Beginning July 1, 2027, new federal requirements under the Student Tuition and Transparency System, or STATS, and its earnings accountability framework could make some college programs ineligible for federal student loans if their graduates fail to meet specific earnings benchmarks.
The requirements could affect programs across several fields, including music, social work, mental health counseling, early childhood education, medical assisting and English literature.
The changes stem from the One Big Beautiful Bill Act, signed into law July 4, 2025.
Programs would not automatically close if they failed the earnings test. Instead, programs that fail the required earnings measure in two out of three award years could lose eligibility to participate in the federal Direct Loan Program for at least two years. Students could still enroll in those programs, but they would no longer be able to use federal Direct Loans to help pay for their education.
On Sept. 28, the U.S. Department of Education defended the framework in a post on X, stating, “Here’s the truth: we are holding colleges accountable for leaving students worse off than if they never enrolled.” The department argued that some graduates delay major life milestones, such as buying a home or starting a family, because their education leaves them with debt that their earnings cannot support.
Under the framework, the department compares the median earnings of graduates from a program with those of workers with a different educational background. For bachelor’s degree programs, the comparison is generally with workers of a similar age who hold only a high school diploma. Graduate programs are compared with workers who hold bachelor’s degrees. A program that fails to meet the applicable earnings threshold may lose federal Direct Loan eligibility if it fails in two out of three award years.
The department says the requirements are intended to encourage colleges to provide education and training that leads to stronger financial outcomes for graduates.
“Federal student loans are not a welfare program for failing college programs,” the U.S. Department of Education said in its Sept. 28 post. “American students deserve education and training pathways that prepare them for the workforce, and transparency about programs that will never pay off.”
Under Secretary of Education Nicholas Kent also defended the administration’s approach, saying, “The Trump administration is hitting the hard reset button on higher education and implementing commonsense reforms that will drive down the cost of higher education and hold all institutions, regardless of sector, accountable for low earnings outcomes.”
However, critics of earnings-based accountability argue that early-career wages alone do not capture the full value of a college education. Fields such as the humanities, arts and public service may offer lower starting salaries while providing long-term career opportunities and services that are not fully reflected in graduates’ earnings.
According to U.S. Department of Education estimates, the fields with the highest projected rates of failure include culinary services, cosmetology, drama and fine arts, religious studies and alternative and complementary medicine. The estimated failure rates vary by state, depending on earnings data.
The new earnings requirements are separate from changes to federal student loan rules that redefine which graduate programs qualify as professional degrees for loan-limit purposes. Fields such as social work, nursing, education, public health and occupational therapy have also been part of discussions surrounding those separate changes.
At the University of Wisconsin-River Falls, programs in fields such as social work, education, English, music, psychology, sociology and stage and screen arts could warrant further examination under the new requirements. However, it has not been confirmed whether any specific UWRF programs will fail the earnings test or lose federal Direct Loan eligibility. The U.S. Department of Education estimates that approximately 6% of higher education programs are projected to fail the earnings test. About 5% of students receiving federal financial aid are estimated to attend programs projected to fail.
The Universities of Wisconsin said the administration is still seeking more information about the new requirements from federal officials.
“UW Administration continues to seek additional information and guidance from our federal partners regarding the new Student Tuition and Transparency System (STATS) Data Reporting and Earnings Accountability Framework,” Mark Pitsch, director of media relations for the Universities of Wisconsin, said in a statement.
The UW System has not yet identified which, if any, UWRF programs could lose federal Direct Loan eligibility under the new requirements.
While the Department of Education says the framework is intended to hold colleges accountable for graduates’ earnings, questions remain about how the requirements could affect programs that lead to careers in education, social services and the arts. As the 2027 implementation date approaches, students and universities will have to wait for further guidance to understand what the changes could mean for their programs and future career paths.
