The Obama administration is tackling two key problems in higher education today: Too many students go into debt to get a college degree, and too few land a job that puts their expensive education to use.

Today, the Department of Education announced a pilot program, the Educational Quality Through Innovation Partnerships (EQUIP), that for the first time will give federal financial aid to students enrolled in nontraditional education programs, such as coding boot camps, online courses and corporation-based training initiatives.

The aim is to give more students the chance to get trained for in-demand jobs quickly and affordably. In its pilot phase, the financial aid initiative will give up to $17 million in grants and loans to students enrolled in eight programs that have been preselected. The programs are partnerships between public universities and less-traditional education providers. All provide students protections, including refunds if they don’t get jobs after completing their training.

Training Future Engineers and Managers

EQUIP programs, which are largely focused on providing skills needed for high-tech jobs, include:

  • Colorado State University Global Campus and Guild Education. A one-year certificate program in management and leadership fundamentals aimed at helping students move from low-wage jobs into supervisory roles.
  • Marylhurst University in Oregon and Epicodus. A 27-week certificate program in web and mobile software development for low-income students to get jobs requiring computer software coding skills.
  • Northeastern University and General Electric. An accelerated bachelor’s of science in high-tech manufacturing, initially only open to GE employees who will do their training at a GE jet-engine manufacturing plant.
  • University of Texas Austin and MakerSquare. A 13-week computer-programming course to prepare students for mid-level software engineer jobs.

The programs target lower income and nontraditional students who are either older, go to school part-time or want to update their skills mid-career. 

“In too many cases, low-income students have been unable to get the training they need because they don’t have access to financial aid to pay for them," Under Secretary of Education Ted Mitchell said in a press briefing. The ability of people to get jobs after doing the training is critical, he added. “It’s not enough to measure access and enrollment. We need a laser focus on outcomes.”

In the next decade, 11 of the 15 fastest growing occupations will require some kind of post-high school education.

New Model of Education Welcome but Not a Cure All

Consumer advocates applauded the move.

“It's no secret that there are skilled jobs in the U.S. that employers are having a hard time filling—and that online education and training has a role to play more broadly in expanding access to learning opportunities,” said Suzanne Martindale, a staff lawyer at Consumers Union, the policy and mobilization arm of Consumer Reports, who focuses on higher education issues.

The financial aid program comes as a growing number of people question the cost of higher education. Today a four-year education at a state school—including tuition, fees, and room and board—costs an average of $78,000; at a private university, it’s more than double that. More than 70 percent of graduates leave school with debt. And it's wreaking financial havoc on their lives.

A Consumer Reports nationally representative survey (PDF) of more than 1,500 student loan borrowers found that 44 percent of those who've left college say they have had to cut back on daily living expenses, and 28 percent have had to delay major goals like buying a house, and 37 percent put off saving for retirement. The financial impact is so daunting that 45 percent of borrowers say knowing what they know now, their college experience was not worth the cost.

The EQUIP programs aren’t a cure-all, said Martindale.

“They won't be the right fit for everyone—not everyone is going to be a software engineer,” she said.  

It's important that these programs remain affordable, "especially if they recruit from low-income communities, so that if a program doesn't work out for the student she isn't stuck with a ton of debt at the end," she said.  

The financial aid programs will start rolling out early next year. The institutions are in the process of setting them up and getting final approval from the Department of Education. Mitchell estimates about 1,500 students will enroll in the first year.