-markets. The Department was very intentional in requiring that Governor of the State determine that the program being offered through distance education to individuals in his or her State meets applicable criteria under § 690.93(a) prior to certifying the program under a bilateral agreement.

Changes:

None.

Comments:

One commenter was concerned that Governors may refuse to enter into an agreement with another State based on political or ideological disagreements. The commenter suggested limiting discretionary denial based on non-objective criteria.

Discussion:

Governors have authority and autonomy regarding whether to enter into a bilateral agreement with the Governor of another State. The Department believes this is the clearest reading of the statute and necessarily means that States can use a variety of criteria to decide whether to enter into a bilateral agreement with another State and does not intend to limit discretionary denial in this way.

Changes:

None.

Comments:

One commenter was concerned that institutions will try and game completion rates through selective enrollment. Institutions could improve completion rates by refusing to enroll students who may be most likely to drop out, concentrating enrollment make-up to the most academically motivated students while turning away the most economically vulnerable applicants. The commenter was also concerned that job placement rates could be gamed through temporary employment. The commenter demanded that bilateral agreement programs be subject to the job placement rate requirements of the State where the student is located, not the State where the institution is located.

Discussion:

The Department declines to accommodate the commenter's demand. We have included a provision under § 690.93(h)(3) that states “[t]he bilateral agreement includes provisions for data-sharing among the States for purposes of completion and placement rate calculations”. The Department intends to release sub regulatory guidance containing more specifics how the completion and job placement rates are calculated for States with bilateral agreements and believes this guidance will prevent institutions from `gaming' this provision.

Changes:

None.

Comments:

One commenter stated that the Department should require that bilateral agreements be time-limited and subject to regular renewal, with the renewal process requiring updated labor market data demonstrating the program's continued relevance.

Discussion:

Eligible workforce programs approved under a bilateral agreement are still subject to § 690.93 (e), which states that the Governor's approval expires at the expiration of the institution's Program Participation Agreement and § 690.93 (f), which says prior to the expiration of an institution's Program Participation Agreement, the Governor must provide, through a process determined by the Secretary, a certification of continued approval of each eligible workforce program offered by the institution. Therefore, the Department believes the commenter's concern is already addressed through the regulations.

Changes:

None.

Comments:

One commenter stated that any bilateral agreement should require the receiving State's Governor to independently verify and clearly justify that the program aligns with that State's labor market needs, rather than simply accepting the originating State's determination.

Discussion:

We decline the commenter's recommendation because such requirement is already established under § 690.93(h)(1).

Changes:

None.

Comments:

One commenter stated that bilateral agreements should include specific consumer protections for distance education students, including requirements that institutions clearly disclose to students whether the program is designed for the labor market in the originating State, provide information about job placement rates and earnings outcomes disaggregated by the State in which students are located, and disclose any additional anticipated costs to students.

Discussion:

We decline the commenter's recommendation because programs included in a bilateral agreement are subject to all the outcomes measures, including job placement, completion, and value-added earnings. Given that all of these measures already exist, and because the bilateral agreement requirements are already specifically designed to protect

students enrolled in distance education programs, the Department does not believe that the value associated with making such disclosures merits the additional burden on States that such a requirement would impose.

Changes:

None.

Comments:

One commenter stated that Department should explicitly prohibit multilateral agreements and ensure that the bilateral framework cannot be used as a backdoor to the nationwide proliferation of Workforce Pell-eligible distance education programs that lack any connection to State and local labor markets.

Discussion:

Multilateral agreements are prohibited under this regulation. The Department believes that regulatory requirements ensuring that the Governor of each State that is part of a bilateral agreement has considered the occupation(s) or sector(s) on their State's list of areas that are high-skill, high-wage, or in-demand prevent the rapid proliferation of low-quality programs that do not meet labor needs in each State where the agreement applies.

Changes:

None.

Value-Added Earnings: Interim Value-Added Earnings Metric (§ 690.95(a))

The Department sought feedback from commenters on whether an interim value-added earnings metric should be computed. We requested feedback on whether this was necessary to at the very least, make those applying for workforce programs aware of the potential earnings outcomes. The Department also requested comments on whether an eligible institution's workforce programs should be held accountable in any way to said interim earnings metric prior to the official calculation of the value-added earnings metric.

Comments:

Several commenters recommended that the Department not adopt an interim value-added earnings metric. They noted that most eligible workforce programs will need time to refine implementation after the program is launched. The commenters did not believe there would be an appropriate interim metric that would be both meaningful and readily attainable for institutions or States during the program's early years.

One commenter stated that the Department should only go as far as developing an optional, nonbinding advisory tool or framework.

Discussion:

The Department agrees with the commenters that establishing a value-added earnings framework during the initial several years of implementation of these provisions is not feasible and would not provide an appropriate evaluation of the program's effectiveness or outcomes. We do not intend to establish a framework for an optional advisory process, although such an optional framework would be permitted if States or other non-Federal entities wish to establish such a process.

Changes:

None.

Comments:

One commenter recommended that the Department adopt an interim methodology for prison education programs because eligible workforce programs that enroll confined or incarcerated students beginning in 2026-27 will operate without any accountability benchmark until 2030-31. They noted this would create a four-year window during which programs with poor earnings outcomes could expand substantially at Pell Grant expense.

Discussion:

The Department declines to create different interim calculations for specific programs, in this case, prison education programs. The administration of a separate calculation would be overly burdensome for both the Department and prison education programs. Note that, in order for a confined or incarcerated individual to receive a Pell Grant, the individual must be enrolled in a prison education program (PEP). A PEP has its own regulatory framework in 34 CFR 668 Subpart P. This includes approval by the Federal Bureau of Prisons, or State Department of Corrections and a best interest determination that must be concluded prior to the expiration of each postsecondary institution's program participation agreement. A PEP that is an eligible workforce program will need to comply with all the regulations under 34 CFR 668 Subpart P and 34 CFR 690 Subpart H. Therefore, there will be sufficient accountability for such program, even in the absence of an interim value-added earnings calculation.

Changes:

None.

Comments:

Under § 690.93(d)(9) the Department requires a Governor to take into consideration the cost of the program and the anticipated wages of the industry or occupation prior to the initial determination of the program's value-added earnings. One commenter stated that, given that States are already required to take such costs into consideration, the Department should require a Governor certification under § 690.93(d)(9) to include a published comparison of program tuition to median entry-level wages for the occupations the program prepares students for, using Bureau of Labor Statistics Occupational Employment and Wage Statistics (OEWS) data or equivalent State data sources. The commenter asserted that this comparison should be made publicly available alongside the Governor's certification and updated annually.

Discussion:

The Department declines to adopt the commenter's suggestion to require Governors to publish the evaluation under § 690.93(d)(9) publicly. The value-added earnings calculation is standardized across all eligible workforce programs, however, the Governor's review of eligible workforce programs prior to the 2030-31 award year is not standardized; each Governor will review eligible workforce programs in accordance with their own established standards and available data. Until the value-added earnings metric is calculated for the first time in 2030-31, we are extending as much flexibility to Governors as possible.

Changes:

None.

Comments:

Several commenters stated that the Department should encourage States to calculate interim value-added earnings for each eligible workforce program. Commenters said that the interim calculation should not affect Pell Grant eligibility.

One commenter noted that a data source that could be used for an interim value-added earnings calculation is State unemployment insurance (UI) systems. The commenter also stated that the Department should explore other sources of administrative data that may be able to produce interim value-added earnings estimates, such as the Internal Revenue Service (IRS) or the Post-Secondary Employment Outcomes (PSEO) data system. A separate commenter noted that, as an already existing data source, the interim calculations should be published in the College Scorecard.

A few other commenters encouraged the Department to create a standardized interim value-added earnings metric that requires eligible workforce programs to demonstrate their economic value to students before the full implementation of the value-added earnings calculation. Additionally, the Department should collect such data and make it publicly available at least annually, so that students, taxpayers, and researchers can access pertinent information on program approvals, earnings, and State interpretations of “high-skill, high-wage, or in-demand” occupations. The commenters additionally encouraged the Department to require States to submit proposals outlining how they plan to ensure compliance with the value-added earnings metric between July 1, 2026, and the 2030-31 award year, taking into account the data sources available to

them in their respective contexts. They believed these plans should include measures of program earnings at least annually, with directions on how the data are to be collected and incorporated into the State-level approval process. They further noted that the Department should require States to share plans for increasing their data capacity to be in full compliance with the value-added earnings metric by the end of the three-year interim period.

Discussion:

We encourage States to calculate an interim value-added earnings metric using available administrative data, including but not limited to data available in State UI tax systems. If a Governor chooses to formally calculate interim value-added earnings, we also encourage that the result be published publicly. Only Governors have sufficient information to determine if their administrative data is sufficient to provide accurate, comprehensive information to consumers regarding interim outcomes for these programs.

