The Trump administration wants to streamline its existing higher education accountability measures with a new earnings test, holding all postsecondary programs to the same standard—regardless of the certification level or institution type involved. But doing so could water down an existing accountability measure for certificates and for-profit programs.
About 6 percent of programs over all would fail the earnings test, and those enroll about 650,000 students who receive federal aid, according to department data. Of those students, more than half attend a for-profit institution.
Under a new policy proposal, released by the Department of Education late last week, undergraduate programs would be required to show that on average their graduates earn more than a working adult with a high school degree. (The same standard applies to master’s and doctoral degrees, but they will be compared to the earnings of someone with a bachelor’s degree.)
Programs that fail to meet those standards for multiple years could lose access to all federal loans.
Congress created the program-level earnings test when it passed the One Big Beautiful Bill Act over the summer, but it exempted certificates. The department’s proposal is the next step to implement the new accountability measure, known as the Do No Harm test. But department officials say they also need to rewrite the rules of an existing accountability metric known as gainful employment that measures students’ earnings as well as whether they can afford to pay off their student loans. That rule applies only to nondegree programs as well as those at for-profits.
Negotiations over the proposal kicked off Monday and are slated to continue through Friday. After that, the department must publish the rule for 30 days of public comment, address public concerns and then finalize the rule—all before the new earnings test is set to take effect July 1.
Under gainful employment, if a program failed either test it would not only lose access to federal loans, but also the Pell Grant and any other federal aid—a penalty that ED ends. The department’s proposal also nixes the debt metric in gainful employment, which officials say will create a level playing field.
An analysis conducted by the Postsecondary Education and Economics Research Center at American University prior to the release of the department’s most recent data predicted that if the gainful-employment standards remain the same, about 5 percent of students would be in programs that fail the test. But with just the earnings test, that proportion would drop to 3.7 percent.
On Monday, department officials made clear to the advisory committee tasked to weigh in on the plan that while they are open to changing their proposal, the goal is to “align” and “harmonize” the two metrics.
“Although we will certainly entertain ideas or proposals that would treat certain programs, types of programs or sectors differently from one another, with respect to these metrics, it will be more challenging for the department to accept those proposals,” said Dave Musser, the department’s negotiator.
Jeffrey Andrade, the deputy assistant secretary for policy, planning and innovation, called this negotiation process “the Super Bowl on accountability,” emphasizing that uniformity will be key to ensuring colleges are held accountable across the board.
“Over the last 15 years or so, people have sat at these tables and designed regulations, but at the end of the day, not a single program has been eliminated based on those regulations,” Andrade said. “What we’re trying to create here is something that is going to work in terms of serving as the floor for basic eligibility.”
No iteration of gainful employment has been in place long enough for a program to lose access to federal student aid. Under the regulations, programs have to fail two out of three consecutive years in order to face consequences. The current version took effect in July 2024, but the data collection necessary to conduct the gainful tests was delayed several times.
Negotiating committee members and lobbyists representing institutions largely praised the Trump administration for its initial proposal, saying all institutions should be held to the same standard and that it was Congress’s intent to limit said standard to an earnings test and loan eligibility.
But the panelists representing taxpayers and legal aid groups as well as think tanks and research groups that advocate for students pushed back, arguing that while continuing a version of gainful employment and maintaining some accountability for certificate programs was better than nothing, the department’s plan wouldn’t be enough to truly protect students.
Pruning Pell
On Monday, several committee members raised concerns about the department’s plan to allow failing programs access to the Pell Grant.
Preston Cooper, the committee member representing taxpayers, was one of the loudest voices on the issue. Using his own analysis of department data, Cooper estimated that the department’s proposal would send about $1.2 billion in Pell Grants to failing programs.
“That’s a lot of money from a taxpayer perspective,” he said. “I’ve got my 330 million constituents who are spending their hard-earned tax dollars funding these programs. That’s a very tough pill to swallow.”
Cooper and Tamar Hoffman, the committee member who represents legal aid organizations, said that while the idea of uniformity is nice in theory, the two accountability metrics are based on different legal authorities. Standards for Do No Harm were clearly outlined in the Big Beautiful Bill. But gainful employment stems from separate language in the Higher Education Act, which implies that eligibility is all or nothing. A program that fails the test must lose access to Pell and loans, Hoffman and Cooper argued.
“I’m wondering where exactly the department’s authority to make this change comes from, given the statutory authority about losing Pell Grant eligibility for programs that were designated as gainful employment,” Hoffman said.
If the department truly wants to create a uniform metric, why not put all degree programs at risk of losing their Pell eligibility if they fail the test, she added.
But committee members and lobbyists representing institutions pushed back. Some disputed the accuracy of Cooper’s numbers. Others argued that, even if his numbers are accurate, the department lacks authority to extend the loss of Pell eligibility to programs other than those affected by gainful employment.
“Congress made it clear that accountability should apply only to direct loans—it’s in statute. Now, what’s silent in statute is how certificate programs should be implemented under this new accountability framework,” Emmanual Guillory, senior director of government relations at the American Council on Education, told Inside Higher Ed. “So within that context, a conversation can be had [about nondegree programs], and negotiators should be able to express how they feel about what the penalty should be. But as it relates to any other program, it is very clear what congressional intent is, and that’s direct loans only.”
Aaron Lacey, the panelist representing nonprofit institutions, argued that an earnings test conducted four years after students graduate does not properly measure the return on investment of a college degree, so to put institutions at risk of losing federal subsidies based on that is unfair.
In his view, Congress’s decision to exclude certificate programs raises questions about whether the department has authority to include gainful employment in these regulations at all.
If the department were to proceed with Hoffman’s idea, the agency would face legal challenges, Lacey said. “So to the extent the department is going to rationalize and extend this to nondegree programs, I think trying to adhere to the consequence and sort of the philosophical outlook of Congress makes a lot of sense.”
Dumping Debt-to-Earnings
While the Pell penalty took up the bulk of discussions Monday, the committee will next turn its attention to the department’s decision to end the debt-to-earnings test in the current gainful-employment rule. A presentation on the matter is expected early Tuesday morning to explain why they opted to exclude it.
Still, multiple outside higher education research groups have already voiced concern about its elimination.
An analysis of department data conducted by the PEER Center shows that there are nearly 100 certificate and for-profit degree programs that would fail the debt-to-earnings test but pass the earnings premium. That means that those programs and the nearly 40,000 federally aided students they serve per year would continue to have access to loans that data shows they can’t pay off.
“Much of the risk is really concentrated in both for-profit programs and undergraduate certificate programs,” said Clare McCann, the PEER Center’s managing director of policy and operations and a former Education Department official. “The department’s taken some steps to create accountability there, but they have fallen a little short in making sure that they fully maximize those protections to students and taxpayers.”
Christopher Madaio, a senior adviser at the Institute for College Access and Success, suggested that “at a bare minimum,” the department should still determine programs’ debt-to-earnings ratio and require schools to disclose which programs failed the test so students can make more informed decisions before enrolling.
