Education Department Ties Loan Eligibility to Earnings

A new accountability rule links federal student loan access to graduate earnings compared with benchmarks for high school and bachelor's degree holders.

Updated on Nov. 11, 2026 in Financial Aid

Education Department Ties Loan Eligibility to Earnings

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Should federal student loans be cut off from college programs with low graduate earnings?

The U.S. Department of Education announced on June 29 a new rule under its STATS and Earnings Accountability system that links federal student loan eligibility to graduate earnings. Programs whose graduates earn below benchmarks may lose access to federal loans.

Why it matters

The framework cites rising default and delinquency rates in the $1.7 trillion federal student loan portfolio as its rationale. Students weighing costly programs will face a new measure of whether a program pays off financially.

Undergraduate programs are compared against the median weekly earnings of $977 for full-time workers aged 25 and over with a high school diploma in 2026, while graduate programs are compared against $1,541 for bachelor's degree holders in 2024. The number of programs that will fall below these benchmarks has not been reported.

The players

U.S. Department of Education

The federal agency that makes federal student loans under terms set by law and oversees the Direct Loan and Title IV programs.

The details

Under the rule, a program that fails to show financial return on investment in two of three consecutive award years loses Direct Loan eligibility. After three years of consistent failure, a program can lose Title IV eligibility, including Pell Grant eligibility, for all of an institution's low-earning programs. Private loans, made by banks and credit unions, are generally more expensive than federal loans.

June 29: Department of Education announces the STATS and Earnings Accountability rule.
July 1, 2027: The majority of the rule, including earnings requirements, takes full effect.

Market Landscape

The rule extends the STATS and Earnings Accountability system by moving from reporting earnings outcomes to tying federal Direct Loan and Pell Grant eligibility to them. It applies the same earnings-versus-benchmark logic across undergraduate and graduate programs.

Prospective students can compare a program's graduate earnings against the $977 high school benchmark or the $1,541 bachelor's benchmark before borrowing. Those who take federal loans may find that eligibility for certain programs changes over the following years.

The takeaway

Students should check whether a program's graduates earn enough to support their debt before enrolling. Comparing federal and private loan terms can also clarify borrowing costs.