Department of Education and Negotiators Reach Consensus on Higher Ed Accountability Framework

This blog was authored in partnership with The Institute for Higher Education Policy (IHEP). 

Last week, the U.S. Department of Education (ED) reached consensus on proposed regulations that would set a new earnings accountability metric for all postsecondary programs, regardless of sector. In its second week-long session of negotiated rulemaking, a process ED uses to discuss and seek stakeholder consensus on proposed regulations, the Accountability in Higher Education and Access through Demand-driven Workforce Pell (AHEAD) Committee considered how to implement changes Congress made to accountability metrics in the 2025 budget reconciliation law, the One Big Beautiful Bill Act (H.R.1). TICAS’ summary of the first AHEAD Committee session is available here. 

The proposed rule would implement H.R.1’s “Do No Harm” earnings standard and align the existing gainful employment (GE) and financial value transparency (FVT) regulations with that standard. The earnings standard would be applied to all programs, including undergraduate certificate programs. The FVT framework has been renamed the Student Tuition and Transparency System (STATS). All negotiators and the Department voted in favor of the proposed framework except for the legal aid negotiator, who abstained. 

This blog reviews the primary areas of discussion between negotiators and the Department over the course of the week and key elements of the agreed-upon proposal, including:

• The earnings premium metric, process for calculating earnings, and implementation timeline;
• Modifications to the gainful employment (GE) rule, including eliminating the debt-to-earnings test and aligning GE with the H.R.1 earnings premium;
• Consequences for programs that fail to meet earnings benchmarks;
• Reporting requirements under the new Student Tuition and Transparency System (STATS); and
• Changes to required student-, program-, and institution-level disclosures.

Earnings Premium Metric

As established in H.R.1, ED proposed an earnings premium measure that conditions a program’s access to federal Direct Loans on whether its graduates meet minimum earnings requirements. For undergraduate degree programs, the median earnings of graduates must exceed the median earnings of working adults ages 25 to 34 with only a high school diploma. For graduate programs, graduates’ median earnings must exceed those of working adults ages 25 to 34 with only a bachelor’s degree. ED will calculate the earnings premium annually by comparing the earnings of program completers four years after graduating with the appropriate earnings benchmark, outlined below. Earnings are calculated in a single award year for programs with at least 30 Title IV completers; the proposed rules also lay out aggregation methods for small programs with fewer than 30 Title IV completers.¹For programs with fewer than 30 Title IV completers in an award year, ED proposes to aggregate completers from up to four prior award years from the same OPEID6, credential level, and 6-digit CIP code to reach a statistically reliable cohort size. If a statistically reliable cohort size is not achieved, ED would aggregate completers from up to five prior award years from the same OPEID6, credential level, and 4-digit CIP code before aggregating completers from up to five prior award years from the same OPEID6, credential level, and 2-digit CIP code. Programs that still do not reach 30 Title IV completers following this aggregation process or do not have median earnings data provided by the federal agency with earnings data are exempt from the earnings test. Programs that fail to meet the earnings threshold twice in a three-year period lose access to Direct Loans. 

The six proposed earnings benchmarks, which would implement the earnings premium metric from H.R.1., are described below:

Undergraduate Programs

In-State High School Benchmark

• Median earnings of individuals ages 25-34 in the state where the college is located who are working and have only a high school diploma. 
• Used for programs at institutions enrolling mostly in-state students.

National High School Benchmark

• Median earnings of individuals ages 25-34 in the entire United States who are working and have only a high school diploma. 
• Used for programs at institutions enrolling mostly out-of-state students.

Graduate Programs

Same-State, Same-Field Bachelor Degree Benchmark

• Median earnings of individuals ages 25-34 in the state where the college is located who are working and have a bachelor’s degree in the same field of study.
• Used for programs at institutions enrolling mostly in-state students, if lowest benchmark. 

Same-State Bachelor Degree Benchmark

• Median earnings of individuals ages 25-34 in the state where the college is located who are working and have a bachelor’s degree.
• Used for programs at institutions enrolling mostly in-state students, if lowest benchmark. 

National Same-Field Bachelor Degree Benchmark

• Median earnings of individuals ages 25-34 in the entire United States who are working and have a bachelor’s degree in the same field of study.
• Used for programs at institutions enrolling mostly in-state students, if lowest benchmark. 
• Used for programs at institutions enrolling mostly out-of-state institutions, if lower than National BA benchmark. 

National Bachelor Degree Benchmark

• Median earnings of individuals ages 25-34 in the entire United States who are working and have a bachelor’s degree.
• Used for programs at institutions enrolling mostly out-of-state institutions, if lower than National Same-Field BA benchmark. 

