STATS and – The Department of Education has finalized rules under the Student Tuition and Transparency System (STATS) and Earnings Accountability framework that will require many college programs to prove their graduates earn more than comparable peers, or risk losing fed
On a decisive Monday, the Department of Education finalized new rules that will reshape how millions of Americans’ student borrowing works—by tying federal loan eligibility to what graduates actually make after they leave campus.
The changes. set to be formalized Wednesday. come under the Student Tuition and Transparency System (STATS) and the Earnings Accountability rule. The department says undergraduate programs will have to show their graduates earn more than the typical high school diploma holder. while graduate programs must demonstrate they earn more than the typical bachelor’s degree holder.
For students, the effect is blunt: if a program fails to meet the earnings thresholds, the government can terminate its eligibility for Title IV of the Higher Education Act. That’s the gatekeeper for federal aid—including Pell grants.
Unlike loans, a Pell grant doesn’t have to be paid back. Under the new framework, programs deemed “low-earning outcome programs” risk losing access to that support, even as the cost of higher education remains a daily pressure point for families balancing tuition bills and living expenses.
The Education Department says schools have three years to show at least a “modest” return on investment for their graduates. If they can’t, the department will terminate eligibility for Title IV for programs it determines produce low-earning outcomes.
Under Secretary of Education Nicholas Kent framed it as an insistence on outcomes. In the department’s statement. Kent said the administration is “hitting the hard reset button on higher education and implementing common-sense reforms that will drive down the cost of higher education.” He added: “If a program cannot show that it leaves its graduates financially better off than if they had never enrolled. it should not be underwritten by federal taxpayers.”.
The government will begin collecting earnings data this October, the Education Department said. The first year schools will have to meet the new earnings threshold is 2027.
The numbers already point to disruption. The Wall Street Journal reported the department says about 3. 200 programs with approximately 690. 000 students who rely on federal student loans are on track to fail the earnings test. The list includes degree and certificate programs tied to fields such as ministry, cosmetology, and massage therapy.
After public outcry, the department made revisions to its plan.
One adjustment delays the new eligibility rules for at least one year for programs whose graduates earn a substantial portion of their income from tips. The timing is tied directly to federal tax policy: the department says it will assess how President Donald Trump’s “No Tax on Tips” policy impacts overall income.
There is also a “parachute option” for schools that fail to meet the earnings threshold after the first year. Under that option, schools can choose to exit the federal student loan program but still remain eligible for Pell grants. Kent said about 600 religious-affiliated programs would be able to maintain access to the Pell grant that way.
Programs may also keep their Title IV eligibility if they are not yet determined to be low-earning and if the school and the Education Department “agree to amend the institution’s program participation agreement to prevent students from borrowing Direct Loans for the program for a period of at least five years.”.
While the federal rule takes shape, states are already moving to cut off programs they deem low-earning.
Indiana’s approach is already on the books. The state passed a law in March directing public colleges and universities to end all academic programs that produce “low-earning” graduates, and that law takes effect Wednesday.
In Indiana, students and faculty have raised concerns that the measure could sweep far beyond the programs policymakers intend. One anthropology student at the University of Indiana Bloomington told the student newspaper the bill could pave the way for lawmakers to eliminate his entire department. according to Higher Ed Dive. The same report said a lecturer with the university’s Parks. Recreation. and the Outdoors program argued that state pay for seasonal workers at the Indiana Department of Natural Resources is “notoriously bad. ” which could set up the program to qualify as low earning.
New Hampshire, West Virginia, and Nebraska have introduced similar bills aimed at eliminating state financial aid for “low-earning” programs.
Wednesday is also when several other major changes to federal student loans take effect under the One Big Beautiful Bill Act passed last year.
Most notably, the Biden-era SAVE program is coming to an end. SAVE—short for Saving on Valuable Education—was designed to set borrowers’ monthly payments based on income and family size. with payments sometimes as low as $0. Those currently on SAVE will have until October to re-enroll in a different repayment plan. or they’ll automatically be put into one.
The Parent PLUS program is also changing. Under the new rules. parents taking out their first PLUS loan for their child can borrow up to $20. 000 a year per student and up to $65. 000 total. instead of borrowing whatever amount is needed to pay for college. For those enrolled in the program by June 30. the old rules will still apply—but only for three years or until the student finishes school.
Short-term workforce training programs—eight to 15 weeks long—will now be eligible for Pell grants for the first time.
Other changes included in the broader federal package cover how Pell grants are calculated, new repayment plans, allowing schools to limit how much their students can borrow, lower caps on graduate loan borrowing, and new restrictions on who qualifies for Public Service Loan Forgiveness.
Taken together. the education department’s earnings test and the loan program rewrites signal a shift toward federal aid being conditioned on outcomes and financial return. For students already committed to programs—especially those in fields flagged as likely low-earning under the department’s thresholds—the immediate question is simple and urgent: whether they will still be able to afford their education when federal eligibility depends on what they earn long after classes end.
Trump administration Department of Education STATS Earnings Accountability federal student loans Pell grants Title IV SAVE program Parent PLUS Public Service Loan Forgiveness Indiana low-earning programs Nicholas Kent One Big Beautiful Bill Act
So now if you don’t make enough, they just yank the Pell? That seems messed up.
Wait I thought Trump already did something with student loans years ago. This sounds like another way to deny people help. Also “high school diploma holder” comparison is kinda weird, like are they assuming those grads don’t try?
Tying loans to graduate pay?? That’s gonna hit community college too, right? Like if the job market is bad for a field, schools lose funding, then students lose everything… but they’re saying it’s to prove the programs work so idk. My cousin went to a grad program and took years to land a job, so would they just cut them off immediately? Seems like punishment.
This is just gonna make schools game the numbers or quietly steer people away from “low earning” majors. And I’m pretty sure this is gonna be used to make Pell harder too, even if they say Pell isn’t paid back. If they compare grad outcomes to “bachelor’s degree holders” that’s apples to oranges because not everyone’s even competing for the same jobs. Sounds like bureaucrats trying to fix something that’s actually about wages.