State Funding for Short-Term Credentials Ramps Up

Title: A 2024 Update of State Investments in Short-Term Credential Pathways

Author: Stephanie M. Murphy

Source: HCM Strategists

The higher education landscape continues to evolve rapidly as more and more students prioritize short-term credentials, also known as micro-credentials and non-degree credentials. There is increased demand for these valuable credentials, which can improve individuals’ career prospects and meet the changing needs of the modern economy and job market.

Despite a massive proliferation in funding for short-term credentials, there has been a lack of systematic cataloging or analysis of state investments in short-term credentials. HCM Strategists, through funding from the Lumina Foundation, conducted an in-depth examination of all 50 states to establish the first comprehensive classification system of state funding for short-term credential programs. The October 2024 report is an update of HCM Strategists’ 2023 typology and policy landscape analysis of short-term credentials.

Key findings are summarized below:

Total state investments in short-term credentials exceed $5.6 billion across 69 initiatives in 31 states.

• This represents an increase from 2023, when there were 59 state-led programs with nearly $4 billion in funding.
• Across programs, a majority of state funding for short-term credentials has gone toward students, for financial aid, and institutions, for capacity building and student supports and aid).

Since 2023, 10 new short-term credential initiatives have launched in eight states, increasing total investments by roughly $1.8 billion.

• As an example, Alabama established its Short-Term Credential Scholarship Program during the 2025 fiscal year with a $1 million appropriation. This initiative reimburses Alabama residents for up to $4,500 in for expenses such as tuition, fees, and materials as they seek short-term credentials aligned with workforce demands.
• In Colorado, HB24-1340, signed into law in May 2024, created a tax credit for low- and middle-income residents enrolled at public colleges and universities. This initiative provides full reimbursement of tuition and fees for eligible recent high school graduates, improving access to short-term credentials.
• West Virginia’s Credential WV micro-credential initiative was created in October 2024 to help workers and students gain targeted credentials to meet new labor market demands in the state. This program will roll out over three years, with institutions identifying resources to create workforce-aligned micro-credentials and standardizing the process for awarding credit for prior learning.

Short-term and non-degree credentials are becoming an increasingly central piece of the education landscape in the United States. And while 31 states have invested more than $5.6 billion across 69 initiatives to make workforce training more accessible, research remains limited on the outcomes and long-term labor market value of these credentials. The large financial investments that states and institutions of higher education are making into short-term credential pathways reflect the growing recognition of the value of immediate upskilling in today’s labor market.

To read the full report from HCM Strategists, click here.

—Austin Freeman