Curry's Sarah Turner Proposes Policies to Align Financial Aid and Unemployment Insurance


04/26/2017

The Hamilton Project

In policy paper featured in The Hamilton Project, Curry professor Sarah Turner proposes new system linking unemployment insurance and financial aid.

Labor Force to Lecture Hall: Pell Grants and Postsecondary Policies in Response to Job Loss

Problem

Economic downturns are a good time for newly unemployed workers to reskill or obtain additional training. However, the same weak economic conditions make it difficult for individuals to finance postsecondary investments, and the two public policies that could facilitate such investments—federal financial aid and unemployment insurance—are poorly aligned. As a result, eligibility for financial aid does not match the current circumstances of the newly unemployed, and prospective students receive limited information about which programs of study have the best labor market outcomes.

Proposal

The author proposes an Enrollment for Employment and Earnings policy that would make income support and student financial aid available to unemployment insurance recipients, replacing Pell Grants and tuition tax credits for these individuals. Receipt of assistance would be conditional on satisfactory progress as well as completion of an enrollment choice module and academic and financial planning module, ensuring that students have the baseline skills to complete the program and the prospect of employment upon completion. In addition, states would develop a decision support tool to provide adult potential students with a clear comparison of costs, program duration, completion rates, and expected labor market outcomes associated with different postsecondary choices. Finally, federal support for postsecondary institutions would increase during recessions to meet rising demand.