Imagine working at a minimum-wage job. You aspire to transition into a career that offers greater financial security and personal growth, but accessing new opportunities requires skills and training you don’t yet have. The thought of paying for a training program feels overwhelming, as you’re already struggling to support your family. 

This scenario is the reality for countless Americans. It’s far too common for individuals to be locked out of education and training opportunities due to prohibitive costs. This challenge has spurred efforts within higher education to offer tuition-free community college, a movement that has now expanded to 37 states. While this is a step in the right direction, it’s only part of the solution. The harsh truth is that even free training comes with significant financial burdens. 

Non-tuition expenses—such as transportation, housing, food, and childcare—can account for up to 80% of a full-time, community-college student’s total budget. For the 2023-24 academic year, the average non-tuition cost for students not living with their parents was $15,870, with transportation alone averaging nearly $2K annually. These figures illustrate the immense financial hurdles faced by those seeking to upskill. 

For many, taking time away from paid work to pursue training is simply not an option—even when tuition is fully covered and wraparound support is provided. For students in programs eligible for federal financial aid, the Pell Grant and subsidized loans can cover some living expenses. But those often fall short of covering all costs, and students in many non-college training programs aren’t eligible for such aid.  

To truly level the playing field, we need solutions that address the broader financial realities of learners. One promising approach is providing living stipends to students in training programs. In 2021, Per Scholas, a no-cost tech training nonprofit, partnered with the SkillUp coalition and Social Finance to explore the impact of offering stipends to low-income learners to offset lost wages incurred during training. 

The results were compelling: graduation rates increased 18 percentage points, certification rates by 11 points, and job attainment rates by 10 points. 

Per Scholas has since partnered with Social Finance to create a sustainable mechanism to offer support for living expenses at a greater scale. With the support of the Google Career Certificates Fund, Per Scholas and Social Finance piloted the Zero Percent Loan program, which provides eligible participants with $3K zero-interest loans for living expenses. The program is outcomes-based, meaning learners repay the loan only when they have a good outcome at the end of the program—securing a job that meets a minimum income threshold. Then, a learner’s repayment is capped at $84 per month over 36 months. 

Initial results from the ten-month pilot demonstrate improved learner outcomes—with 83% of learners who took out a loan completing their program, compared to 70% of those who did not. This financing model gives students the agency to spend the money where they believe is most important. By alleviating the financial pressure of choosing between skills training and basic life necessities, this approach removes a significant barrier to career advancement. 

Massachusetts has adopted a similar approach with the announcement of the new Massachusetts Workforce Skills Fund as part of its WIOA State Plan. This initiative aims to increase learner access to skills training for in-demand careers and to help the commonwealth retain talent by providing stipends to unemployed and underemployed residents enrolled in certain job training programs. 

We need more models like this that account for the full spectrum of costs learners face while upskilling. While some programs and apprenticeships pay participants while they train, they remain the exception rather than the rule. 

To close the wage and skills gap and really make a difference for low-income learners, we need bigger and bolder thinking. Living stipends and loans for living expenses are a practical, flexible, and scalable solution that allow participants to exercise their agency and allocate resources where they are most needed.

As learners embark on a new career path, they must first be able to afford the time to learn. 

Tracy Palandjian is the CEO and co-founder of Social Finance. Plinio Ayala is the CEO of Per Scholas.