College programs could lose federal student loan eligibility if graduates earn too little
College programs whose graduates repeatedly earn less than workers with lower levels of education could lose access to federal student loans under a new nationwide earnings test taking effect in 2027.
The U.S. Department of Education announced the final Student Tuition and Transparency System, known as STATS, and Earnings Accountability rule on June 29, 2026, and published it on July 1. The rule will apply an earnings standard across nearly all college programs participating in federal student aid, extending accountability requirements beyond the career programs historically covered by federal gainful employment rules.
Undergraduate programs generally must show that their typical graduates earn more than working adults ages 25 to 34 whose highest credential is a high school diploma or equivalent. Graduate programs are measured against workers with bachelor’s degrees, with the benchmark also accounting for the graduate program’s field of study.
The Department can use a state or national earnings threshold depending on where a school draws its students. Most programs will face an in-state benchmark, while institutions with at least half of their students coming from outside the state generally face a national comparison.
Programs that fail the earnings test in two of three consecutive award years become low-earning outcome programs and must stop participating in the federal Direct Loan Program for at least two years.
- Law Commentary, Oct. 5, 2026