Last week, the U.S. Department of Education (ED), signed off on regulations that would require all postsecondary programs to pass a single earnings test to remain eligible for federal student loans. As part of the One Big Beautiful Bill Act (OBBBA), Congress enacted an earnings test for all higher education programs that deems programs as “low earning” if their graduates do not earn more than a working adult without that credential.

ED convened a committee of negotiators for the second week of negotiated rulemaking to write regulatory language on the new earnings test, along with the existing Gainful Employment (GE) and Financial Value Transparency (FVT) regulations, now being renamed as Student Tuition and Transparency System (STATS). Throughout the week, ED repeatedly said that their goal was to “harmonize” the various accountability rules with the OBBBA framework, but in doing so, they watered down the stronger standards that were in place for certain programs. ED’s agreed upon proposal would:

• Cover all higher education programs under the new earnings test passed in OBBBA, including undergraduate certificate programs
• Completely eliminate the debt-to-earnings metric that captures high-cost programs that would pass the earnings test but leave students with a high-debt burden they can’t afford to repay
• Allow students to continue to use Pell Grants at failing programs — programs only lose Pell access if the failing programs represent more than 50% of an institution’s students or federal aid revenue in two out of three consecutive award years

According to ED’s analysis of projected impact, approximately 6% of programs would fail the earnings test. These programs enroll about 650,000 Title IV students, and half of those students are enrolled at a for-profit institution. Programs most at risk of failing the new earnings test are undergraduate certificates; approximately 31% of students in undergraduate certificate programs attend failing programs.

The new accountability metric, set to take effect in July, will cut failing programs off from federal student loans if they fail the earnings test in two out of three years. Under the proposal, undergraduate programs will have to show that their graduates earn more than a working adult with only a high school diploma.

The proposed regulations aren’t final yet. ED still must publish the draft rule, take public comments, and review them before they finalize the rules on July 1, 2026.

Read the details of the proposal by downloading the brief