Key facts
- The U.S. Education Department is finalizing new rules linking federal student loan access to graduate earnings.
- Programs must demonstrate graduates earn more than typical high school or bachelor's degree holders.
- Failure to meet earnings thresholds for two of three consecutive years will result in loss of federal loan eligibility.
- The new rules will take effect in 2027.
- The Trump administration has previously sought to restrict federal funding for universities on various grounds.
The U.S. Education Department is set to implement new regulations that will tie a school's access to federal student loan funding to the earning potential of its graduates. Under the new Student Tuition and Transparency System (STATS) and Earnings Accountability rule, undergraduate programs will need to prove their graduates earn more than the average high school diploma holder, while graduate programs will face a similar benchmark against bachelor's degree holders.
Programs that fail to demonstrate this minimum financial return on investment for their graduates for two out of three consecutive award years will be deemed ineligible for the federal Direct Loan program. The final rule is scheduled for publication on July 1, with 2027 being the first year these earnings thresholds will be applied. Furthermore, institutions that consistently fail the earnings premium measure for three consecutive years could face termination of eligibility for Title IV of the Higher Education Act, including Pell Grants, for all their low-earning outcome programs.
This move represents the Trump administration's latest effort to exert pressure on colleges and universities. President Donald Trump has previously taken action against educational institutions, including attempts to freeze federal funding over issues such as pro-Palestinian protests, transgender policies, climate initiatives, and diversity programs. Rights advocates have expressed concerns regarding free speech, academic freedom, and due process amid these actions.