This publication identifies the front-line lessons learned to date on the role of education in the next phase of welfare reform. It presents the voices of leading welfare administrators, educators, business people, and current and former welfare recipients. Part 1, "Identifying the Issues," presents "The Case for Investing in Welfare Families." Part 2, "One Dozen Ways for States and Colleges To Make Work Pay," includes the 12 lessons: (1) "Aggressively Use Education To Meet Federal Work Requirements"; (2) "Cash in on Pell Grants, Work-Study, and Other Student Financial Aid"; (3) "Use State Funds To Extend Education beyond 12 Months"; (4) "Forge Partnerships between Welfare Offices and Community Colleges"; (5) "Use Comprehensive, Cooperative Assessment"; (6) "Identify and Support Welfare Recipients Who Are Already in School"; (7) "Encourage Concurrent Education and Work"; (8) "Redesign Classes for Working Parents"; (9) "Offer Students the Support They Need to Stay in School"; (10) "Send Former Recipients Back to School Too"; (11) "Expand Private-Sector Partnerships"; and (12) "Give Tax Credits to Employers Who (Really) Train." Examples of lessons in practice for each lesson are included. An appendix presents measures of skill in the National Adult Literacy Survey. (SM)