Passing or failing such an interim metric would not affect Pell Grant eligibility for the eligible workforce program, but it would demonstrate to the Governor, institutions, and students whether the program is assisting completers in obtaining employment in high-wage fields or occupations. Interim calculations done by the Governor will not be submitted to the Department; therefore, it is unlikely that IRS or PSEO data can be used or publicly published. Use of Federal data would likely require a memorandum of understanding (MOU) to be ratified between the Department and the Department of Treasury or Census Bureau. Because the Department does not have the authority to require an interim value-added earnings calculation, and the Department does not know how many Governors will seek to create an interim value-added earnings calculation, nor how many would wish to rely on Federal data for those calculations, the Department believes that it would be impractical to commit to working with another Federal agency to furnish such data.

In the proposed and final regulations, we believe that we have sufficiently mitigated the downsides of the necessary delay of the value-added earnings calculation by requiring a Governor to certify that he or she will take into consideration the cost of the program and the anticipated wages of the industry or occupation prior to when the initial determination of the program's value-adding earnings is made under 34 CFR 690.95. This requirement was specifically added at the request of non-Federal negotiators in acknowledgement of the period when a program would not be assessed using the value-added earnings metric. Finally, as an additional measure to improve public understanding of these programs as early as possible, the Department intends to publish for the general public the results of value-added earnings calculations, including median earnings, for all eligible workforce programs as soon as they become available.

The Department will not require States to submit proposals outlining how they plan to ensure compliance with an interim value-added earnings calculation, because we do not have the legal authority to require an interim calculation, nor subject a program's eligibility to an interim calculation. We also do not see a need to require States to share plans for increasing their data capacity to be in full compliance with the value-added earnings metric by the 2030-31 award year because the Department, rather than States or Governors, will calculate the value-added earnings.

Changes:

None.

Value-Added Earnings: Exclusion of Certain Students in the Completer Cohort (§ 690.95(a))

Institutions must keep the tuition and fees for an eligible workforce program below the program's calculated value-added earnings. Value-added earnings are calculated by determining the difference between adjusted median earnings of program completers and 150 percent of the poverty guideline for a single individual. The Department sought feedback from the community on whether certain students should be excluded from the value-added earnings metric when assembling completer cohorts, including currently enrolled students.

Comments:

Many commenters recommended excluding currently enrolled students from the value-added earnings metric. Commenters noted that eligible workforce programs are intended to lead to a credential that is stackable and portable. They argued that institutions should not be penalized when students choose to continue their postsecondary enrollment in other programs after graduating from an eligible workforce program, and that including such students would necessarily deflate program earnings outcomes since currently enrolled students generally earn less than students who are not enrolled.

Discussion:

The Department is persuaded by the commenters who proposed excluding currently enrolled students from the value-added earnings metric. In addition to the points raised about credential stackability, the Department believes that this decision is relatively administratively easy to execute, since the Department maintains enrollment data for students who received title IV, HEA funds and can therefore remove such students from a cohort.

There are significant differences between excluding currently enrolled students from the value-added earnings cohort and excluding them from the job placement rate. Notably, it would usually be much more difficult for institutions to abuse the value-added earnings metric by ensuring continued enrollment for potentially up to several years (until the earnings measurement year). This differs from the job placement metric, which until the 2028-29 award year is measured in the second quarter after the individual exits the program and would therefore be easier for institutions to potentially manipulate. Additionally, including enrolled students in the job placement metric reduces the likelihood that institutions could easily manipulate the value-added earnings metric by encouraging students to move directly from an eligible workforce program into another program.

Changes:

The Department amends the regulations to include paragraph (l) under § 690.95 that states, “The Secretary excludes a student from the value-added earnings calculation if the Secretary determines that the student was enrolled in any other educational program at the institution or at another eligible institution during the calendar year for which the Secretary obtains earnings information under paragraphs (g) and (h) this section.”

Comments:

One commenter recommended three exclusions that reflect documented barriers specific to formerly confined or incarcerated individuals that are entirely outside of a postsecondary institution's control. The exclusions they commended included:

• Students subject to active occupational licensing restrictions. The commenter believed that counting these students in the value-added earnings cohort at suppressed wages punishes programs for the collateral consequences of the criminal justice system, not for poor educational outcomes;

• Students subject to active parole or probation conditions that restrict employment. The commenter contextualized this request by noting that supervision conditions frequently prohibit employment in certain

industries, with certain employers, or during certain hours; and

• Students who completed the program within a correctional facility and who were not released until more than 90 days after the cohort period ended. They noted, that for in-facility programs, students may complete training 6-18 months before their release date. Their post-completion employment opportunity depends entirely on their release date, not their completion date. Measuring earnings in the second quarter after program exit—when the student may still be incarcerated—structurally produces a zero-earnings result for students who have not had any opportunity to enter the labor market.

Discussion:

The Department notes that, for all these recommendations, in the value-added earnings metric, a completer is not included in the median earnings until three full years after program completion. Also, an individual that is not employed is not included in the median earnings, as only individuals that are working are included in this metric.

We decline exclusions for currently or formerly incarcerated students from the value-added earnings metrics. Under the regulations for prison education programs at § 668.238(a)(7), postsecondary institutions are prohibited from enrolling a confined or incarcerated individual into PEPs designed to lead to licensure or employment for a specific job or occupation if such job or occupation typically involves prohibitions on the licensure or employment of formerly confined or incarcerated individuals.

It is incumbent upon the postsecondary institution to counsel a student regarding the viability of their post-graduation employment prospects in relation to any parole or probation conditions that restrict employment. If a completer still has a restriction or condition during the time when value-added earnings for the program is calculated then the program may not best suit the students' need. Pell Grant eligibility is limited; therefore, students should not exhaust eligibility on eligible workforce programs that may not lead to employment after completion.

We decline the third recommendation because the Department calculates the value-added earnings three years after completion of the eligible workforce program, which aligns with the first full tax year following the award year in which the student completed the eligible workforce program. Offering an eligible workforce program is voluntary; it is incumbent upon an institution to decide if they are able to offer an eligible workforce program that also functions as a prison education program complying with all statutory and regulatory requirements.

Changes:

None.

Comments:

A few commenters stated that students that are currently enrolled should not be excluded from value-added earnings because the goal of an eligible workforce program is to get completers into the workforce as soon as possible, because value-added earnings are calculated using median earnings of those who completed the program three years prior, commenters believed that was an ample amount of time to secure employment.

Discussion:

The Department disagrees with the commenter who urged the Department to continue including currently enrolled students in the value-added earnings metric. The Department did take the commenter's concern into consideration, and we chose not to exclude currently enrolled individuals from the placement rate calculation because, in addition to operational challenges we believe that would be substantially more likely to cause institutions to establish eligible workforce programs that are designed to move students into continued enrollment rather than the workforce.

Changes:

The Department will exclude students enrolled in an educational program during the earnings measurement period, or the next full tax year, from median earnings when the value-added earnings metric is calculated.

Comments:

One commenter recommended treating students that are currently enrolled as a partial value of 0.5. For example, students continuing in education would count for 0.5 in the denominator. The commenter argues that this would have the effect of tempering negative impacts from a subset of students directly transitioning to new programs out of an eligible workforce program, while also disincentivizing the creation of programs that funnel students into additional enrollment instead of the workforce.

Discussion:

The Department does not believe we have the legal authority to treat a student that is enrolled in a program as a partial value. We decline the recommendation because the commenter did not provide any legislative or regulatory examples of such a proposal currently existing or being legally supportable.

While the Department believes that there is a basis for excluding certain individuals from the calculation from a program's value-adding earnings entirely, such as in the case of students who completed a program and are now enrolled in another educational program, the statute does not provide any basis for weighting any individual (or category of individuals) included in the calculation of a program's value-adding earnings differently from any other individuals included in the same calculation.

See

HEA Sec. 481(b)(3)(A)(iv)(IV). Because of this, the Department believes that it would be improper to attempt to add such a factor into the calculation, much less determine what weighting value should be ascribed to currently enrolled students (or any other class of individuals).

Changes:

None.

Comments:

One commenter recommended that the Department exclude individuals in subsidized employment placements required by TANF, Medicaid work requirements, or court-ordered service programs.

Discussion:

We decline to exclude these individuals. If graduates do not obtain employment, but instead need to access public benefits, that should be reflected in median earnings so as to accurately describe student outcomes.

Changes:

None.

Comments:

One commenter recommended that value-added earnings results be disaggregated and published by employment status (full-time/part-time) and by caregiver-identified status where data permit, so that programs serving predominantly part-time workers are evaluated in the appropriate context.

Discussion:

We decline the commenter's recommendation. The statute does not distinguish between full-time or part-time positions. The purpose of receiving Pell Grant funds under the Workforce Pell provisions is to obtain high-wage employment after completing the program. The value-added earnings calculation is a standardized method for evaluating earnings. The Department has provided various exceptions that include exclusions for individuals who are not working. The Department does not believe that part-time employment can be accurately and consistently distinguished from employment that is low-wage, and we therefore do not believe it would be useful to further disaggregate value-added earnings results in the manner described by the commenter.

