A proposed U.S. Department of Education rule could affect federal loan eligibility for programs whose graduates repeatedly fall below earnings benchmarks.
Religious colleges, trade schools and arts programs are among those warning that a proposed federal earnings test could limit access to loans for students entering lower-paid fields.
WASHINGTON — A proposed U.S. Department of Education rule could, if finalized, cut off federal student loans for college programs whose graduates repeatedly fail to meet federal earnings benchmarks, drawing objections from religious colleges, trade schools, arts programs and other institutions that say the measure could penalize fields where pay is modest but educational, public or vocational value remains significant.
The proposal would tie a program’s eligibility for federal Direct Loans to the earnings of its graduates. Undergraduate programs would be measured against the earnings of working adults with only a high school diploma. Graduate programs would be measured against the earnings of bachelor’s degree holders.
Programs that fail the earnings test in two out of three consecutive years could lose access to federal student loans for two years. The Education Department has said the proposal is intended to protect students and taxpayers from programs that produce low earnings outcomes.
The proposed rule would apply across higher education sectors, including public, nonprofit, religious and for-profit institutions. That broad reach has made it one of the most closely watched federal higher-education accountability measures under review.
The debate centers on whether federal aid should be tied primarily to measurable earnings outcomes, or whether the government should account for programs whose value may not be fully reflected in salary data.
Some religious colleges, seminaries and affiliated higher-education groups have warned that the rule could affect students preparing for ministry, missionary work, nonprofit service and other faith-based fields where compensation is often limited. Their concern is that a federal earnings formula could treat lower-paid religious or service-oriented work as evidence of poor program quality.
Trade schools have raised separate concerns. Beauty and cosmetology programs argue that federal earnings data may not fully capture income in fields where graduates rely on tips, commissions, self-employment or part-time work while building a client base. In public comments and sector statements, representatives of those programs have argued that early-career wage data may not reflect the long-term economic path of graduates in service-based trades.
The department’s regulatory analysis identified several categories that could be more exposed under the proposed framework, including humanities and liberal arts, religious studies, cosmetology, somatic bodywork, dental support services, some mental and social health programs, teacher education and drama or theater arts.
The agency also acknowledged that some institutions could choose to close programs that lose loan eligibility. Others could respond by changing curriculum, reducing costs, adjusting program length or limiting borrowing.
Supporters of the proposal argue that federal loans should not subsidize programs that leave graduates earning no more than workers who did not pursue the same credential. Opponents counter that the rule may be too blunt, because earnings vary by region, occupation, family circumstance and early-career timing, and because some students knowingly choose lower-paid fields for religious, artistic, educational or public-service reasons.
The proposal remains under federal review and has not taken effect. No program has lost aid under the proposed rule. Before issuing any final regulation, the Education Department must review public comments and decide whether to revise, delay or finalize the framework.
The outcome will determine how far the federal government is willing to go in tying college access, student borrowing and institutional accountability to graduates’ earnings.
