Colleges Face Aid Cuts if Grads Don’t Outearn Non-College Workers

The U.S. Department of Education is implementing a new rule requiring colleges to demonstrate that their graduates earn more than workers without a degree or risk losing federal student aid.

The rule, stemming from last year’s One Big Beautiful Bill Act, aims to hold institutions accountable for the financial outcomes of their students. Programs failing to meet the earnings threshold for three consecutive years will be penalized.

The Department estimates most programs will pass, but roughly 800,000 students currently attend programs likely to fail, with for-profit schools and certificate programs in fields like cosmetology showing the highest risk. Advocates for arts education express concern that the focus on earnings undervalues the societal contributions of artists and may lead to cuts in vital programs.

The first earnings data will be calculated in early 2027, with potential aid impacts beginning in the 2028-2029 academic year. The current metric doesn't account for student loan debt, a factor the Department may address in the future.