Changes:

None.

Value-Added Earnings: Process for Combining Multiple Cohorts (§ 690.95(h))

The Department sought feedback from relevant stakeholders regarding the

process of computing the value-added earnings metric for programs with small numbers of students. The Department was particularly interested in feedback pertaining to its proposed method for aggregating multiple years of cohorts together to increase cohort sizes.

Comments:

A few commenters proposed that the Department modify the method it uses to aggregate completers from small programs to reach the minimum cohort size needed for the value-added earnings calculation. Some commenters advocated that the Department use completers from the cohort period and up to four additional award years, for a maximum of five award years. One commenter argued that this process would be advantageous because programs in emerging fields (such as artificial intelligence (AI)) may have small cohort sizes initially. Alternatively, one commenter argued against this approach, noting that expanding the cohort aggregation process to include additional years—beyond four years of program completers—would not realistically represent the present-day outcomes of the program.

Other commenters expressed concern that the cohort aggregation process proposed for calculating the value-added earnings metric does not match the cohort aggregation process in the recently released STATS and Earnings Accountability NPRM (91 FR 21088), published April 20, 2026. One commenter noted that maintaining different cohort aggregation processes will create unnecessary administrative burden on the Department. Another commenter noted that consistent cohort aggregation processes are critical for giving students clear and consistent information about program outcomes. Both commenters advocated for the simpler two-year and four-year cohort aggregation structure that was previously used in the 2014 and 2023 gainful employment regulations. Commenters noted that this approach would be simpler, reduce burden on the Department, better facilitate comparability of earnings across time, and reduce year-to-year variability in how a program's earnings are measured.

Another commenter was similarly concerned about the misalignment in cohort aggregation processes across this regulation and the proposed cohort aggregation process from the consensus language for the STATS and Earnings Accountability regulations. To address this, the commenter recommended changing the cohort aggregation process to match the process in the recently released STATS and Earnings Accountability NPRM. Under this approach, the commenter proposed that the Department could aggregate cohorts at the six-digit Classification of Instructional Program (CIP) code level across eight years to reach a minimum threshold of 30 completers for calculating value-added earnings. Should that number not be reached, completers at the four-digit CIP code and credential level would be added. If the minimum number of completers was still not reached, then the process would repeat at the two-digit CIP code and credential level.

Discussion:

The Department agrees with commenters who suggested simplifying and aligning the cohort aggregation process with the processes used in prior regulations. The Department disagrees with commenters who suggested adding a fifth award year to the cohort aggregation process and with commenters who suggested aggregating cohorts to the four-digit and two-digit CIP code level. The Department considered several factors when making these determinations.

First, the Department agrees that a revised process will reduce administrative burden. The current cohort aggregation process included four individual steps, iteratively aggregating completers from the cohort period and three prior award years. The Department agrees with commenters who contemplated combining the last two steps into a single step (adding completers from the second and third prior award years at the same time, rather than individually). Such an approach reduces the amount of burden on the Department when creating program completer lists, since it would not have to design an individual process to add completers from the second and third prior award years individually.

Second, the Department agrees that aligning the cohort aggregation processes will provide clearer information to students. The simplified cohort aggregation process contemplated by commenters will better ensure that earnings information is consistently reported to students, since the Department would no longer need to maintain two separate cohort aggregation processes. Furthermore, a streamlined process will reduce complexity for the Department, who would otherwise have to design and administer two distinct cohort aggregation processes.

Third, the Department agrees that a streamlined process will improve cohort consistency over time, allowing for more consistent earnings comparisons over time. The simplified cohort aggregation process contemplated by commenters will enhance the likelihood that cohorts are consistently aggregated to the same level each year, thereby reducing the possibility of year-to-year fluctuations due to differences in cohorts that are included in any one particular year.

Lastly, the Department agrees with commenters who argued to align the cohort aggregation processes from this regulation with the cohort aggregation process used in the STATS and Earnings Accountability NPRM. As part of this alignment process, the Department believes it is necessary to lower the cohort aggregation threshold for these regulations in this final rule from 50 to 30, which will allow the Department to use the same cohort aggregation process across both regulations, thereby forming consistent cohorts.

The Department disagrees with commenters who proposed adding a fifth year to the cohort aggregation process and with commenters who proposed aggregating up to the four-digit and two-digit CIP code level. Aggregating for additional years beyond the fourth prior year risks reducing the ability of the Department to measure a program's present-day outcomes. Similarly, because eligible workforce programs are relatively short in duration, the Department is concerned that aggregating cohorts using four-digit and two-digit CIP codes will risk combining program outcomes that are from entirely different types of programs, which may unfairly benefit or disadvantage certain types of programs.

Changes:

The Department will update the regulations under § 690.95(h) to account for an additional year when combining cohorts. We amend paragraph (h)(1), (h)(2), (h)(3), strike paragraph (h)(4), and redesignate (h)(5) to (h)(4) as follows:

(h)(1) If the final list of students who completed the program during the cohort period includes at least 30 students, the Secretary sends information about those individuals to the Federal agency with earnings data;

(2) If the final list of students who completed the program during the cohort period does not include at least 30 students, the Secretary adds students who completed the same program during the first award year prior to the cohort period. If the combined number of completers from both award years includes at least 30 students, the Secretary sends information about those individuals to the Federal agency with earnings data;

(3) If the final list of students who completed the program during the cohort period and the first award year

prior to the cohort period does not include at least 30 students, the Secretary adds students who completed the same program during the second and third award years prior to the cohort period. If the combined number of completers from all four award years includes at least 30 students, the Secretary sends information about those individuals to the Federal agency with earnings data;

(4) If the final list of students who completed the program during the cohort period and the first, second, and third award years prior to the cohort period does not include at least 30 students, the Secretary does not calculate value-added earnings for the program for that award year.

Comments:

In response to the directed question, one commenter asked if the Department needs to—or should—create carveouts for certain fields or rural public institutions. The commenter used an example of a Hydrogeology program, which may graduate less than 50 students over a three-year period. The commenter also noted that, for such programs, two or three years of program or student data is needed before they can understand what the right `regulatory specificity' is. They also asked if, for such programs, language could be built that functions more as a temporary framework or guidance that can be modified in the future.

Discussion:

The Department disagrees with the commenter. Using enrollment in undergraduate certificate programs, the Department estimated the size of existing short-term certificate programs. For that reason, we do not believe it is necessary to wait for two to three years of program or student data, as the commenter requested, to determine an appropriate cohort aggregation procedure. Furthermore, the Department does not believe it has the authority to delay the implementation of these regulations due to the hypothetical example raised by the commenter, nor does it have the authority to create exemptions to the cohort aggregation process for specific institutions or programs based on their location.

Changes:

None.

Value-Added Earnings: Programs Serving Out-of-State Students (§ 690.95(k))

The Department sought feedback on its proposal that, if more than 50 percent of students enrolled in an eligible workforce program are not located in the State in which the eligible institution offering the program is located, the Department will not adjust the program's median earnings by the State and metropolitan area regional price parities of the Bureau of Economic Analysis when calculating the value-added earnings measurement.

Comments:

While some commenters supported the Department's position, several commenters disagreed with the Department's proposal. These commenters stated that the Department should not default to national median earnings for programs serving mobile or out-of-State students without an approved State alternative methodology, as national benchmarks may not reflect the economic value of programs aligned with States' regional labor markets. One commenter suggested that the Department allow institutions to appeal a determination regarding the student location if the institution can prove that more than 50 percent of students in the eligible workforce program are located in the State in which the eligible institution offering the program is located. They described this appeal as strictly limited to institutions with more than 50 percent of students outside the State. In the instance of an appeal, the commenters proposed that institutions could use IRS data to confirm the students' location.

Discussion:

We decline the commenter's recommendation. We believe that adding an appeals process would add significant, additional burden to the process. The standardized method that requires using the student's address or State of legal residence as reported on their Free Application for Federal Student Aid (FAFSA®) form at the time of enrollment will result in consistent application of the regulation.

During negotiated rulemaking, the Department proposed to use information provided on the FAFSA form by an applicant regarding their permanent address as the means of determining the State in which the student is located. We chose this method in part because of precedence for the use of this method in the Financial Value Transparency and Gainful Employment metric calculation process, with the attendant savings in operational costs, as well as because the Department's strong view is that institutions should not be granted the ability to interpret an individual's true “location” due to the likelihood that some institutions would use such discretion to place students in a State that would be most beneficial to the program's value-added earnings calculation. For this reason, the Department continues to believe that the best indication of a permanent location must be provided by the individuals themselves—who do not have an incentive to choose a State that best benefits the program and the institution—and not by institutions, which do have such an incentive.

