Here’s how ‘renewable learning funds’ can transform workforce development


Dec 13, 2017

As sustainability efforts continue to grab headlines across a range sectors, we shouldn’t limit those efforts just to industries like renewable energy. As the shelf life of skills shrinks and the durability of degrees declines, individuals are under increasing pressure to move beyond a one-and-done approach to learning. Yet our national investments in education and training still reflect an era when workers learned skills that could last a lifetime.

A new approach to funding education, however, could enable the creation of renewable learning funds: sustainable resources that can support learners in getting the workforce training they need year after year.

Today, federal, state, and municipal governments alongside foundations are, with good reason, taking note of skills gaps that limit economic growth and reflect the labor market mismatch between in-demand jobs and available skills. LinkedIn’s monthly workforce reports, which offer timely insight into the labor market, continue to highlight endemic gaps in most major cities.

Despite the attention, total spending on workforce development has fallen as a percent of GDP in recent years. Amid competing priorities and long-term debt, our reliance on yearly appropriations and outlays may not be enough. A clever solution is, fortunately, waiting in the wings.

Renewable learning funds would leverage investments in workforce development to create evergreen funds that recycle prior outlays to fund future adult learners to get the training they need. What’s exciting is that debt would not have to power these funds. Income Share Agreements (ISAs) could.

ISAs work by collecting a set percentage of a learner’s future income, as opposed to putting a student into debt. A recent white paper that I coauthored in my capacity as a principal consultant at Entangled Solutions, The Future of Student Aid: Advancing New Models to Expand Access, Improve Quality, and Spur Innovation in Education,” provided an overview of this relatively nascent vehicle in the United States.

Through ISAs, there are a variety of ways a foundation or local or state government could create a renewable learning fund.

A one-year program in cybersecurity might, for example, cost $12,000. Government workforce development funds might, however, only cover $6,000 of the total cost. A foundation could offer an individual seeking to upskill an ISA for that amount. The foundation would pay the program $6,000, and then, after earning the certificate, a worker might repay the foundation 5 percent of her income over two years, which could then be used to finance workforce development for someone else.

A structure of this sort would overcome one of the major limitations of inadequate workforce development funding by creating a sustainable funding model that aligns the needs of regional labor markets and helps close the skills gap.

What’s more, ISAs should encourage donors to care more about the outcomes for learners in the programs in which they invest. That’s because the foundation’s ability to fund future learners will be dependent on whether the program graduates the learners and places them into well-paying jobs. The forward-looking nature of the ISA is one of the most important attributes of this new student finance vehicle.

Sustainable models for funding workforce training are particularly vital at a time when demand for such investments is likely to grow. The robots are coming for our jobs—or so we are told. But already, 56 percent of working adults with a bachelor’s degree or more education report having taken a class or enrolled in more training in the past 12 months.

To combat the specter of mass technological unemployment, we need to lower the cost for adults of getting more education and training to help workers learn how to retool and complement—not be replaced by—technology. That may require not just financing adult learners’ educations, but also creating more affordable learning models that pay for adults’ living expenses as they learn and retool.

After all, leaving a job that provides for one’s family to enroll in an educational program carries an opportunity cost. Even if someone can simultaneously work and learn in a formal educational program, those programs still carry an opportunity cost with them in an increase in failure rates as learners struggle to balance their lives and dedicate themselves to the education. Learners entering these programs may not be able to afford failure. Waiting to be laid off before enrolling also has an opportunity cost in that it is much harder to get back into the workforce.

In other words, it won’t be enough to provide money just to help learners afford tuition.

At its core, ISAs and the renewable learning funds that they enable are about making good on the promise of education and training by creating more viable—and sustainable—pathways to economic and social mobility. It’s about preparing for the displacement and disenfranchisement just beginning to roil our society.

The question at the moment isn’t whether this will happen, but which foundation, city, county, or state will act first.

Michael is a co-founder and distinguished fellow at the Clayton Christensen Institute. He currently works as a principal consultant for Entangled Solutions.