The U.S. House of Representatives passed a broad domestic policy bill early Thursday morning. The legislation includes several noteworthy provisions relating to workforce education.
For example, the section from the Ways and Means Committee would incrementally raise the long-standing cap on the tax exclusion for workers who receive employer-provided educational assistance. It also would make permanent a pandemic-era exclusion for employers that pay off student loan debt as part of educational assistance programs. Going forward, both of those tax benefits would be increased based on inflation rates.
The first $5,250 of employer-provided educational assistance is excluded from an employee’s income. That cap hasn’t been raised for almost 40 years and fails to cover the tuition costs of many education programs. Tying the exclusion to inflation doesn’t come close to the increase wanted by a broad coalition of advocates. But it adds long-sought momentum and could encourage companies to invest more in education benefit programs.
Because most companies cap tuition benefits at the current $5,250 IRS limit, even a modest increase could open faster and more affordable pathways to career-aligned degrees and credentials for working adults, says Nick Greif, vice president of corporate partnerships and external affairs at InStride, which partners with employers on workforce education.
“Working and learning simultaneously deserves our support, not tax burdens,” he says.
Labor Secretary Lori Chavez-DeRemer last week spoke at a McDonald’s in Ohio to join the company in celebrating the 10th anniversary of its education benefits program. McDonald’s has spent $240M to help more than 90K employees earn their high school diploma, pay for college, or learn English as a second language.
Pell Grants: The bill’s contribution from the House Committee on Education and the Workforce would cut $350B from the federal budget over the next decade, mostly through student loan reforms, according to the Congressional Budget Office.
It would increase the number of credits students need to pursue to receive the maximum federal Pell Grant award. Students would have to enroll in 30 credits per academic year to hit the full-time threshold. Those who are enrolled less than half-time would not be Pell eligible. The changes would reduce spending by $7B. Critics say they also would pose substantial challenges for the large share of college students who work while attending college.
For example, students who take 12 credits per semester, the current threshold, would see a $1,479 cut to the max award of $7,395. A spokesperson for the committee’s Republican majority told The Washington Post that the move is aimed at encouraging students to take a course load to earn a credential on time.
The bill also would open up Pell Grants to shorter-term programs, at an estimated cost of about $300M over 10 years. The so-called Workforce Pell proposal would make programs that can be completed in eight to 15 weeks eligible for the federal grants.
Republicans included several ROI and completion quality checks on short-term Pell eligibility, echoing previous versions of the proposal.
However, it also would allow noncollege education providers to award Workforce Pell. That move is a “dramatic and unexpected change,” writes David Baime, senior vice president for government relations at the American Association of Community Colleges. The two-year college group opposes the shift.
SHRM, the HR association, backs both the Republican bill’s tuition and loan benefits and its Workforce Pell proposal.
Tech Hubs Redo: Beyond the budget drama in Congress, the Trump administration continues to make substantial changes and cuts to Biden-era workforce policies.
Commerce Secretary Howard Lutnick last week announced a plan to revamp federal Tech Hubs. That program seeks to create regional centers of innovation and prosperity in overlooked regions. It features an unusual combination of goals on economic growth and mobility for workers.
Lutnick said six awards to Tech Hubs would be pulled back—with those amounts ranging from $22M to $48M—charging that the Biden administration named the recipients in a “rushed, opaque, and unfair” way as it was leaving office. The Commerce Department will conduct a new funding competition, he said, with awards to be announced early next year.
A department fact sheet said terms of that competition will “remove references to policy priorities of the previous administration,” including those that prioritize unions, reference the Good Jobs Principles, and contradict President Trump’s executive orders on energy and DEI.
The Tech Hubs selection process was highly transparent and executed by an “exemplary team of public and private sector experts,” says Jonathan Lovitz, a former director of public affairs at the Commerce Department’s Economic Development Administration, who was a senior advisor during the program’s two phases during the Biden administration.
“They used metrics that were explicitly clear in the Notice of Funding Opportunity to make a data-driven and evidence-supported series of decisions,” says Lovitz. “Every day wasted by slowing down this process because of ridiculous political grandstanding makes America less successful, less safe, and less ready to compete.”
U.S. Representative Michael Baumgartner, a Republican from Washington State, criticized Lutnick’s announcement to nix a $48M award for an advanced aerospace materials Tech Hub in Spokane. The decision was disappointing, he said in a statement, and “puts the entire effort at unnecessary and potentially irreversible risk.”
Strong bipartisan majorities in Congress reaffirmed support for Tech Hubs in December, noted Jon Schnur, CEO of the nonprofit America Achieves. And Lutnick himself endorsed the program last week, calling it an exciting initiative that “can ensure that critical industries, companies, and jobs start, grow, and remain the United States.”
Yet only 8% of the bipartisan authorization for Tech Hubs has been funded by Congress, as a coalition of 40+ business, economic, and workforce groups that America Achieves helped pull together wrote in a recent letter to Congressional leaders.
“While we were disappointed that the work of the six Tech Hub projects awarded in January will not be funded at this time,” Schnur says, “we were pleased to see that the program is being re-launched and that those six coalitions will also be given ‘heightened consideration’ in the review process.”