Under ED’s proposed timeline, ED would first calculate the earnings test and notify colleges of their programs’ results in early 2027. At the time of calculation in early 2027, the most recent tax data available would cover the 2025 calendar year, which is four years after graduates from the 2021 award year completed their programs. ED will then conduct the second earnings test calculation and notification in early 2028 using data for completers in the 2022 award year. Programs that fail the calculation in both 2027 and 2028 would be designated as “low-earning outcome programs” and could lose access to federal student loans beginning July 1, 2028. 

ED agreed to add a process proposed by the non-profit institution negotiator that would allow programs that fail to meet the earnings threshold test in one year to elect to close the program while retaining access to Direct Loans for a limited amount of time. This provision is intended to allow currently enrolled students to complete their program or transfer to a higher earnings outcome program, while preventing institutions from enrolling new students in that program or starting a substantially similar program for at least two award years following closure. In response to concerns from negotiators representing legal aid organizations and others, ED added additional limitations to this voluntary teach-out provision, including limiting continued loan eligibility to the lesser of three years or full-time normal program duration, informing state authorizers and accreditors of pending program closure, and giving the Secretary of Education discretion to approve a teach-out only when it is in students’ best interest. 

Modifications to Gainful Employment (GE)

In an effort to align gainful employment (GE) regulations with H.R.1, the Department made significant changes in the proposed regulations. The GE rule’s statutory authority in the Higher Education Act (that career education programs prepare their graduates for gainful employment in a recognized occupation) allows ED to apply the earnings premium metric to undergraduate certificates, which were not included in H.R.1, though lawmakers later clarified that those programs should not be exempted from earnings accountability.  The new proposed rule will assess programs based on H.R.1’s earnings premium test only, eliminating the current GE rule’s debt-to-earnings test as well as any differences between the Biden Administration’s earnings metric and the standard in the statute. ED rejected requests by some negotiators, including those representing institutions, to exempt undergraduate certificates from the earnings premium or make the first year of earnings informational only. 

Based on preliminary data, ED estimates that approximately six percent of programs, enrolling approximately 650,000 students receiving Title IV loans or grants, would fail the proposed earnings premium test. Among these students, approximately 55 percent attend a for-profit institution. ED estimates that undergraduate certificate programs will be much more likely to fail than other credential levels; 29 percent of undergraduate certificate programs are estimated to fail, followed by seven percent of associate programs and four percent of graduate certificate and master’s programs. Only about one percent of bachelor’s degree programs are estimated to fail.

In a presentation to negotiators, ED argued that adding the debt-to-earnings metric would have little impact on the program pass/fail rate beyond what was already captured by the earnings test, and therefore is not worth the additional administrative burden. Additionally, the Department stated that the new loan limits set by H.R.1 would further reduce the debt burden for students and make debt-to-earnings a less relevant accountability metric. 

To prevent institutions from starting similar programs that have failed the earnings premium metric, ED accepted a proposal from the negotiator representing employers stating that an institution may not update its list of Direct Loan-eligible programs to include a program sharing both the same 4-digit CIP code and any overlapping Standard Occupational Classification (SOC) code with a failing program that the institution voluntarily discontinued or became ineligible. 

Maintaining Total Loss of Title IV for Some Failing Programs

Throughout neg reg, the legal aid negotiator raised serious concerns about limiting sanctions under the new rule to loss of federal student loans only, instead of loss of all Title IV aid eligibility, based upon the need for stronger incentives for compliance for programs like certificates that receive more Pell Grants than federal loans. While ED was unwilling to reinstate total Title IV loss as a consequence for failing programs, the Department proposed compromise language that would cause some institutions to lose access to Title IV in some circumstances. 

Under standards of administrative capability (the conditions a school must meet to participate in Title IV), ED added the requirement that institutions must demonstrate that at least half of their Title IV recipients and at least half of their Title IV volume are not tied to programs that fail the earnings premium test. If an institution does not comply with this requirement in two out of three consecutive award years, the institution will be placed on provisional status and its low-earning outcome programs will lose access to Title IV, including Pell Grants. Most negotiators expressed support for this compromise language.

The graphic below illustrates how the proposed changes to administrative capability would affect Title IV eligibility for institutions with most Title IV recipients or Title IV dollars in failing programs.

Student Tuition and Transparency System (STATS)

The current Financial Value Transparency (FVT) framework was renamed the Student Tuition and Transparency System (STATS). While the core structure of the framework remains intact, ED and negotiators agreed to some modifications to the metrics and reporting requirements. Notably, the proposed regulations remove the debt-to-earnings rates and only maintain a modified earnings premium metric to align STATS with H.R.1’s earnings premium metric. As with FVT, STATS will apply to all programs. 

