Education Department Proposes Earnings-Based Eligibility for Federal Student Aid Programs

The public comment period for the rule ends May 20. The Obama administration first attempted to address earnings accountability through a gainful employment rule that applied primarily to for-profit colleges and vocational programs. Beginning July 1, 2026, the Grad PLUS loan program is being phased out.

The Grad PLUS loan program will mark its 20th anniversary in July 2026. Professional students in fields such as pharmacy, dentistry, law, and medicine may borrow up to $50,000 per year, with a lifetime cap of $200,000 in federal unsubsidized loans. Other graduate students, including those in nursing, accounting, and education, may borrow up to $20,500 per year, with a lifetime limit of $100,000.

6% of college graduates between the ages of 22 and 27 are unemployed. 5% of recent college graduates are underemployed. Over the past three decades, average tuition at both public and private four-year colleges has roughly doubled after adjusting for inflation.

The average federal student loan balance has climbed to about $39,075 per borrower. Fortune reported that the programs most at risk vary widely and span both traditional four-year colleges and more technical, career-focused institutions. Some are short-term certificate programs, including cosmetology and other vocational training fields.

Others are degree programs in areas where graduates often earn less early in their careers, such as music, fine and studio arts, and certain health-related fields. The changes could bring a new level of transparency to higher education. Fortune reported that the return on investment of postsecondary education has increasingly become a hot-button topic as many young people have confronted the reality that a college degree does not guarantee a high-paying job.

As the Trump administration restarted loan repayments after Biden-era attempts at canceling or reshaping those programs, those balances are once again squeezing household budgets. The tension between rising interest in human-centered skills and a policy environment increasingly focused on earnings underscores a broader debate about what higher education should deliver.

Steve Taylor, policy director at Stand Together Trust, an economic mobility nonprofit and member of Virginia’s State Council of Higher Education, said the degree-or-bust model is failing too many Americans.

“College can have civic, personal, and cultural value beyond wages,” Taylor told Fortune. Having more transparency at the program level will give students a better idea of the job prospects on the other side of a certain degree. “If a program consistently leaves graduates with debt they struggle to manage, students should know that before they enroll,” Taylor added.

Greater transparency could also help open the door to opportunities outside of traditional degree pathways, including skilled trades and other career-focused training programs. “College can still be a great choice,” Taylor said. Cooper echoed that sentiment, but argued the conversation needs to move beyond a simple four-year-versus-trade-school divide—and instead focus on which programs actually deliver strong outcomes for students.

“I think that there are some great four-year college programs, and there are some great trade school programs. There are also some bad four-year college programs, and there are some bad trade school programs,” Cooper said.