Changes:

None.

Comments:

One commenter stated that the approach introduces a separate structure for determining student location that may not align with these established institutional determinations. They noted that the reported State of residence on the FAFSA form may not reflect a student's actual physical location during enrollment or the labor market in which the student ultimately earns wages. As a result, institutions may face conflicting Federal expectations regarding how student location is defined and applied. The commenter recommended that the Department:

• Define determination of “student location” consistently across 690.95(k), 600.9(c)(2), and 668.43(c)(3)(ii), or explicitly distinguish the purposes and definitions if differences are necessary.

• Permit institutions to rely on student location determinations already made for compliance with 600.9(c)(2) and 668.43(c)(3)(ii), where those determinations are based on documented and consistently applied institutional policies; and

• Provide clear guidance on how discrepancies between Federal data sources and institutional records will be resolved, including which source will be considered authoritative for purposes of value-added earnings calculations.

Another commenter recommended that the Department allow institutions to use verified institutional records to determine student location, where available. In addition, they believed the Department should consider flexible reporting options for students experiencing homelessness, such as allowing institutions to identify students as in-State or out-of-State based on enrollment or service data, rather than relying solely on addresses reported on the FAFSA form. The commenter stated that FAFSA data are not a reliable location indicator for students experiencing homelessness.

Discussion:

We decline the commenters' suggestions. The standardized method of using the student's address or State of legal residence as reported on their FAFSA form at the time of enrollment, will result in consistent application of the regulation. That said, the Department appreciates these comments and commits to evaluating its instructions for students to enter a permanent address on the FAFSA form in light of its importance for the process of calculating value-added earnings and other uses for the STATS and Earnings Accountability process.

The regulations under 34 CFR 600.9(c)(2), and 668.43(c)(3)(ii) were designed for a different purpose than these requirements; specifically, those regulations were designed to establish where an individual is located for State authorization purposes and for purposes of determining whether an institution was required to ensure that licensing requirements for a particular State were met if a student was located in that State. These requirements give the institution more control over the process of determining a student's location for this purpose, and the Department continues to believe that they are reasonable for that purpose to ensure that a program does not lose eligibility due to a technicality. Conversely, these regulations pertain to a process for determining where a student is located for purposes of the value-added earnings calculation, where the benefit of using an individual's indication of their personal address outweighs the benefit of an institution having control over that process, particularly given the potential for institutional gaming of that process, as described in the Department's response to the comment above.

Furthermore, the Department does not believe that a clear, consistent method exists to establish the specific location of an individual who is homeless, and the potential benefit of establishing a complicated framework for addressing such cases for the purposes of the value-added earnings calculation does not outweigh the significant costs, complexity, and burden associated with establishing an alternative process for determining their location. Many homeless individuals change locations within the same State and lack access to transportation; others may shift location across State lines and lack a permanent location.

Changes:

None.

Responses to Comments Received on NPRM

General Comments

Comments:

Many commenters urged the Department to strengthen engagement with the Department of Labor, Department of Health and Human Services, the Small Business Administration, employers, businesses, adult education providers, State higher educational officials, correctional facilities, State workforce boards, Governors, US territories, accrediting agencies, nonprofit workforce organizations, organizations that work with unaccompanied homeless youth, postsecondary institutions, and other stakeholders to promote the successful implementation of eligible workforce programs.

Commenters requested the Department release sub regulatory guidance on all provisions in the final regulations, including clarification on the Department of Labor's (DOL) role in the rules and if DOL or the Department of Education has the ultimate authority over eligible workforce programs. A few commenters also requested a unified data reporting pathway so that institutions report program data once, to avoid having to report to both DOL and the Department of Education.

Many commenters requested more guidance on other provisions outside of the regulations that impact student, program, and institutional eligibility, including areas such as satisfactory academic progress, ability to benefit, eligible career pathway programs, prison education programs, and written arrangements. Commenters also requested examples of how Governors will calculate outcome measures. Commenters recommended additional written guidance be provided through various publications including the Federal Student Aid (FSA) Handbook, frequently asked questions, Dear Colleague Letters, or Electronic Announcements. They also recommended that the Department conduct webinars and workshops with stakeholders.

Several commenters also stressed that the Department prioritize the timely release of final regulations, release technical specifications, and provide interim guidance to support implementation. Commenters also requested guidance, systems, and communications tailored to the new eligible workforce program student population, particularly those in PEPs and in the military. Commenters warned that although each proposed eligible workforce program requirement may seem reasonable on its own, the combined effect could sharply reduce the number of programs able or willing to participate, especially early on. The commenters expressed concern that programs that are high-quality but have limited administrative capacity may be discouraged from applying under a brand-new, fast-moving eligibility system. The commenters claimed that many States may still be determining how to structure and resource their new responsibilities, and that the lack of clear Federal guidance may increase the likelihood of inconsistent implementation, delays, and confusion for students. The commenters believed this uncertainty may ultimately deter institutions from seeking approval, which limits the intent and goals of eligible workforce programs.

Discussion:

The Department commits to continue collaboration with stakeholders, monitor implementation closely, and prepare additional guidance or resources to ensure consistent and timely access to Pell Grants in eligible workforce programs across all States and institutions. The Department believes this final regulation provides additional clarity and guidance and we commit to providing follow-up resources as needed by eligible workforce programs writ large. The structure of these regulations provides eligible workforce programs with the time and flexibility needed to adapt their programs to meet the requirements of this final rule.

Changes:

None.

Comments:

A few commenters expressed concern that expanding Pell Grant eligibility to workforce programs could increase overall Pell Grant expenditures, particularly during a time when the Pell Grant program is projected to face funding shortfalls. The commenter urged the Department to work closely with Congress to secure sustainable long-term funding for both traditional Pell Grants and Pell Grants funding for eligible workforce programs. The commenter also suggested several potential policy changes for broader Pell Grant reform, including modifying the Pell Grant eligibility formula to better target aid to the neediest students, redesigning the year-round Pell Grant model to distribute benefits more broadly, and restructuring Pell Grants as a multiyear grant to promote persistence and completion.

Discussion:

The Department recognizes that the statutory expansion of Pell Grant eligibility for eligible workforce programs may influence program expenditures, as estimated in Table 4.1 in the Regulatory Impact Analysis. The Department will continue to work closely with Congress, which holds the authority to appropriate additional resources, and will provide timely information to support informed budgetary decision-making. With respect to the commenters' suggested broader reforms, such as modifying the Pell Grant eligibility formula, redesigning the year-round Pell Grant structure, or establishing multiyear Pell Grant awards, these policy considerations extend beyond the scope of this rulemaking. Any such changes would require separate statutory or regulatory action and cannot be adopted within this final rule.

Changes:

None.

Comments:

One commenter was particularly concerned with the

influence of foreign adversaries over the United States. The commenter was acutely interested in the role eligible workforce programs could play in national defense. For example, the commenter stated that the Department should create more checks to ensure that foreign adversaries do not have undue influence in eligible workforce programs, such as requiring the Department to create a National Security Workforce Priority list and a Workforce Pell Grant Foreign Payment Monitoring Protocol. The commenter also suggested the Department conduct threat assessments of eligible workforce programs in collaboration with the Federal Bureau of Investigations and annual consultation with the Department of War. The commenter was also interested in how artificial intelligence could be used by foreign adversaries for economic warfare.

Finally, the commenter stated that the Department did not consider several additional statutes when drafting the NPRM and must add policies, frameworks, and reviews to the final regulation that consider applicable statutes including the CHIPS Act, the Foreign Agents Registration Act, the Economic Espionage Act, Federal Information Technology Acquisition Reform Act, Defend Trade Secrets Act, the Wolf Amendments framework, Bank Secrecy Act, International Emergency Economic Powers Act, Evidence-Based Policymaking Act, Federal Acquisition Regulations, and the Government Performance and Results Act.

Discussion:

The Department declines the commenter's requests. Throughout the 60-comment submission that included hundreds of demands, the commenter did not provide one example of current foreign influence that would warrant inclusion of the recommendations in the final rule. While the commenter did mention the Confucius Institutes, as of 2023, according to the Government Accountability Office, there were fewer than five Confucius Institutes still active within the United States. Most importantly, an eligible workforce program cannot be offered by a Confucius Institute because it is not an eligible institution. The Department expects postsecondary institutions to comply with all applicable Federal laws. The Department does not have enforcement authority over most of the Federal laws the commenter included in the submission. The appropriate Federal agency with jurisdiction will oversee proper enforcement of such laws and the Department is committed to working with any Federal agency that seeks assistance in enforcing Federal laws. Section 117 of the HEA requires institutions of higher education to report covered gifts and contracts from foreign entities to the Department. We recently released guidance on a new Reporting Portal for Reporting of Foreign Gifts and Contracts under Section 117 of the HEA to increase transparency and oversight of these transactions.

