States should use Workforce Pell to back stackable pathways that pay off

July 2025’s One Big Beautiful Bill Act (OBBBA) created Workforce Pell, an expansion of the existing federal Pell grant for much shorter credentials (about eight to 14 weeks long, less than a full semester) than federal aid has historically covered. The program officially launched July 1, 2026, though the decentralized design of Workforce Pell means rollout has been slow, with only a few programs approved to start awarding grants.

Workforce Pell is unique among federal student aid programs. The program has stricter accountability measures than traditional Pell, but even more unusual is how much of Workforce Pell governance has been delegated to the states. Governors are responsible for developing state Workforce Pell policies that operationalize federal regulations and for approving which programs the state will submit for federal review and approval.

One criterion governors need to define is that Workforce Pell programs must be “stackable and portable.” This federal requirement acknowledges concerns that very short-term workforce programs might not have labor market returns on their own and will likely be most impactful when graduates parlay their Workforce Pell program credits into a longer certificate or associate degree. While there is a broad federal definition of credential “stackability,” the Department of Education intentionally gave states the authority to develop and apply their own definition in their review process. In practice, states could develop and implement 50 different policies. But ideally, states should develop stackable credential definitions and review processes that draw on evidence about when stacking pays off.

Collectively, the authors of this piece have examined the returns to stackable credentials in Virginia and New Jersey and how different types of stacking result in different labor market returns. Given what we know about the returns to stacking, governors should prioritize Workforce Pell programs that enable vertical stacking into longer-term programs and invest in robust data systems that track stacking as an outcome in their program reviews.

What are stackable credentials?

The Department of Labor defines stackable credentials as two or more distinct postsecondary programs that can be accumulated over time as part of a sequence that increases individuals’ skills, while helping them progress in their careers. But data show individuals “stack” in multiple ways, and not all stack pathways have similar economic benefits. Vertical stacking means collecting increasingly longer awards, such as a certificate before an associate degree. Horizontal stacking means collecting two credentials at the same level, such as two certificates. Many policies focus on within-field stacking, offering pathways within the same field (e.g., health care), though individuals also stack credentials outside their field.

Amidst these nuances, confirming the number of stackers across the country is tricky, but it may be quite large. In Kentucky, about 35% of short-term certificate graduates went on to earn another credential in the state system, and in California, a quarter of short-term certificate graduates completed a second community college credential. A substantial share of community college graduates also reenroll after their first credential but never complete that second credential.

Evidence consistently shows when stacking pays off

The evidence on stackable credentials is remarkably consistent and offers clear insights for policymakers when approving Workforce Pell programs with stackability in mind. Stacking can pay off, but there are meaningful differences in outcomes across stacking approaches and fields of stacking.

Earlier work (by Meyer and colleagues Kelli Bird and Ben Castleman) using data from the Virginia Community College System provided early causal evidence on stackable credentials. Students who completed stackable credentials were 4 percentage points more likely to be working and earned about $375 more (a 4% increase) each quarter than their peers who did not stack. The gains were particularly pronounced in fields such as health care and business.

Recent evidence  (by Lenard and Wright-Kim) from New Jersey reinforces many of the patterns observed in Virginia despite differences in institutions, populations, and labor markets. Students saw a boost of around $700 in earnings per quarter (a 6% increase) after successful stacking—women, Black students, and those with an associate degree as their second “stacked” credential saw the biggest benefits. Figure 1 shows the breakdown in earnings by stacking type, field, and student demographics.

Evidence from other states also finds the highest returns to vertical stacking and in programs with well-defined stackable pathways. Of note, most evidence focuses on within-community college stacking, but a new RAND report highlights more expansive definitions of stacking among many states, including the use of microcredentials, work-based experiences (e.g., apprenticeships), or stacking toward the baccalaureate.

Why is stackability important when certifying Workforce Pell programs?

Legislators argued that Workforce Pell would expand access to and affordability of short-term credentials that can help students with quick career pivots and improve their economic well-being. However, whether such short-term programs hold labor market value in the longer term is complicated. 

