The U.S. Department of Education (DOE) issued a Notice of Proposed Rulemaking (NPRM) to establish a new earnings accountability framework on Friday.
Under the proposed rule, if an undergraduate program does not produce graduates who earn at least as much as high school graduates, the program will lose its eligibility for federal student loans, and in some cases, Pell Grants.
The proposed framework was authorized under the federal budget reconciliation bill, signed into law by President Donald Trump in July 2025, and other existing DOE authorities.
According to a DOE press release, the framework presents an opportunity to “rein in unsustainable student loan borrowing, better align postsecondary education with workforce needs, and bring uniform accountability across the higher education system.”
“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,” said Under Secretary of Education Nicholas Kent in the press release.
Sign up for Awake58, our newsletter on all things community college.
There are two thresholds established for undergraduate programs under the “do no harm” earnings test:
- If the median earnings of an undergraduate program’s graduates don’t exceed the median state earnings for high school graduates, the program will lose the ability to provide federal loans.
- If programs falling below that threshold account for at least half of an institution’s federal aid recipients or half of federal student aid funds, then the institution will lose the ability to provide Pell Grants as well as federal loans.
Under the proposed rule, the first earnings test would be calculated in early 2027, and colleges would be notified of the result at that time. Programs will lose access to federal student loans if they fail the earnings test two out of three consecutive years — with July 1, 2028 being the earliest date that programs may lose access to federal student loans.
To make a public comment, use the Federal e-Rulemaking portal. Comments are due by May 20, 2026 at 11:59 p.m. EST.
In January, the DOE released data that estimates which programs may pass or fail the earnings test. While the analysis does not reflect the final data that will be used to administer the test — which will not be available until early 2027 — it provides an early indication of the potential impact of the earnings test.
The data estimates that roughly 6% of all programs nationwide would fail the test, largely concentrated in for-profit programs.
The data also presents some data by state. In North Carolina, roughly 5% of programs are estimated to fail the test. By comparison, Louisiana has the highest estimated fail rate, at 11%.
Undergraduate certificates face the highest risk of failing the earnings test, with 29% of certificates estimated to fail, compared to 6.6% of associate degrees, 1.2% of bachelor’s degrees, and 4% of master’s degrees.
Some of the most common undergraduate certificates and associate degrees estimated to fail the test include those in culinary services, cosmetology, English language and literature, visual arts, and music.
Programs related to early childhood education also face a high risk of failing the test. According to an analysis from New America, certificates related to human development (77% estimated to fail) and teacher education (55% estimated to fail) often train future early childhood educators, creating particular risk for the pipeline of early childhood educators that could exacerbate existing shortages.
“Rather than treat a failed earnings test as a sign of program failure, we should recognize it for what it is: a reflection of a broken compensation system in a field that society depends on,” reads the New America analysis. “The real risk is not only to individual programs, but also to the pipeline of trained early childhood educators that communities across the country cannot afford to lose.”
In an analysis of the proposed rule from The HEA Group, which includes more than 1,300 undergraduate programs in North Carolina, 75 programs are estimated to fail the test, 57 of which are offered by community colleges.
You can view the full presentation from the DOE on estimated impacts of the proposed rules below.
Editor’s note: The American Association of Community Colleges will provide an analysis of the proposed rules later this week, which will be added to this article once available.
Recommended reading
