ED Proposes Accountability Framework with Tight Timeline, Expanded Penalties

​The Department of Education has released its proposed rule on program-level accountability under the One Big Beautiful Bill Act (OBBB), advancing a framework that would tie federal student aid eligibility to graduate earnings outcomes.

The 400-page rule goes beyond what the statute requires in key respects and does not address concerns ACE and other higher education associations raised before negotiated rulemaking.

The accountability provisions apply program by program, not at the institutional level. Undergraduate completers, four years out, must on average out-earn high-school-only graduates ages 25 to 34 in their state. Graduate completers must out-earn bachelor's-degree holders in the same age range. A program that fails the earnings test in two out of three years loses eligibility for federal student loans. The rule is scheduled to take effect July 1.

Failing programs tend to cluster by field rather than by institutional type. The fields of greatest concern are those that require advanced training but pay modestly, such as social work, library science, early childhood education, and counseling, where the country already faces workforce shortages.

The most significant issue is an expansion beyond what the statute requires. Congress wrote the penalty to apply to federal student loans only. The department's proposal would go further: if a failing program accounts for 50 percent or more of an institution's Title IV students and Title IV dollars, the program would also lose access to Title IV aid, including Pell Grants, Work-Study, SEOG, and other federal financial aid. That is a meaningful escalation, and it is not in the underlying law.

The timeline is a concern as well. The department has shown no interest in the master calendar requirement that would give institutions reasonable time to prepare. The 30-day comment period closes May 20. Even if the department moves quickly to finalize the rule, college and universities will have little runway to update systems, advise students, and adjust programs before the rule takes effect.

ACE will file comprehensive comments and encourages institutions to do so as well. Even when the department does not change course, the formal record matters, both for shaping the final rule and for any subsequent legal or legislative challenges. Documenting what this framework will mean for campuses, programs, and the students and communities institutions serve is important work.

ACE has prepared an initial summary of the proposal.