U.S. Department of Education Issues Final Rule to Hold All Colleges and Universities Accountable for Low-Earning Programs

Today, the U.S. Department of Education (the Department) announced a final rule establishing a long-overdue postsecondary education accountability framework. Under the new Student Tuition and Transparency System (STATS) and Earnings Accountability rule, undergraduate programs will be required to demonstrate that their graduates earn more than the typical high school diploma holder, and graduate programs will be required to demonstrate that their graduates earn more than the typical bachelor's degree holder.

If a program fails to show at least this modest financial return on investment for its graduates in two out of three consecutive award years, it will lose eligibility to participate in the federal Direct Loan program. After three years of consistently failing the earnings premium measure, the Department could also terminate eligibility for Title IV of the Higher Education Act (HEA), including Pell Grant eligibility, for all of an institution's low-earning outcome programs.

Additionally, the final rule will harmonize new and existing earnings accountability measures, aligning the new earnings standard in President Trump's Working Families Tax Cuts Act (the Act) with the Department's existing Financial Value Transparency and Gainful Employment regulations. Under the final rule, nearly all programs and sectors will be subject to the same transparency and earnings accountability framework, without regard to an institution's tax status or credential level.

"The Trump Administration is hitting the hard reset button on higher education and implementing commonsense reforms that will drive down the cost of higher education and hold all institutions, regardless of sector, accountable for low earnings outcomes," said Under Secretary of Education Nicholas Kent. "If a program cannot show that it leaves its graduates financially better off than if they had never enrolled, it should not be underwritten by federal taxpayers. Amid rising rates of default and delinquency in the $1.7 trillion federal student loan portfolio, this new accountability framework is a responsible policy that will safeguard American taxpayer dollars and protect students from taking on unmanageable debt for programs that cannot demonstrate a reasonable return on investment."

This is the third and final rulemaking package authorized by the Act, which will rein in unsustainable student loan lending, realign postsecondary education with workforce needs, and bring uniform accountability across the higher education system.

To learn more about the final rule package, please see here.

Major Changes to the Final Rule, Compared to the Notice of Proposed Rulemaking:

Delay of Select Provisions: The Department will delay implementation of the program eligibility consequences for certain programs that prepare students for employment in occupations where a majority of workers receive tipped income, in order to use reported earnings from the tax years when the "No Tax on Tips" policy is in effect, which begins with the 2026 tax year. This change results in at least a one-year delay in the rule's eligibility consequences for affected programs.

Program Exemptions: In the final rule, the Department exempts an institution from the automatic loss of Title IV eligibility if the institution does not currently participate in the Direct Loan program and has not participated in the Direct Loan program for the five most recently completed award years.

In addition, under the final rule, the Department also exempts a program from automatic loss of Title IV eligibility if the program is not yet determined to be a low-earning outcome program and the institution and the Department agree to amend the institution's program participation agreement to prevent students from borrowing Direct Loans for the program for a period of at least five years.

The final rule exempts institutions from the program eligibility consequences if they exclusively serve individuals with documented disabilities, as defined under 34 CFR 300.8.

Background:

On July 4, 2025, President Trump signed the Act into law, which created a once-in-a-generation opportunity to reform higher education in America. The Department held a public hearing on August 7, 2025, to receive public feedback on implementing the law and later convened two negotiated rulemaking committees to address the changes made.

The Accountability in Higher Education and Access Through Demand-driven Workforce Pell (AHEAD) Committee met for five days of negotiations in January 2026. The AHEAD Committee included a range of impacted stakeholders, including higher education institutions, the legal aid community, employers, and organizations representing taxpayers. The Committee addressed the accountability provisions contained in the Act, as well as the Financial Value Transparency and Gainful Employment regulations, and reached consensus on the final vote.

Following negotiated rulemaking, the Department published a Notice of Proposed Rulemaking in the Federal Register on April 20, 2026, and invited public comment. The Department received nearly 10,000 comments, which are summarized and addressed within the final rule.

The final rule will be on public inspection in the Federal Register tomorrow and published on July 1, 2026. An unofficial copy of the regulations can be found here.