7

7

Electronic Announcement General-25-46:

https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2025-12-01/new-reporting-portal-reporting-foreign-gifts-and-contracts-under-section-117-higher-education-act-1965-implementation-planned-january-2026-and-reminder-january-reporting-deadline.

Changes:

None.

Comments:

Two commenters urged the Department to make eligible workforce programs effective immediately, rather than waiting until July 2026. Drawing on personal experience with months-long WIOA processing delays after being laid off, one commenter argued that the current system keeps qualified workers from starting training in a timely manner. The commenter further argued that accelerating Pell Grants for eligible workforce programs would allow displaced workers to enroll directly in short-term college programs without having to navigate slow, burdensome approval pipelines.

Discussion:

The Department appreciates the commenter's experience and agrees that timely access to high-quality workforce training is critical for displaced workers seeking to re-enter the labor market. However, the effective date is shaped by statutory requirements, system-readiness constraints, and the timeline necessary for States and institutions to build and certify eligible workforce programs.

Changes:

None.

Comments:

One commenter urged the Department to require institutions offering eligible workforce programs to proactively inform students about the full range of Federal, State, and local public benefits and supports for which they may be eligible. The commenter asserted that, because eligible workforce program students are low-income and face substantial non-tuition costs and often cannot access Federal student loans, students may face significant financial gaps that could push them toward predatory private loans or excessive work hours. The commenter recommended requiring institutions to provide clear benefits information to all eligible workforce program students; designate a staff member or office responsible for connecting them to benefits such as SNAP, TANF, CCDF, Medicaid, the Earned Income Tax Credit, and the Child Tax Credit; and report how they are informing students of such options.

Discussion:

We recognize that students in short-term programs may experience non-tuition costs. We also agree that students may benefit from information about Federal, State, and local public benefit programs for which they may be eligible. At the same time, the Department declines to establish a new regulatory requirement that institutions provide individualized benefits counseling, designate a dedicated benefits access office, or report benefits outreach activities as a condition of Pell Grant funding for eligible workforce programs. The statutory framework for eligible workforce programs under the WFTCA does not provide authority for the Department to impose such requirements on institutions, nor does it require institutions to administer, screen for, or coordinate eligibility across public benefits such as SNAP, TANF, CCDF, Medicaid, or tax credits. These benefits are administered under separate Federal and State authorities, each with their own eligibility structures and verification processes. Nevertheless, we reiterate that institutions retain broad discretion to offer student support services, including referrals to public benefit programs, financial coaching, or emergency aid, as part of their existing student services infrastructure. Many institutions already assist students in connecting to external supports, and we encourage institutions and States to continue these efforts where feasible.

Changes:

None.

Comments:

A few commenters urged the Department to adopt strong oversight and safeguards as it implements eligible workforce programs. The commenters warned that expanding Pell Grants to short-term workforce programs introduces significant risks, as similar expansions in the past enabled predatory, low-quality, high-cost programs, particularly among for-profit institutions and newer online credential providers (

e.g.,

tech bootcamps, OPM-run programs), to prey on unsuspecting students.

The commenters cited several examples of abuse, including deceptive marketing, inflated job-placement rates, misuse of income-share agreements, lack of transparency, weak instruction, and revenue-sharing arrangements that divert Federal funds away from accredited institutions. The commenters argued that strict guardrails are necessary to ensure eligible workforce programs will not supercharge the ability for low-quality educational

providers to participate in potentially predatory behaviors, reiterating that student protection must be the Department's priority.

Discussion:

Safeguarding students and protecting Federal funds remain central priorities for the Department.

As described throughout this final rule, the Department has established a comprehensive accountability framework for eligible workforce programs designed to prevent low-quality or predatory programs from gaining or maintaining Pell Grant eligibility. These safeguards include Governor certification requirements under § 690.93 to ensure programs align with high-skill, high-wage, or in-demand occupations, Secretary-determined performance requirements under § 690.94, including minimum completion and job placement thresholds, a value-added earnings metric under § 690.95 to verify that programs lead to earnings meaningfully higher than the poverty line, clear limitations on written arrangements and restrictions on the role of ineligible entities, consistent with the Department's broader oversight of third-party program delivery, and prohibitions on reestablishing failing or substantially similar programs for two years under § 690.97. Collectively, these measures are intended to ensure that only high-quality workforce programs serving students' interests can receive Pell Grant funds, while preventing providers, whether for-profit, online, or operating through contractual arrangements, from exploiting the new program structure.

Changes:

None.

Comments:

One commenter argued that, for eligible workforce programs to receive Pell Grants and be effective, the Department must be fully functional and capable of implementing the program. The commenter expressed strong concern that the dismantling of the Department will undermine the Department's ability to carry out the law. They criticized the reductions in force and efforts to move Federal Student Aid operations to the Department of the Treasury and note that these structural changes were not addressed in the NPRM.

Alternatively, a different commenter supported the Department's efforts to fully implement the Workforce Pell Grant provisions at current staffing levels. The commenter stated that the Department should leverage its existing capacity which will promote continuity, reduce administrative fragmentation, and minimize implementation risk. The commenter stated that the introduction of new personnel is neither necessary nor wise, particularly because it could cause duplicative functions or dilute accountability within established operational structures.

Discussion:

The Department disagrees with the commenter's assertion that it does not have sufficient staff to implement the Workforce Pell Grant law and regulations. Furthermore, the Department affirms its commitment to implementing eligible workforce programs faithfully, transparently, and in accordance with all statutory requirements. We will continue to coordinate across offices, provide technical assistance to States, institutions, and accrediting agencies, and maintain the infrastructure necessary to safeguard title IV, HEA funds and support students' access to high-quality- workforce training programs. This commitment will remain regardless of any operational shifts.

The Department thanks the other commenter for their support of our efforts to implement the Workforce Pell Grant provisions under current operational conditions.

Changes:

None.

Comments:

One commenter recommended the Department to clearly state that developing eligible workforce programs is voluntary for both States and institutions. The commenter also requested that programs be allowed to withdraw from participation for any reason, not just solely due to failure to meet eligibility requirements.

Discussion:

Developing eligible workforce programs is indeed voluntary for both States and institutions. States are not required to approve eligible workforce programs, and institutions are not required to seek approval or offer eligible workforce programs. This voluntary approach is consistent with the statutory structure, which allows States and institutions to determine whether participation aligns with their workforce development strategies and institutional priorities. Regarding program withdrawal, the Department agrees that institutions should have the flexibility to discontinue eligible workforce programs for any reason. The regulations do not restrict withdrawal solely to cases of failure to meet eligibility requirements. Institutions may choose to withdraw an eligible workforce program from participation in the Pell Grant program at their discretion, whether due to changes in institutional priorities, program restructuring, or other considerations. If a program is withdrawn, the institution must follow the appropriate notification and reporting procedures to ensure compliance with Federal requirements and to protect the interests of enrolled students.

Changes:

None.

Comments:

A few commenters recommended the development of a centralized, public-facing list of eligible workforce programs approved for participation in the Pell Grant program. One commenter asserted that such a list would ensure students are well supported in navigating these new programs and opportunities. The commenter recommended that the Department utilize the Federal Student Aid Data Center to provide students and employees with a trusted resource to verify the program's eligibility. Another commenter requested that the list be searchable by State, occupation, and credential type.

Discussion:

While the Department declines to add specific regulatory language to this rule regarding the commenter's recommendation, we do commit to exploring the possibility of releasing information about approved eligible workforce programs as soon as it becomes available. Additionally, in the preamble to the NPRM, we strongly encouraged Governors to maintain and publish a list of eligible workforce programs in their State.

The Committee on Appropriations for Departments of Labor, Health and Human Services, and Education, and related agencies directed the Department to collect and report to Congress a complete list of institutions of higher education and programs that have gained eligibility for Workforce Pell Grants, and the Department will explore the possibility of releasing such information to the broader public when it provides the information to Congress.

Changes:

None.

Comments:

Several commenters requested that the Department require specific curriculum or instruction in every eligible workforce program, such as problem solving and teamwork.

Discussion:

The Department does not regulate, control, or direct the curriculum and instructional materials used by higher education institutions and is primarily concerned with the eligible workforce program meeting our eligibility requirements outlined in 34 CFR 690 Subpart H. Governors will determine in-demand occupations, which will focus the institutions' program offerings in areas that will help graduates gain high-wage employment.

Changes:

None.

General Agreement With the Proposed Regulations

Comments:

Many commenters expressed appreciation for the Department's efforts to expand access to

Pell Grants through the eligible workforce program initiative. A few commenters strongly supported the inclusion of Registered Apprenticeships within this framework, with one noting that recognizing Registered Apprenticeship completion as a recognized postsecondary credential and enabling related instruction to qualify for Pell Grant funding in eligible workforce programs represents an important step toward strengthening workforce development in skilled trades.

