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New Jersey Pay It Forward

Getting workers off the sidelines and onto the playing field of opportunity

New Jersey needed to help employers fill critical vacancies and workers get the skills to take those jobs. A public-private collaboration created an affordable revolving loan fund for workers to get training and enter the workforce.

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We’re trying to serve those for whom the access to credit is a barrier to getting in a skills-training program. – Justin Bakule, vice president for impact investments at Social Finance


Workforce Fund to Fill Critical Jobs

The Challenge

In recent years, New Jersey businesses have been starved for workers with specialized skills they need. At the same time, many of the state’s residents have struggled to afford the training to acquire those skills. It’s an all-too-familiar scenario in nearly every part of the country and the sort of challenge that talent finance efforts can address.

This disconnect between available jobs and eligible workers has been especially prominent in New Jersey’s nursing sector. A large part of the current nursing workforce is on track to retire in the next decade. The sources of replenishment are insufficient, leaving the state to face a potential shortage of 10,000 nurses. By comparison, the pool of qualified HVAC technicians and welders is also smaller than companies need to serve their customers. There is a growing, largely unmet, demand for skilled professionals in the growing cybersecurity industry across the state.

Many would-be workers face both financial and social barriers to getting the required skills training. Though they might qualify for various public and private loans to pay for their school, still others lack the credit credentials to get loans, or their family responsibilities and personal needs compete with their ability to go to school. 

The Solution

The big question is, what would it take to get them on a path that provides income and opportunities for advancement? The answer: an innovative new talent financing model that builds on the power of a public-private collaboration. A program called New Jersey Pay It Forward launched in 2022 to help both employers and potential workers overcome the impediments New Jersey faces in bridging the skills gap and filling critical job openings. New Jersey Pay It Forward is a public-private partnership comprising of Social Finance, the New Jersey state government and the New Jersey CEO Council, which represents major employers in the state including BD, Campbell Soup Company, Johnson & Johnson, Merck & Co., Prudential Financial, PSEG, RWJBarnabas Health, and Verizon.

New Jersey Pay It Forward emerged in 2020 from a series of meetings convened by Governor Phil Murphy’s Restart and Recovery Commission, whose primary mission was to advise about the safe reopening of the state’s economy after COVID-19 lockdowns. That, in turn, led to the CEO Council’s October 2020 pledge to hire or train more than 30,000 New Jersey residents from underrepresented communities of color and other underserved communities by 2030 and to urge other companies to join their efforts.

To jumpstart its pledge, the CEO Council committed nearly $5 million. Governor Murphy has since offered a $7.5 million in state monies, and that collective pool now makes up a revolving loan fund available to students who wish to pursue careers in nursing, HVAC, welding, or cybersecurity. It is reserved for students who otherwise earn too little to pay for schooling or whose credit is too weak to tap other loans.

The student borrowers pay no loan fees and incur no interest. To help students navigate some of the barriers that often disrupt schooling, New Jersey Pay It Forward also offers living stipends and supportive services, such as emergency aid funds and mental health counseling. Social Finance is a member of the U.S. Chamber of Commerce Foundation’s Talent Finance Core Team, a group of 11 organizations that helped start the Talent Finance initiative and help inform its direction. So, it is not coincidental that Social Finance espouses many of the Talent Finance concepts through its work. Indeed, New Jersey Pay it Forward lives out the Talent Finance guiding principles about the power of public-private partnerships.

How it works

Once students begin working in the jobs they’ve trained for, New Jersey Pay It Forward participants pay back their loans to the tune of 10 percent of their discretionary income each month for up to five years. But that’s only if they earn above a minimum annual salary. (The threshold varies by household size; for a household of three, for example, it is $44,940.) If they fall below that income level, they pay nothing toward their loans and do not have to pay back their living stipends or the cost of supportive services. The program also features a Student Bill of Rights to protect students and ensure they receive the friendliest borrowing terms possible.

Because New Jersey Pay It Forward is a public-private partnership driven by workforce outcomes, the investors take no monetary returns and, in the spirit of a revolving fund, loan repayments go back into the pool to be available to future borrowers.

The New Jersey Pay It Forward partnership also includes three teaching institutions in which students have the option to enroll: Hudson County Community College in Jersey City, which offers a two-year nursing, associate degree program; the New Jersey Institute of Technology, which has a Cybersecurity Professional Bootcamp, a 10-month, part-time, training program; and Camden County College, which provides HVAC and welding courses over nine months.

