Federal Policy Bars Student Loans for Programs With Low Graduate Earnings

A federal policy that took effect July 1 bars students from using federal loans for college programs whose graduates earn less than the average high-school wage in the same state four years after graduation. The rule implements a section of the Big Beautiful Bill that withholds federal aid from programs failing the earnings test for two of three consecutive years.

The Department of Education will use Treasury tax records to calculate program-level earnings outcomes.

An analysis by the HEA Group compared earnings data for about 32,000 bachelor-degree programs with state high-school wage averages. The review flagged 804 programs—2 percent of the total—that graduate roughly 40,000 students annually. Examples include music programs at the University of Southern California, Juilliard, and the New School, where average earnings four years after graduation were $34,124, $32,842, and $32,930 respectively.

Fine-arts graduates from Cooper Union averaged $24,920, while liberal-arts and fine-arts graduates from Bard College averaged $34,571 and $34,667.

Kelchen, head of the Department of Educational Leadership at the University of Tennessee, Knoxville, said the revisions represent the largest changes to federal financial aid in decades. Mark Kantrowitz, author of a book on college financial aid, said some colleges may discontinue programs if enrollment and borrowing patterns shift.

Michael Itzkowitz, president of the HEA Group, said students and taxpayers both benefit when aid is limited to programs that improve earnings. Andrew Gillen, an educational researcher at the Cato Institute, said the new threshold may still allow programs that raise earnings only modestly while leaving students with high debt loads.