Several commenters supported using Pell Grants to cover transportation programs, noting that the cost of these programs can be unaffordable for many students. The commenters believed this final rule will help address critical workforce shortages in essential industries like trucking.

Discussion:

The Department thanks the commenters for their support.

Changes:

None.

General Opposition to the Proposed Regulations

Comments:

One commenter expressed opposition to government funding for higher education, arguing that it leads to higher costs. Instead, the commenter suggested providing free, public continuing education for workforce training or higher education.

Discussion:

Congress has expressly directed the Department to implement statutory changes that expand Pell Grant eligibility to eligible workforce programs and to establish accountability requirements for those programs. Decisions about replacing or restructuring Federal student financial aid programs fall within Congress's legislative authority, not the Department's regulatory authority.

Changes:

None.

Comments:

One commenter erroneously believed Pell Grants would be eliminated with this final rule.

Discussion:

This final rule does not eliminate the Pell Grant program. Rather, it allows students to receive Pell Grants for programs that were previously ineligible. These programs, referred to as “eligible workforce programs,” are intended to be high-quality, performance-based, short-term programs that support America's workforce needs.

Changes:

None.

Rulemaking

Comments:

One commenter stated that Congress would have put a waiver to the master calendar requirements in statute, if its intention was for the Department to implement these regulations on July 1, 2026. Given this, the commenter believed that the final rules issued in 2026 should have an implementation date of July 1, 2027, at the earliest. The commenter stated that abiding by the master calendar gives institutions the proper amount of time to prepare for the changes implemented by the Department, adequately inform students and families of the changes to their student aid, and plan for the smoothest possible transition.

Discussion:

We decline the commenter's suggestion. Section 401(k) of the HEA states that “For the award year beginning on July 1, 2026, and each subsequent award year, the Secretary shall award grants (to be known as `Workforce Pell Grants') to eligible students under paragraph (2) in accordance with this subsection.” We intend to implement these final regulations on July 1, 2026.

Changes:

None.

Comments:

Several commenters were pleased with the negotiated rulemaking process. However, one commenter urged the Department to provide more time for future negotiated rulemakings so that appointed experts can fully understand the issues, consult stakeholders, and work toward consensus. The commenter also stressed the need for broader and more comprehensive institutional representation on the negotiating committee.

Discussion:

The Department strives to balance the need for thorough deliberation with statutory timelines and administrative requirements, and we select negotiators with the goal of ensuring balanced representation across the communities most affected by the regulations. We will continue to apply this principle in future rulemakings to ensure negotiators have sufficient time to review materials, consult with stakeholders, and engage meaningfully in the discussions.

Changes:

None.

Pell Grant Ineligibility Due to Non-Federal Grant or Scholarship Assistance (§ 690.5(a) and (b))

Comments:

There was a general understanding that this regulation implements the new provision in the HEA established by the WFTCA. One commenter agreed with the provision because it would be a responsible allocation of Federal dollars by declining Pell Grants in cases where students' cost of attendance is already met and using those funds for students who have need instead.

Discussion:

The Department thanks commenters for their understanding of the issue.

Changes:

None.

Comments:

A few commenters urged the Department to clarify how the new Pell Grant ineligibility rule for students who receive non-Federal grants equaling or exceeding their cost of attendance will interact with State “last-dollar” grant programs and Promise programs. One commenter asked the Department to confirm that these programs may continue operating as last-dollar aid without jeopardizing Pell Grant eligibility as long as total non-Federal aid remains below COA. The commenter noted that the NPRM's request for ideas to prevent “gaming” is unnecessary because the statute already provides adequate oversight mechanisms, and Congress did not create new reporting or enforcement requirements for this provision. The commenter also highlighted potential inequities: institutions can adjust their own aid to avoid overawards, but they cannot adjust private or external scholarships which means students with identical financial circumstances could receive different Pell Grant outcomes. The commenter recommended the Department create clear guidance and communication materials for external scholarship providers.

Additionally, the commenter asked for clarification surrounding how WIOA funds should be treated under the new rule, given WIOA's historical use as last-dollar aid. The commenter urged the Department to explicitly exclude WIOA funding from counting as non-Federal aid for Pell Grant eligibility purposes. Finally, the commenter requested clarification on how to handle cases where a student's Pell Grant eligibility increases after all aid has been disbursed and non-Federal aid already meets COA. The commenter asked the Department to specify whether institutions may disburse the additional Pell Grant amount or must first reduce non-Federal aid before releasing additional Pell Grant funds.

Other commenters also requested that WIOA funds be allowed to work together with Pell Grants and that the Department publish guidance explaining how to braid such funding effectively while minimizing administrative burden on institutions and students. Commenters encouraged the Department of Education to build on its collaboration with the DOL in this effort.

One commenter was unclear about how grant and scholarship assistance would be defined in the regulations.

Discussion:

The Department clarifies that grant and scholarship assistance is aid that does not have to be repaid. It encompasses dollars that are explicitly

called grants and scholarships as well as funds that are not, such as tuition reimbursements. “Last-dollar” grant and scholarship programs, including WIOA funds, will continue to be packaged as they have been; the difference is that now once all non-Federal grant and scholarship aid equals or exceeds the COA, the student becomes ineligible for a Pell grant. In many cases, the relevance of this provision will be clear early—for example, students who receive a “full-ride” scholarship will not be eligible for a Pell Grant, and the institution will be aware of that at the beginning of the year. When non-Federal grants and scholarships accumulate over the award year, the institution will need to check with each receipt of funds to ensure that they do not total an amount that equals or exceeds the COA; if it does and Pell Grant funds remain to be disbursed, the institution will need to adjust the amount to below the COA for the student to retain the Pell Grant. Barring that, the Pell Grant must be returned, as explained in § 690.80. Note that institutions are used to monitoring late-arriving aid because they are required to address potential overpayments at any time during the payment period.

8

8

Federal Student Aid Handbook—Volume 3, Chapter 3—Packaging Aid—

https://fsapartners.ed.gov/knowledge-center/fsa-handbook/2025-2026/vol3/ch3-packaging-aid#pid_1455637.

Because WIOA funds are provided through the DOL, they are considered Federal dollars, even though they are distributed by the States, and do not count toward the total of non-Federal scholarship and grant aid. To the extent that any funds are directly traceable to the U.S. Government, those would also be Federal dollars that do not count toward the relevant total. If funds are directly traceable to States or other non-Federal sources, they would count toward the total and in a sufficient amount will result in Pell Grant ineligibility.

Changes:

None.

Comments:

Several commenters expressed concern that the new Pell Grant exclusion might have the harmful effect of discouraging existing support from non-Federal sources or would otherwise interrupt the flow of that support. The types of support referenced by the commenters included employer sponsorships, philanthropic assistance, and local workforce development funding. The commenters stated that participants in workforce training programs have costs beyond tuition and fees, including transportation, childcare, and housing, etc., that are associated with participating in training. They claimed that removing Pell Grant eligibility would especially harm needy students, who have earned their scholarships and grants, while allowing Pell Grants to work alongside other funds would ensure those students can complete their programs successfully.

Some commenters thought that the new rule effectively changed Pell Grants from being “first-dollar” to “last-dollar” aid. They noted that this would be a significant change because it would replace Federal entitlement aid with private and institutional funds.

Some commenters misunderstood the provision and its implications. For example, one worried that the rule could unintentionally penalize programs that are most effectively serving participants facing the greatest barriers. They offered an example in which a student who received transportation support, tool allowances, and a housing stipend from a State emergency assistance program (all non-Federal grant or scholarship aid) “could be deemed ineligible for Pell if the combined amount approaches their COA, even if none of these funds are paying for training itself.”

One of the commenters requested that there be a carveout for defense worker educational benefits and that State workforce development grants specifically designed to supplement Federal financial aid be excluded from the calculation if the State grant's authorizing legislation includes a Federal aid preservation clause.

Another commenter asked that State assistance that is designed to offset a component of the COA be excluded from this determination.

Finally, one commenter asserted that high-need populations frequently receive non-Federal aid exceeding the COA “by design,” which, under the new law and regulation, would cause them to lose Pell Grant eligibility.

Discussion:

The Department does not agree that funders would be inclined to retract aid for students who become ineligible for Pell Grants because their COA is covered. A logical conclusion on the part of funding providers would be that their funding is even more important given that the student will not receive a Pell Grant. The opposite case would seem to make such funding more likely to disappear: if the COA were mostly or entirely covered by a Pell Grant, the student would then be in less need of the non-Federal funding.

Under the new law and regulations, scholarship providers, States, employers, institutions, and any other non-Federal funder of higher education are free to provide students with as much grant or scholarship assistance as they desire, to include more than the student's COA if they choose, but students will not be eligible to receive a Pell Grant in those cases. The implication of the new law is clear: Pell Grants are intended to cover the costs of higher education for needy students; they are not intended to be a financial reward for students who have no need, and, by definition, students whose entire COA has been met or exceeded by non-Federal grant or scholarship dollars have no financial need or unmet educational expenses as defined under the law.

