Take a moment to review the latest debates related to student and trainee finance in the United States. Note that, in the renewable learning space, workers and jobseekers are referred to as students. Better Future Forward issued a position paper outlining how the existing student finance system came to be and a framework for fixing it focused on three key pillars:
Accessibility: An equitable training finance program should follow the principles of broad access. Eligibility should include all students demonstrating their commitment and ability to advance in their educational program. Eligibility criteria should be factors over which students have agency, such as their ability to make satisfactory progress. Eligibility should not require students to have established a credit history. It should not depend on a cosigner, which would require a student to have external support. Funds should not be limited to high academic achievers, as many types of students demonstrate that they can succeed in and benefit from training. The support would cover supplies and living expenses, enabling students to enroll full-time and focus on their training program.
Affordability: An equitable program should also be affordable. To define affordability, consider potential circumstances of financial hardship that a student could experience with a conventional private student loan. For example, an individual might be unable to afford their monthly payments. An equitable finance program should not require payments when an individual earns less than a certain minimum-income threshold.
Accountability: Finally, an equitable student finance program should be accountable for the outcomes of the students it serves. In other words, outcomes should sustain the program financially, and funders should share the loss if program outcomes fall short.
Develop the impact case for the problem a renewable learning fund would solve in your jurisdiction. Determine why your agency is the right organization to lead the effort. This involves defining your target customers in detail (income, employment status, education level, demographics) and the specific sectors and occupations you will focus on. Key questions include:
Which customers are we not serving as well as we’d like with existing funding (e.g., Workforce Innovation and Opportunity Act [WIOA] Title I)?
Are there specific funding shortages or eligibility requirements limiting our ability to serve this population?
What specific occupations in our region provide quality jobs (based on your established definition) that require short-term (3- to 12-month) training or certification?
The San Diego Workforce Partnership created the nation’s first Renewable Learning Fund after a review of American Job Center (AJC) customer satisfaction data revealed high levels of customer frustration when WIOA individual training account (ITA) scholarship funding was not available to them, either due to a shortage of funds or because their income in a low-wage job made them ineligible. The agency ran out of ITA funds each program year and could provide training scholarships to only 4 of every 10 eligible WIOA participants who wanted one. This video outlines how the local workforce board defined the business case for the San Diego community when the program was rolled out.
The type of funding used to start a renewable learning fund will influence program design decisions, including program enrollment requirements, the minimum income threshold, repayment terms, repayment window and your agency's flexibility in handling delinquent repayments. After establishing your why, you should identify at least one source of funding or a potential funder willing to explore this concept with you. Potential sources of funding include:
Philanthropy: Some private organizations make funds available in the form of grants. Organizations that have supported renewable learning funds in the past include the Strada Education Network, ShareFound, Lumina Foundation and James Irvine Family Foundation, the Michael and Susan Dell Foundation and W. K. Kellogg Foundation.
Flexible local or state funds: General or other flexible funding sources, often matched by philanthropy, are how most early regional renewable learning funds got off the ground. See diversifying funding streams.
Community development block grant (CDBG) funds: Federal CDBG dollars have been used to capitalize revolving loan funds for decades. The same authority and flexibility in those funds can be used to establish a renewable learning fund for workers. For example, Wisconsin uses CDBG funds to capitalize a revolving loan for housing in which housing funds are loaned to low- to moderate-income (LMI) households and to local landlords in exchange for an agreement to rent to LMI tenants at an affordable rate.
SNAP employment and training reimbursements: 50/50 funds reimbursed through SNAP employment and training programs represent discretionary revenue that workforce agencies can consider reinvesting in a renewable learning fund.
Workforce Innovation and Opportunity Act (WIOA) Title I funding: While there are no examples of a workforce board using WIOA to capitalize a renewable learning fund at this time, potential opportunities exist under WIOA fee-for-service and program income statutes.
We recommend that public agencies shouldn’t accept any capital seeking a return (even below market rate) at the start of a renewable learning fund. This provides the agency with 100% flexibility to ensure that the program principles and impact goals are met first and foremost.
A note on costs: The rest of the steps required to establish a renewable learning fund take time (6 to12 months) and technical expertise. We don’t recommend pursuing the remaining steps until you have identified a funder or funding stream willing to cover the costs associated with structuring the fund, developing a loan or income share agreement product, hiring a servicer to collect payments and covering staff costs for program delivery. While renewable learning funds are intended to replenish over time, keep in mind that initial investments ranging from legal fees to supportive services may need to be made several years before the fund sees a return. Naturally, the timeline to see a return depends on the length of the learning program and the rate of repayment.
During this step, you will turn the why of a renewable learning fund and your initial concepts into a program model. Here are our recommended next steps:
Develop your program principles: This includes your nonnegotiables, student protections and values that will guide design decisions. Here is an example developed by the San Diego Workforce Board in partnership with input from five other workforce and economic development agencies across the United States. Program principles create the guardrails for the rest of the work. You can learn more about student protections in this report from the Aspen Institute.
