Federal Earnings Test Implemented for Colleges

The Department of Education has launched new earnings requirements for higher education programs nationwide.

Updated on Sept. 23, 2026 in Financial Aid

Isometric editorial illustration showing a graduation cap resting on a stack of structural bricks, representing federal academic earnings standards. — The Department of Education has initiated new federal earnings requirements for college programs, tying Title IV funding to graduate income metrics. AI Illustration. Upload story photo >

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Should the federal government restrict student loans to programs with higher graduate earnings?

The U.S. government implemented a new federal earnings test for colleges and professional programs as part of the 2025 One Big Beautiful Bill Act. Programs that fail to meet these graduate income standards for two consecutive years will lose access to federal Title IV funding, including direct loans and Pell Grants.

Why it matters

This regulation seeks to curb the student debt crisis by ensuring that educational institutions provide programs leading to financial independence. By holding colleges accountable for student earnings outcomes, the policy aims to prevent federal funding for programs that do not yield a return on investment.

Over 800,000 students are enrolled in programs now at risk of failing the new earnings test. More than half of those students attend for-profit institutions, while some specialized fields have received a one-year implementation delay.

The players

Department of Education

This federal agency is responsible for administering the new earnings test and overseeing Title IV funding eligibility for educational programs.

Donald Trump

As the current President of the United States, he oversees the administration that expanded the earnings test beyond for-profit programs.

The details

Under the new policy, undergraduate programs must demonstrate that graduates earn more than the median income of a high school graduate in their state, while graduate programs must exceed the earnings of a bachelor's degree holder. The Trump administration expanded these metrics to all institutions, removing previous criteria that weighed loan payments against income.

The One Big Beautiful Bill Act was passed in 2025.
The federal earnings test for higher education programs was implemented in 2026.
Earnings are measured four years post-graduation.

Culture Shift

This policy marks a significant shift toward outcome-based accountability in higher education, moving away from traditional models that prioritize enrollment. It reflects a broader movement to address the student debt crisis by limiting the influence of institutions with poor graduate earnings.

Students currently enrolled in programs that fail to meet earnings targets may see their access to federal student loans or Pell Grants cut off. Colleges may respond to these requirements by merging departments, closing programs, or shifting research funding to support struggling majors.

The takeaway

Students should evaluate the long-term career earnings of their chosen program to ensure it meets federal standards. Prospective enrollees in high-need fields should monitor institutional updates as schools may adjust program offerings or funding models to comply with the new rules.