Also, some commenters demonstrated a lack of understanding of exactly what the COA entails, which is more than just tuition and fees. It typically includes an allotment for food, housing, transportation, and childcare, as well as other costs that are associated with obtaining an education. When the COA is fully funded, the assumption is that all costs that will be incurred while the student is enrolled in the program will be met. When the normal COA for a student in a given program does not anticipate special circumstances and there are extra costs, such as abnormally high medical bills to the student or a family member, financial aid administrators at the school are permitted to exercise PJ to adjust for such circumstances and increase the COA if warranted.

Regarding the commenter who worried that the rule could unintentionally penalize programs that are most effectively serving participants facing the greatest barriers, their logic was flawed in that, if the combined non-Federal funds only approach the COA but do not equal or exceed it, the Pell Grant remains intact. Indeed, in the example the commenter provided, if none of the funds are paying for training—which is the largest or second-largest element in the COA—it is a given that the combined aid is not close to reaching the COA.

The reasoning above demonstrates both the value and importance of the new Pell Grant exclusion. When students' COA has been met or exceeded (with dollars that they do not have to pay back or work for), the total cost of obtaining their education is covered and more funding is unnecessary.

Further, the Department notes that the exclusion is related to non-Federal grant and scholarship aid. The Department wrote in the NPRM that we also propose to clarify that grant or scholarship assistance from non-Federal sources does not include sources that Section 480(i) of the HEA excludes from “other

financial assistance.” We codified this in § 690.5(b), and it includes tax credits under section 25A of the Internal Revenue Code (IRC), distributions under section 529 of the IRC or Coverdell Education Savings Accounts, and emergency financial assistance provided to students for unexpected expenses that are a component of the cost of attendance. We do not have the authority to make other exclusions recommended by the commenter that are not prescribed in statute. The law does not provide carveouts for State grants or defense worker education benefits.

The Department takes issue with the commenters' claim that Pell Grants are no longer “first-dollar” aid. This is not the case. Pell Grants (when not automatically determined according to HEA rules) are still calculated by subtracting the Student Aid Index from the maximum Pell Grant for the award year; other aid is not accounted for. What the new law and regulations establish is that, when students' combined non-Federal grant and scholarship aid is equal to or exceeds the COA, the student will receive no Pell Grant. Aid administrators will package students normally, Pell Grant first and then other aid, and as soon as it is clear that the non-Federal grants and scholarships will equal or exceed the COA, the Pell Grant is removed, or the other aid is adjusted as explained under § 690.80(d). Often, though, as we stated above, the aid office will be able to determine which students may face this situation at the outset. Students will not be considered for a Pell Grant when they receive a “full ride” scholarship that covers the entirety of their COA. It

is

the case that for the relatively few students who become ineligible for a Pell Grant because their entire education costs are met in this way, Federal aid will have been displaced by private or institutional dollars.

Finally, it is not our understanding that high-need students frequently receive non-Federal grant aid in excess of the COA “by design.” State and private funders have a strong vested interest in not exceeding the amount required for students to complete their education, as it preserves limited funds for other students who do have need. To the extent that these providers deliberately fund students over the COA, they will cause them to lose Pell Grant eligibility for said award year.

It is more likely that funding programs function in the manner that one State higher education agency described to the Department. They have programs that provide last-dollar aid to students who receive Pell Grants and that cover the balance, up to the COA, after the Pell Grant has been applied. In such a situation, there is no danger to the student's Pell Grant eligibility because the State grant is in an amount less than the COA by the value of the Pell Grant.

To provide an illustrative example, a student with a COA of $12,000 receives a $7,000 Pell Grant. The State higher education agency then provides a $5,000 grant to cover the student's remaining costs. This procedure has been the case and will continue to be so under the new rules. But assume that after aid has been awarded and some of it disbursed that the student receives a $6,000 private scholarship. If under the State's rules, the student is permitted to keep its grant, the Pell Grant also remains intact because the combined State grant and private scholarship is $11,000, which is $1,000 less than the COA. If the private scholarship was $8,000 and the total of non-Federal aid was $13,000 and the scholarship could not be adjusted, the school would need to reduce the amount of the State grant by more than $1,000 (so that the total is less than $12,000) if it has the authority to do so. If it can't reduce the State grant and the total cannot otherwise be brought under $12,000, under § 690.80(d) the entirety of the Pell Grant would need to be returned. This assumes that Pell Grant dollars remain to be disbursed. If the entire Pell Grant had been disbursed when the private scholarship was received, the school would not need to do anything.

Changes:

None.

Comments:

One commenter was opposed to the regulation because they believed it would harm the neediest of students. By excluding students from Pell Grant eligibility when their non-Federal grant aid exceeds cost of attendance, the commenter believed the rule effectively penalizes low-income students for securing State, institutional, or private scholarships, and aid they depend on to cover basic living expenses, which is not fully reflected in cost-of-attendance formulas.

Discussion:

As a foundational matter, the Federal student financial assistance programs are designed to cover educational expenses. As explained in the previous section, this rule will not deprive Pell Grant-eligible students of funds needed to cover the cost of their education. Cost of attendance includes tuition and fees, housing, food, books, supplies, and several other allowable costs.

9

If a student receives non-Federal grant or scholarship assistance that in total is greater than or equal to the COA, there is no need to be met. If the student were to receive a Pell Grant in this instance, it would cause his or her need to be exceeded. For example, a student enrolls in a one-year program at a university, and the total cost of the program is $20,000, which includes $2,000 in tuition and fees, $500 in books, $13,000 in housing, and $4,500 in food. If the student receives a non-Federal scholarship for $20,000, his entire cost is covered by the non-Federal scholarship. The student would not be eligible for a Pell Grant in this case.

9

Federal Student Aid Handbook—Volume 3, Chapter 2—Cost of Attendance—

https://fsapartners.ed.gov/knowledge-center/fsa-handbook/2025-2026/vol3/ch2-cost-attendance-budget.

Changes:

None.

Comments:

One commenter was concerned about the new rule because there will be a cliff effect in that students whose other grant aid is one dollar less than the COA will receive a full Pell Grant, while those whose grant aid is one dollar over the COA will get no Pell Grant. As the commenter observed, “This approach is inequitable and may discourage institutions, States, and foundations from offering generous scholarships.” The commenter suggested a more gradual approach to reducing Pell Grant dollars or, if the law does not allow for that, the Department should “implement oversight measures to prevent manipulation of scholarship amounts.”

Discussion:

The commenter touches on the possible gaming that we raised in our directed question about this issue. As we note above, however, the new regulation remains as drafted in the NPRM because we believe that is the surest reading of the statute. The Department will consider possible oversight measures in the future if the potential problem we have foreseen actually arises.

Changes:

None.

Comments:

One commenter was concerned that the flexibility afforded to schools in determining their COA could “result in inconsistent or inaccurate calculation of non-tuition expenses for short-term programs, particularly those related to basic needs.” If COA determinations do not reflect the true cost, students could face unmet financial need. To address this concern, the commenter asked that “the Department either (a) remove this provision for the Workforce Pell Grant program or (b) revise it to replace `cost of attendance' with `tuition' in the context of Workforce Pell Grant.” Another commenter similarly asserted that COA budgets are often understated,

leaving the possibility that students have unmet costs.

Discussion:

Institutions have long had considerable discretion, as outlined by the law, in how they create their COA budgets, and those do include non-tuition expenses. As noted above, the use of COA is intended to cover the complete cost for a student to attend the educational program. However, the Department cannot correct for what may be inconsistent approaches from one school to the next that are allowable under the law. In general, schools are incentivized to ensure that their COA does not leave unmet financial need; doing otherwise puts students in stressful financial situations that distract them from their program of study and that they feel obliged to rectify, such as by requesting a PJ adjustment. When students believe that their budgets are inadequate, they are able to request PJ adjustments to them, as we explain above, but such adjustments are intended for the special circumstances of individual students and not as a general corrective for COA budgets that are lacking. Also, the Department's oversight of PJ discourages its overuse.

As for the suggestions, the HEA does not allow for revising the new provision or excluding eligible workforce programs from it. Moreover, it is not clear how the suggestion under (b) to replace COA with tuition in the context of Workforce Pell Grants would help since that would involve reducing the amount at which other grant aid would cause the student to lose Pell Grant eligibility.

Changes:

None.