As Michael Grossman, the managing director of Social Finance recounted in an interview with a Philadelphia news outlet in 2023 an interaction he’d had with a hospital CEO. “Hospital CEOs are not super hyperbolic types,” Grossman said. “But he was describing this workforce situation as an ‘existential challenge.’ We keep hearing that across industries.”

Building a Team Around the Concept

Since its founding in 2011, Social Finance has, through training providers, made financing available to students who otherwise might not have the financial wherewithal to acquire loans for tuition. The source of the capital is typically from impact investors, philanthropy, employers and public sources. It’s all part of Social Finance’s mission: to get potential valuable players off the sidelines and into a game that can both improve their personal well-being and help employers overcome workforce shortages.

“We’re trying to serve those for whom the access to credit is a barrier to getting in a skills-training program,” says Justin Bakule, vice president for impact investments at Social Finance, and a participant in the U.S. Chamber of Commerce Foundation’s Talent Finance workshops from which he draws insights from many others.

With this mission in mind, Social Finance developed in 2019 a tool called the “Career Impact Bond,” a model that Pay It Forward drew on heavily.

Carrie Benjamin, Social Finance’s director of media and communications, notes that when some of the public sector players in New Jersey heard about the Career Impact Bond, it sparked their interest in a public version. “We worked with them for over a year on this concept, and really closely with HESA [the state’s Higher Education Student Authority],” Benjamin said. “They wanted to make sure that this was a very student friendly tool.”

Social Finance played the complex and essential role of melding together the partners and providing the talent finance infrastructure that is the backbone of New Jersey Pay It Forward. The Social Finance team of experts helped coordinate nearly every aspect of the program. Social Finance recommended and put in place the financing structure, vetted training providers, selected the industries, and worked with participating local companies.

HVAC tech fixing unit

Replicating the Model Elsewhere

It’s too soon to say exactly how many workers and businesses will benefit from New Jersey Pay It Forward, yet the impacts are coming into focus. The first cohort of 15 nursing students the program supported graduated in May 2023, and there are 29 enrolled first-year students. The first few Camden County Community College students also graduated in May. The first New Jersey Institute of Technology cohort of 33 students will graduate in October.

But, even before this point, Governor Murphy, who is clearly proud to have played a major role in standing up what is the first program of its kind, has also urged others around the country to apply the model for their own use. Bakule agrees that, while every environment is unique and requires custom designs, the New Jersey Pay It Forward model could work well in other settings, and Social Finance is already exploring opportunities to expand it elsewhere.

“I think what’s appealing to a state is, instead of just paying this funding out one time as a grant and then not really knowing what happens to it, this is much more like an investment with a measurable return,” Bakule says. Additionally, he believes the efficacy of the model might be politically appealing to conservatives and liberals alike, “because it’s about more efficient and effective usage of government resources.”

Bakule also notes the appeal of the model to students, “Imagine taking out credit that you only pay back if the credit did what it said it was going to do. That’s what’s new here for students.”

Another important element behind New Jersey Pay It Forward is that private sector players have done something he believes is critical to successful talent financing programs — put their own skin in the game.

“I think the employer should do more to pay for [training workers],” Bakule says. “It boils down to how central the talent problem is to that business running well. And if the answer is, it’s really central to it, they will pay. If you’re an employer, historically, what you could do is hang out a help wanted sign, and you would benefit from a public education system that just delivered people to your door.”

Today, he adds, a number of industries don’t have the luxury of that kind of a workforce, and they, too, need to get off the sidelines. “Just waiting for the talent pipeline to improve is not a great option for industries that have real needs for more workers right now,” Bakule says. “Industry is uniquely positioned to prime that pump and to help increase the number of better-prepared workers. The solution is very much theirs to help create.”

Talent Finance is a collaboration of The U.S. Chamber of Commerce Foundation, the Federal Reserve Bank of Atlanta, the Greater Houston Partnership, Working Nation, Education Finance Council, SHRM, National Association of Workforce Boards, the National Governors Association, Social Finance, Jobs for the Future, and Uncommon Impact Studio. The mission of the Talent Finance Initiative is to make education, training, and credentialing more affordable, with less debt, and to achieve better outcomes for learners and workers. Talent Finance refers to the development and use of public and private instruments for aligning investments in talent development and in managing employment and income risks. Talent Finance explores how we can produce a better public-private approach for how we finance and invest in talent.