Select a training focus: Finalize the in-demand occupation(s) you wish to target and determine your preferred procurement approach for identifying a training provider. Keep in mind that the most successful training programs for a renewable learning fund are those with a history of positive outcomes.
Build your technical team: Through requests for proposal (RFPs) or other procurement processes, we recommend securing technical assistance from a project management and outcomes fund design firm. As renewable learning funds often involve legal contracts between the student and the funder, you may also want to consider outside legal counsel with expertise in consumer and education finance. See partners and experts here.
Hear from your target audience: Conduct informal discussions and structured focus groups with individuals in your target population to learn their perspectives on current financing options, their experience with student debt and their preferences and priorities in the renewable learning fund’s key terms. Use these sessions to test your draft program terms such as the percentage of income that will be shared if they are successful, the expected monthly payment and the payment period.
This New Jersey Pay it Forward Fund, a $10,000,000 renewable learning fund focused on health care and information technology, has developed an informative slide deck outlining how it works, including priority occupations, the training partner selection process and key terms for participants.
To guide design choices, this statement of income share agreement principles outlines specific protections for workers including income thresholds, institution eligibility, comprehensive disclosures and nonfinancial supportive services. This set of principles was developed by the San Diego Workforce Partnership in collaboration with Colorado Workforce Development Council, Commonwealth Corporation (Massachusetts), City of Minneapolis/City of Saint Paul/Greater Metropolitan Workforce Council, New York City Economic Development Corporation/New York City Department of Small Business Services, Philadelphia Works, Inc. and Workforce Alliance of South Central Kansas.
After the program has been operating for several months and the first graduates complete their program, are placed into jobs and begin repaying the fund, begin reviewing the following key performance indicators on a regular cadence:
Percentage of trainees who completed their training program, including breakdowns by race, ethnicity, prior education and other demographics relevant to your population
Percentage of students who were placed in jobs making above the minimum income threshold
Trend comparison to other funded programs (e.g., Workforce Innovation and Opportunity Act individual training accounts)
Number of students in repayment
Projected breakeven point for the fund
Here is an example of an early impact report from the San Diego Workforce Partnership, the country’s first renewable learning fund administered by a public workforce development board, that includes initial student data, key performance indicators and early results.
Identify, select and complete due diligence on one or more programs that train professionals in your occupations of focus as initial renewable training fund partners. When selecting a training partner you should consider:
Background information on the organization and its workforce training programs.
Enrollment history and trends.
Demonstrated outcomes (e.g., placements above $50,000 in technology). You can use existing performance data (e.g., eligible training provider list performance data) and/or third party evaluations.
Ability to serve your target population with outcomes disaggregated by race and ethnicity.
Program costs.
The provider's willingness to put “skin in the game." Providers should not be paid in full until all outcomes are achieved, aligning incentives across the individual, the fund and the training provider.
New Jersey’s renewable learning fund uses this New Jersey Pay It Forward Training Provider Basic Data Form to collect potential provider data. Data are then assessed to determine if the provider meets New Jersey’s program criteria including experience serving the population, history of successful outcomes and reasonable program costs.
Once your provider is selected, finalize the full set of services that the student will receive. Consider the following:
Incorporate the costs of necessary books, materials and even technology into the cost of the program so that students are equipped with everything necessary for success.
Determine how additional wraparound support—transportation, childcare and emergency cash aid—will be provided and what funding source will be used to cover the cost. Support can be built into the cost of the program, delivered through an organization's existing funding streams using co-enrollment or targeted as areas for fundraising from philanthropic sources.
Identify who will serve as the student’s primary point of contact throughout the program.
Consider whether additional resources or activities, such as mentorship, job fairs or networking events, will be incorporated into the set of supports provided.
Determine appropriate staff to student ratios to ensure that students have the level of personal contact necessary to support their success.
Establish your desired tracking system and reporting cadence to ensure necessary data on outcomes will be readily available throughout the program.
Design your application form and process for the program.
Design and launch an outreach campaign to attract workers and jobseekers to participate through:
Targeted outreach to existing program enrollees in the Workforce Innovation and Opportunity Act (WIOA) or other core programs
Sector- or occupation-specific events as part of your sector strategy
Social media campaigns to raise awareness
Information sessions held onsite at the American Job Center
Online interest forms
As applications are received, begin enrolling trainees funded through the renewable learning fund. The main responsibilities for the public agency at this point are to stay available and flexible while initial customers are signing up and entering into repayment obligations, to ensure that trainees are aware of the obligation they are taking on and to establish regular project check-ins with all project partners. Key performance indicators to monitor include:
How many initial interest requests, full applications, completed originations and enrollments are coming through each week?
What are your customers saying about the process and their understanding of what they are committing to?
Are initial customer demographics and profiles consistent with initial goals?