Comments:

One commenter stated that the treatment of Workforce Pell Grants received by students who are simultaneously receiving employer-paid educational assistance under IRC Sec. 127 (up to $5,250 annually excluded from income) is unclear in the proposed rule. The commenter asked, “If an employer's Sec. 127 educational assistance plan covers the full cost of an employee's Workforce Pell Grant program, must the institution return the Workforce Pell Grant?” The commenter requested that:

• the final rule contains explicit guidance on the interaction between Workforce Pell Grants and IRC Sec. 127 employer educational assistance,

• employer educational assistance not be counted as non-Federal grant or scholarship assistance for purposes of the Pell Grant exclusion rule, and

• the Department coordinate with the IRS and Treasury to ensure that students receiving employer-sponsored Workforce Pell Grant program training can stack Sec. 127 benefits and Pell Grants without losing eligibility for either.

Discussion:

Employer-provided educational assistance counts as non-Federal scholarship aid for the purpose of the Pell Grant exclusion. There is no provision in the law to exclude that type of assistance, and, as we note above, the Department is not at liberty to exclude it from counting as one of the many types of non-Federal grants and scholarships students can receive. It would be impossible for the Department to attempt to provide an exhaustive list here of all types of relevant aid.

As for students losing eligibility for employer-provided education assistance, nothing in this rulemaking necessitates that outcome; it is up to employers whether they will provide that aid. The new regulations will solely impose Pell Grant ineligibility in those cases when the COA is covered or exceeded by non-Federal grants or scholarships. See the above discussion regarding why this still leaves students entirely able to pay for their education. Also, in cases where students in workforce programs have their whole COA paid for with, for example, employer assistance, their limited Pell Grant eligibility is preserved for any later programs that they might enroll in, such as a bachelor's degree program.

Changes:

None.

Comments:

Another commenter also expressed concern that employer-provided tuition benefits would unduly cause students/employees to lose Pell Grants that typically cover expenses such as transportation and housing. They suggested that the Department (1) exempt employer-provided tuition assistance from the non-Federal aid exclusion; (2) provide clear guidance distinguishing tuition assistance from wages; (3) clarify how partial employer tuition assistance should be treated in Pell Grant eligibility calculations; and (4) permit students to remain eligible for Pell Grants for non-tuition components of the COA such as transportation and housing, even where employer-provided assistance fully covers tuition cost.

Discussion:

As noted above, employer-provided tuition assistance would count as non-Federal scholarship aid. Such tuition assistance is not wages, nor do wages count in the calculation for determining this new Pell Grant ineligibility provision. Partial tuition assistance by definition would not make a student Pell Grant-ineligible since it would not cover the COA. Finally, in situations where the employer-provided assistance fully covers tuition but no other elements of the COA, the student would remain eligible for Pell Grants unless there were other non-Federal grant or scholarship aid that, combined with the employer assistance, equaled or exceeded the COA.

Changes:

None.

Pell Grant Ineligibility Due to Non-Federal Grant or Scholarship Assistance (§ 690.80(d))

Comments:

One commenter asked for guidance regarding an example they provided involving subsequent ISIR transactions that show increased Pell Grant eligibility after funds have already been disbursed and packaging completed. The example they provided described a student with a $20,000 COA that receives $18,000 in non-Federal grant aid and $3,000 in Pell Grant funds, which are fully disbursed. A subsequent non-Federal scholarship of $2,000 brings the total of such aid to $20,000. A later ISIR transaction then increases the student's Pell eligibility to $5,000. The commenter requested that the Department clarify what happens in this scenario.

Discussion:

Because the late-arriving scholarship increases the total non-Federal grant aid so that it equals the COA, and an additional transaction was made that increased the student's Pell Grant by $2,000, § 690.80(d) applies. The school can reduce the non-Federal aid to below the COA and award the additional Pell funds. If it cannot or chooses not to do so, the entire Pell Grant must be returned, and the student's COA would be met by the $20,000 in non-Federal aid.

If there had been no subsequent transaction that resulted in additional Pell Grant eligibility—all the Pell Grant funds had been disbursed already—the school would not have needed to do anything when the additional non-Federal scholarship arrived even though it caused the total amount of such aid to equal the COA.

Changes:

None.

Eligible Workforce Programs

Date, Extent, Duration, and Consequence of Eligibility (§ 600.10(c))

Comments:

A few commenters stated that a risk of the proposed framework is that institutional eligibility for an eligible workforce program bypasses the accreditor quality assurance process because the Secretary's program review does not incorporate accreditor assessment of program quality.

Discussion:

As discussed in the NPRM, an eligible institution must be able to demonstrate that each program (including eligible workforce programs, collectively or individually) is formally

accredited and included within its grant of accreditation. The Department does not require the accrediting agency to approve each eligible workforce program individually, and an accrediting agency recognized by the Department may establish its own internal processes regarding the approval of eligible workforce programs, which must follow its established review procedures for substantive changes set forth in § 602.22. If an accrediting agency decides to approve one or more eligible workforce programs separately or based on established policies that require eligible institutions to make a substantive change request to add an eligible workforce program, the accrediting agency may do so. Such approval may come before or after approval by the Governor (but must be provided prior to Department approval). There is not a need to add additional regulatory language requiring accreditation because existing regulations cover this requirement.

Changes:

None.

Comments:

A few commenters stated that the current proposal unnecessarily restricts program eligibility to accredited institutions participating in title IV, HEA programs which risks excluding a large segment of high-performing workforce training providers already validated through State workforce systems. Several commenters urged the Department to allow State-approved Eligible Training Provider List (ETPL) programs to qualify for Workforce Pell Grant eligibility, regardless of institutional accreditation status, provided they meet all other programmatic and accountability requirements. A different commenter stated that ETPL programs offered at eligible institutions should automatically receive Governor and Department approval. Other commenters asked that ineligible organizations that provide social services to communities, such as after-school care, healthcare, and security, be Pell Grant eligible.

Discussion:

We decline the commenters' recommendations. The Department does not have authority to create a separate eligibility pathway or designate additional categories of programs outside of the Workforce Pell Grant statutes. A student (§ 668.32), program (§ 668.8), and postsecondary institution (34 CFR 600) must meet all Pell Grant eligibility requirements.

Section 102(a) of the HEA defines institutions of higher education eligible to disburse title IV, HEA assistance to enrolled students. Also, paragraph (a)(5) of section 101 states that such institutions must be “. . . accredited by a nationally recognized accrediting agency or association, or if not so accredited, is an institution that has been granted preaccreditation status by such an agency or association that has been recognized by the Secretary for the granting of preaccreditation status, and the Secretary has determined that there is satisfactory assurance that the institution will meet the accreditation standards of such an agency or association within a reasonable time.”

We acknowledge that there may be similarities between programs on a State ETPL and eligible workforce programs; however, there are also differences between the statutory requirements for the two types of programs. WIOA, which includes the ETPL provisions, and the HEA, which includes provisions for Pell Grant eligibility and eligible workforce programs, are different statutes. Governors and the Department must ensure that a program on a State ETPL meets all the requirements under the HEA to become an eligible workforce program.

Changes:

None.

Comments:

One commenter asked if there would be pilot opportunities or phased implementation for institutions and requested the Department clarify this.

Discussion:

No, there will not be pilot opportunities or phased implementation. All institutions wishing to offer an eligible workforce program will have to follow the same procedures and processes outlined in regulations.

Changes:

None.

Comments:

One commenter stated that many institutional accreditors do not currently include noncredit programs in their scope of review. This creates an “accreditation bottleneck,” as the commenter termed it, and noted this creates a structural barrier that may prevent otherwise high-quality programs from accessing Pell Grants for eligible workforce programs. The commenter recommended that the Department explicitly encourage institutional accreditors to develop expedited review processes for eligible workforce programs and acknowledge the role that specialized programmatic accreditors can play in providing program-level quality assurance for workforce training in emerging fields. The commenter stated that the Department's own Fund for the Improvement of Postsecondary Education grant has invested in building this capacity.

Discussion:

While the Department cannot require additional structure outside the statutory framework, we will consider how we might provide sub-regulatory guidance that helps accrediting agencies develop the expertise necessary to fulfill their role in ensuring the quality of eligible workforce programs in a timely manner.

The Department announced the Accreditation, Innovation, and Modernization (AIM) committee on January 27, 2026.

10

Those interested in the regulatory process related to accrediting agencies may wish to follow the rulemaking process.

11

Additionally, the Department has taken administrative steps to clarify and streamline the process for new accrediting agencies to enter the market.

10

AIM

Federal Register

notice—

https://www.Federalregister.gov/documents/2026/01/27/2026-01620/intent-to-establish-negotiated-rulemaking-committee.

11

AIM website—

https://www.ed.gov/laws-and-policy/higher-education-laws-and-policy/higher-education-policy/negotiated-rulemaking-higher-education-2026.

Changes:

None.

Comments:

One commenter urged the Department to go beyond the preamble and include clear regulatory expectations that accreditors must review Workforce Pell Grant programs—including non-credit programs—and update their scopes of recognition accordingly. The commenter stated that doing so will close a critical oversight gap, strengthen program quality, and ensure that this new expansion of Pell Grant eligibi

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