A new federal rule could change which college programs are allowed to participate in the federal student loan program, with the government preparing to judge programs partly by how much their graduates earn.
The U.S. Department of Education finalized its new Student Tuition and Transparency System, or STATS, and Earnings Accountability rule this summer. The regulations were published July 1, 2026, and the new accountability framework is scheduled to replace the current system on July 1, 2027.
The goal is to determine whether students are seeing a financial return after completing a college program.
How will the government measure earnings?
For undergraduate programs, the Department of Education will compare the median earnings of graduates with the earnings of working adults who have a lower educational credential, generally workers with only a high school diploma.
Graduate programs will face a similar test, comparing graduates’ earnings with those of workers who hold bachelor’s degrees.
The rule applies broadly across higher education rather than only to a small group of career or for-profit programs.
One bad year does not automatically mean losing federal loans
This is an important detail missing from some posts circulating online.
A college program will not automatically lose federal student loan eligibility because its graduates fall below the earnings benchmark once.
Under the final rule, a program that fails the earnings test in two out of three consecutive award years would be considered a low-earning outcome program and would have to stop participating in the federal Direct Loan Program for at least two years.
That means the rule affects the program’s ability to receive federal student loan funding, not the validity of a graduate’s degree.
The first earnings test takes effect in 2027, and based on the Department’s implementation timeline, July 1, 2028 is the earliest programs could lose federal Direct Loan eligibility after failing the required tests.
What happens to students already enrolled?
The final regulations also include protections intended to avoid suddenly cutting off students who are already working toward their degrees.
Schools may be able to use an approved wind-down process that stops new students from entering a failing program while allowing eligible students who are already enrolled to continue receiving federal aid as they finish their studies.
What about social work, art, teaching and other lower-paying careers?
This is where some of the conversation online needs more context.
The rule does not specifically ban degrees in social work, art, music, education or religious studies from receiving federal loans.
Instead, individual programs will be evaluated using their graduates’ earnings.
That distinction matters because two universities offering the same type of degree could potentially receive different results depending on the earnings data for their graduates.
The new approach has also fueled a broader debate over whether salary alone can adequately measure the value of degrees that lead to important but traditionally lower-paying careers.
The Education Department argues the system will protect students and taxpayers from programs that leave graduates with poor financial outcomes and large amounts of debt.
Critics of earnings-based accountability have raised concerns that programs preparing people for lower-paying public-service professions could face greater pressure even when those jobs remain necessary to their communities.
What students should know
For now, students should not read the new rule as the federal government suddenly eliminating student loans for specific majors.
The changes will be based on individual program outcomes, and programs generally must repeatedly fail the federal earnings test before losing Direct Loan eligibility.
The current Financial Value Transparency and Gainful Employment regulations remain in effect through June 30, 2027. The new STATS and Earnings Accountability framework takes over July 1, 2027.
