U.S. Department of Education implements student loan earnings test

The U.S. Department of Education has finalized new regulations under the Trump administration to tie federal student loan eligibility to the earning potential of specific degree programs. Scheduled to take effect on July 1, 2027, the Student Tuition and Transparency System (STATS) will implement an earnings accountability test to ensure students receive a financial return on their education.

Under this system, undergraduate programs must demonstrate that their graduates earn a median annual salary higher than that of workers with only a high school diploma. Graduate programs will be measured against the median earnings of bachelor’s degree holders. Programs that fail to meet these benchmarks in two of three award years will be classified as low-earning and barred from participating in the Direct Loan Program for at least two years.

Critics and educators warn that the rule could disproportionately impact fields such as social work, music, art, religious studies, and mental health, where graduates perform essential societal roles but often receive lower salaries. Additionally, the One Big Beautiful Bill Act has already introduced significant changes to graduate lending, including the elimination of the Grad PLUS program and new lifetime borrowing limits, causing uncertainty among graduate students regarding their ability to fund advanced studies.