The Department removed several reporting requirements, including some elements that can be pulled from ED’s administrative data. Those deleted elements include the amount of debt owed to the school by students who complete or withdraw from the program, along with students’ attendance dates, attendance status, enrollment status, and dates of completion or withdrawal. The proposed regulations add a requirement to report grants and scholarships provided for the student’s entire enrollment in the program, which will allow the Department to calculate a more accurate net price.

Institutions have already reported two years of FVT and GE data under the 2023 regulations. GE/FVT reporting requirements will not change from what ED currently requires in 2026.  Beginning in 2027 under the new proposed rules, colleges would be required to report data (excluding data elements eliminated) for the two most recently completed years each October 1. 

Student, Program, and Institutional Disclosures

Student Warnings

In addition to establishing STATS, ED’s proposal includes required disclosures of student-, program-, and institutional-level data to further increase transparency. Institutions must provide warnings notifying current and prospective students that a program may become ineligible for the Direct Loan program due to failure to meet the earnings premium measure. The warning must indicate that the program has not passed the earnings premium metric and may lose access to Direct Loans, as well as the relevant information to access the Department’s program information website. Students must acknowledge having viewed the warning before the institution can disburse Title IV funds to them. ED accepted the proposal from the legal aid and student negotiators to retain the requirement to issue a follow-up warning if the student enrolls more than 12 months after receiving the initial warning. The proposed regulations include a new disclosure requirement to inform Pell-eligible students of their remaining lifetime Pell Grant eligibility and that all Pell funds used for enrollment in the program count toward their lifetime limit. 

The proposed regulations eliminate warnings around options for students to continue their education in another program at the institution and the institution’s plans if the program loses Title IV eligibility, as well as the requirement to provide warnings in alternative languages. 

Institutional and Program Information Website

The Department will establish and maintain a website for information about institutions and their programs. This “Program Information Website” must include, but is not limited to, the following elements:

• The published length of the program in calendar time (i.e., weeks, months, years)
• (Newly added) The median length of calendar time taken for full-time and less-than-full-time students to complete the program’s academic requirements and obtain the degree or credential awarded by the program (calculated by the Secretary)
• The total number of individuals enrolled in the program during the most recently completed award year
• The total cost of tuition and fees, and the total cost of books, supplies, and equipment that a student would incur for completing the program within the published length of the program
• Of the individuals enrolled in the program during the most recently completed award year, the percentage who received a Direct Loan, a private loan, or both
• The median loan debt of students who completed the program during the most recently completed award year or for all students who completed or withdrew from the program during that award year (calculated by the Secretary)
• The median earnings of students who completed or withdrew from the program (calculated by the Secretary)
• Whether the program is programmatically accredited and the name of the accrediting agency
• The program’s earnings premium measure (calculated by the Secretary)

The website may also include:

• The primary occupations (by name, SOC code, or both) that the program prepares students to enter, along with links to occupational profiles
• The program or institution’s completion and withdrawal rates for full-time and part-time students (as reported to or calculated by the Secretary)
• The medians of the total cost of tuition and fees, and the total cost of books, supplies, and equipment, and the total net cost of attendance paid by students completing the program (calculated by the Secretary)
• The loan repayment rate for students or graduates who entered repayment on the Direct Loan Program (calculated by the Secretary)

The proposed regulations eliminate the debt-to-earnings rates from the program information website. After initially proposing to remove the requirement for institutions to include information on cost, financial aid, or admissions information about the program or institution on program webpages, the Department accepted a proposal from the legal aid and student negotiators to reinstate that requirement.  

Next Steps

Because negotiators reached consensus, the Department will issue a proposed rule for public comment that matches the agreed-upon text. ED will likely publish that rule in the coming months and allow 30 days for written public comment before publishing a final rule that will take effect on July 1, 2026. 

TICAS’ summary of the student loan and repayment changes approved by the first H.R.1 negotiated rulemaking committee, Reimagining and Improving Student Education (RISE) Committee, is available here. To view materials provided to the committee and the public, visit the Department of Education’s negotiated rulemaking website.

Lydia Franz is a Senior Policy Associate for Accountability at The Institute for College Access & Success (TICAS). Her work supports TICAS’ federal accountability team in advocating for strong protections against low-quality and abusive colleges and developing initiatives to promote equitable outcomes for all students.

Jocelyn Salguero is the Assistant Director of Policy at the Institute for Higher Education Policy (IHEP). In this role, she conducts and manages policy analysis and development to advance IHEP’s policy priorities, including data and transparency, equitable admissions, need-based aid, evidence-based completion, and strong outcomes for all students.