Trump Proposal Ties Federal Aid to Student Earnings Outcomes (1)

The Trump administration proposed regulations mandating colleges and universities be accountable for how much their graduates earn after leaving their programs, cutting off the institutions from accessing federal student loans if they leave them worse off financially.

The Department of Education’s “Do No Harm” or earnings test would require all postsecondary programs and schools to prove their graduates are earning more than workers without that degree or credential. Failure would result in those programs losing access to federal loans. The proposal also removes a Biden-era rule that put added scrutiny on for-profit colleges.

“The Trump Administration’s proposed accountability framework is grounded in common sense: if postsecondary education programs do not leave graduates better off, taxpayers should not subsidize them,” Education Under Secretary Nicholas Kent said in a Friday statement.

The proposal will publish April 20, with public comments open until May 20.

The regulations (RIN 1840-AE06) take effect July 1 and implement changes from the GOP’s 2025 tax-and-spending law.

The for-profit education industry generally welcomes the changes, which expand standards to programs at nonprofit schools. More traditional colleges and universities and some critics say the measures are too blunt an instrument.

Several for-profit chains have collapsed in recent years, leaving taxpayers on the hook for tens of millions of dollars in student loans. The Biden and Obama administrations took a hard line on the groups, which they accused of poor fiscal management and dodgy marketing practices.

“We are pleased that the Department applied the accountability requirements universally across all sectors, an approach we have advocated for many years, ensuring that all schools can be held accountable for their outcomes,” Jason Altmire, president and CEO of the trade group Career Education Colleges and Universities, said in a statement Friday.

Student Earnings Outcomes

The proposal requires schools to prove that graduates from their undergraduate programs—including certificate, associates, and four-year degrees—earn as much as or more than the average working adult with only a high school diploma. For master’s and doctoral programs, graduates should be earning more than workers with a bachelor’s degree.

Schools would lose access to federal loans if they don’t meet the earnings thresholds for two out of three consecutive award years. If failing programs account for at least half of a school’s federal financial aid recipients or half of their federal aid funds, those programs also would lose eligibility for Pell Grants.

Census data would be used to track how graduates are doing four years after leaving school. The median earnings of graduates from undergraduate programs must be higher than the median earnings of workings adults with only a high school diploma, who are between 25 and 34 years old, and who aren’t enrolled in higher education.

For programs that enroll mostly in-state students, those graduates would be compared to workers within the state. But if fewer than 50% of students are from out of state, they’ll be compared to workers nationally.

For graduate programs, the median earnings of graduates would be compared to the median earnings of people with only a bachelor’s degree in the same field of study and are between the ages 25 and 34. The same out-of-state and in-state student population rules apply as well.

The proposal also would eliminate the Biden administration’s debt-to-earnings test, an accountability measure aimed at protecting students from career schools that leave graduates with exorbitant debt level compared to how much they’re earning in the workforce.