Rising concerns over student debt and job prospects are driving a policy shift in U.S. higher education. The proposed changes aim to tie federal funding more closely to graduates’ earnings, raising questions about the future of certain academic programs.
The U.S. Department of Education has introduced a proposal that would restrict federal student loan access for college programs whose graduates earn less than benchmark levels. The rule, backed by President Donald Trump, is part of a broader effort to address the growing burden of student debt, which has reached $1.7 trillion, according to federal data.
The proposal would require undergraduate program graduates to earn at least as much as workers with only a high school diploma, while graduate program alumni would need to surpass earnings typical of bachelor’s degree holders. According to reporting from Fortune, programs that fail these thresholds repeatedly could lose eligibility for federal loans and, in some cases, Pell Grants.
Programs Across Disciplines Face Potential Funding Cuts
The policy would apply broadly across higher education, affecting both traditional universities and vocational institutions. Programs identified as at risk include cosmetology certificates, fine arts degrees, music programs, and certain health-related fields where early-career earnings are often lower.
According toPreston Cooper of the American Enterprise Institute, nearly 2,000 colleges and universities have at least one program that could fail the proposed earnings test. This could impact more than 600,000 students. At the same time, about 95% of the nearly 20 million postsecondary students are enrolled in programs likely to meet the required benchmarks.
The rule would rely on IRS data to calculate median earnings of graduates. Programs would need to fail the earnings test in two out of three years before losing access to federal loans. Institutions would also be required to disclose “low earning outcome” warnings to current and prospective students if their programs are flagged.
According to the Department of Education, the framework is designed to ensure that federal funding supports programs that leave students financially better off. Under Secretary Nicholas Kent stated that programs failing to meet these standards should not be subsidized by taxpayers, reflecting a shift toward outcome-based accountability.
Broader Reforms Reshape Student Borrowing and Higher Education Value
The proposed rule is part of a wider set of changes to federal student aid. Beginning July 1, 2026, the Grad PLUS loan program will be phased out. New borrowing caps will limit professional students to $50,000 per year, with a lifetime maximum of $200,000, while other graduate students will face lower annual and total limits.
These changes come amid growing skepticism about the economic value of a college degree. According to data compiled from the Federal Reserve Bank of New York, 5.6% of recent college graduates are unemployed, while 42.5% are underemployed. Tuition costs have also risen significantly, with average prices at four-year institutions roughly doubling over the past three decades after inflation adjustment, according to the College Board.
At the same time, perspectives differ on how to measure the value of higher education. Some policymakers emphasize earnings as the primary indicator, while others point to broader benefits. According to comments reported by Fortune, Steve Taylor of Stand Together Trust noted that college can provide civic and cultural value beyond wages, though he acknowledged the need for transparency when federal debt is involved.
Business leaders have also weighed in on shifting workforce demands. Daniela Amodei, president of Anthropic, told ABC News that humanities education may retain long-term importance, even as technology reshapes job markets.
The proposal highlights a tension between economic accountability and educational diversity. While it seeks to protect students from debt burdens tied to low-paying outcomes, it also raises questions about how institutions balance financial returns with broader educational goals.
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