The U.S. Department of Education (ED) has proposed new regulations, part of the "One Big Beautiful Bill Act," to implement an "Earnings Premium" accountability metric for postsecondary programs. These rules require undergraduate programs to show that their graduates earn more than a working adult with only a high school degree. Similarly, graduate programs must demonstrate that their graduates earn more than individuals holding a bachelor's degree. This new framework, known as the Student Tuition and Transparency System (STATS) and Earnings Accountability, aims to ensure that higher education programs provide economic value and address the student debt crisis by reining in unsustainable loans.
Programs failing this earnings premium test for two out of three consecutive years risk losing access to federal student loans and potentially Pell Grants. The ED described this as a "once-in-a-generation" opportunity to hold all institutions equally accountable. Under Secretary of Education Nicholas Kent stated that the framework is grounded in common sense: if postsecondary programs do not leave graduates better off, taxpayers should not subsidize them, and this will drive meaningful change, ending regulatory whiplash and addressing student debt.
Public comment on these proposed regulations is open until May 20, 2026. The metric was first debated by a committee of policy experts and stakeholders in January 2026, receiving significant pushback but ultimately gaining unanimous approval after multiple changes. Career Education Colleges and Universities (CECU), an association for for-profit institutions, while calling the proposal a "dramatic improvement," still noted "several problems in the accountability formula remain unresolved," such as the lack of consideration for regional wage differences and part-time versus full-time work. CECU plans to submit comments to address these perceived flaws.
If finalized, the rules are slated to take effect on July 1, 2026, though the ED must respond to all public comments before a 30-day waiting period prior to finalization. The first Earnings Premium metric calculation for institutions is anticipated in early 2027, covering students who completed their programs in 2021. This move replaces the former debt-to-earnings (D/E) metric with the revised earnings premium measure, aiming to enhance transparency and strengthen institutional compliance by requiring program-level data reporting, including tuition, fees, and financial aid details.