Research in Kentucky found short-term credentials around the length Workforce Pell would cover (seven to 15 credits) increased employment by about 6.3 percentage points and quarterly wages by $310. The employment boosts remained consistent four years after graduation. Meanwhile, examinations of short-term certificates (though not typically as short as Workforce Pell programs) in other contexts, including Washington, Michigan, Tennessee, Ohio, and North Carolina, document both positive and null wage returns that vary widely across discipline and student demographics.

Given the mixed evidence on the returns to short-term credentials on their own, stackability and other accountability metrics are important guardrails to ensure Workforce Pell results in students enrolling in programs that either have clear labor market returns or set students on a path toward a credential stack that will. While short-term credentials can have small labor market returns, larger returns come from using a shorter program as a stepping stone to a vertical stack pathway. Therefore, governors should emphasize pathways, not just credentials, when approving Workforce Pell programs.

How are governors currently defining stackability and portability in their approval processes?

Leveraging the Opportunity Data Workforce Pell Readiness tracker, we reviewed every written policy for the 39 states (and Washington, D.C.) considered “live” with approved Workforce Pell policies as of Oct. 29, 2026. In Table 1 below, we report how each state defined “stackable.”

We reviewed whether stackable definitions (a) mentioned or implied vertical stacking as a goal, (b) explicitly discussed credit transfer, and (c) provided details about how to document stackability.

Eleven states simply adopted the Department of Labor definition of stackability or a slight, sparse variation. Others included one or two of the ideal policy features.

Encouragingly, about a dozen states provided clear details on each of the three elements we reviewed. Each provides a level of detail other states could adopt to ensure stronger, clearer stackable pathways for students. These states have tightly defined stackability to ensure high-quality stacks and built in important review and monitoring processes to evaluate stackability. For example, states outline:

• Vertical stacking: New Jersey explicitly notes that horizontal stacking alone does not meet the state’s stackability criteria—Workforce Pell programs must lead to progressive, vertical stacking.
• Field of study: Oregon defines stackability as the ability to stack a Workforce Pell program into the same broad field of study (e.g., health).
• Reducing administrative burdens: South Dakota requires colleges to provide an Articulation to Credit Review that spells out exactly how credits will transfer to make stacking possible.

These evidence-based state definitions move beyond the broadest definition of stackability to prioritize programs with a proven track record of students navigating how to successfully transfer credits and complete a stack.

How can states best support stackability in Workforce Pell reviews?

As other states adopt Workforce Pell policies and governors revisit policies in the coming years, they should prioritize seamless stackable pathways with the biggest economic benefits for the students who need it the most. We recommend states:

• Adopt stricter definitions of stackability: For Workforce Pell, states should prioritize approval of programs with vertical stack pathways and require a documented credit transfer policy.
• Track and report on the share of students who actually stack: States should monitor stacking rates after approval to identify whether programs actually have high rates of stacking among program completers. Federal regulations focus on graduation and employment outcomes, but states could adopt similar standards—such as 70% of graduates stacking into another credential within three years of completion (or meeting prespecified workforce exemptions). These metrics should prioritize completing the second credential, not simply taking courses.
• Prioritize submitting high-stack programs for review: States can decide which programs to submit for federal recognition and should prioritize programs that have historically documented high rates of stacking among completers. Our research shows that within-health stacking typically has the highest returns, and prioritizing short-term health programs could ensure a pipeline of graduates for later health stacks.
• Fund advising and navigation supports: Graduates need clear information about potential next steps. This includes ensuring Workforce Pell students have access to academic and career advisors and proactively sharing information about longer-term credentials that could accept students’ Workforce Pell credits, as well as the returns to stacking that might make returning to school more appealing.

The evidence on stackable credentials collectively indicates the highest value to students comes when a credential serves as the first step in a clearly connected pathway toward additional credentials, higher skills, and better jobs. Workforce Pell could be a valuable first step to connecting students with the first credential in longer pathways.