Feds propose rules to penalize low-earning college degrees

The plan is backed by the Working Families Tax Cuts Act, which is a part of President Donald Trump’s One Big Beautiful Bill Act, which aims to cut taxes, according to the department.

Under the proposal, programs that fail to meet earnings benchmarks in two out of three consecutive years could lose access to federal student loans. If failing programs account for at least half of an institution’s federal financial aid recipients or funding, they could also lose eligibility for Pell Grants.

“The Trump Administration’s proposed accountability framework is grounded in common sense: if postsecondary education programs do not leave graduates better off, taxpayers should not subsidize them,” Nicholas Kent, the under secretary of education, said in a statement.

The department said it would use census data to measure graduates’ earnings four years after leaving school. Undergraduate program graduates would be required to earn more than the median income of working adults ages 25 to 34 who hold only a high school diploma and are not enrolled in higher education.

Student debt levels continue to rise across the states. 

The Center Square previously reported that Mississippi has the highest student debt burden relative to income, with borrowers owing an amount equal to 56% of the state’s median income. Residents there hold a combined $17 billion in student loan debt, along with the 14th-highest default rate, according to a personal finance report.

In California, residents owe about $151.5 billion in student debt, though the state also offers numerous grant and loan forgiveness programs.

Over 70% of college graduates have not found jobs in their field, raising concerns about the return on investment in higher education.

“I think that that is definitely going to make colleges rethink what sorts of programs they should prioritize in offering to students because if they end up offering programs and majors that don't have that return on investment, they're going to find that their revenue streams are going to be affected by it,” Lance Izumi, senior director of education studies at Pasadena-based Pacific Research Institute, told The Center Square.

Izumi highlighted that young people are not getting a return on investment.

They are not making the expected income and are burdened with student loan debt, which puts them in a weaker position to repay those loans because they are unable to find work in their field, Izumi said Monday.

The Career Education Colleges and Universities declined to comment. The Center Square also reached out to the University of California for comment, but did not receive a response.