At the beginning of the month, the Trump Administration released new regulations that require colleges and universities across the country to demonstrate return on investment to prospective graduates.
Under these federal Student Tuition and Transparency System (STATS) and Earnings Accountability rules, undergraduate programs will have to show that their graduates earn more than typical members of the workforce holding only a high school diploma. And, similarly, graduate programs will have to demonstrate that students who complete their degrees earn more than those who hold only an undergraduate degree.
Programs that fail these criteria in two consecutive out of every three years will be ineligible to participate in the federal Direct Loan program, and after three years could lose eligibility for Title IV of the Higher Education Act (HEA), including access to Pell Grant funding.
For many families, federal loan programs are the most important financial resource to pay higher education. So basically, the new regulations tie the ability of undergraduate and graduate degree programs to compete for future students to the earnings of current and recently past students.
The new federal guidelines are an effort to update existing higher education accountability to new requirements created by the One Big Beautiful Bill Act (OBBBA) in 2025. Namely, a “Do No Harm” provision in that law that replaces a weight of future earnings to student debt with a “universal earnings premium” test.
To quote from the regulation:
Undergraduate completers’ median earnings will be compared to the median earnings for working adults aged 25-34 with only a high school diploma either from the state in which the institution is located or nationwide, depending on the institution’s enrollment makeup. Similarly, graduate completers’ median earnings will be compared to the median earnings for working adults aged 25-34 with only a bachelor’s degree.
In other words, while there’s no guarantee that going to college or graduate school will make you filthy rich, you should at least expect not to be worse off—at least as far as your annual income is concerned—than when you started.
In spirit, that makes good sense. But in practice, the problem for higher institutions is that the new rules make institutions responsible for outcomes that are partly determined by individual characteristics—and choices.
On the one hand, the vast majority of degree programs and institutions of higher education already pass this test.
One report, by CBS News, illustrates the implications of the new regulation for my state of Michigan: “9,380 Michigan graduates between 2017 and 2018 would fail the earnings test. The vast majority of which are cosmetology and allied health certificate programs, with a few arts undergraduate and master's programs.”
Overwhelmingly, the new rules impact certificates and programs offered by for-profit providers. This is generally a sector that calls for more, not less, policy oversight. So to the extent that any new rules could create some consumer protection guardrails, that’s good.
As higher education expert and outstanding University of Michigan professor Kevin Stange explained:
"There are many programs that are just not serving their students well. And the whole point of this policy is to incentivize students to leave those programs or shut down those programs entirely. If it incentivizes those programs to change, that's the whole point of the policy."
In my own field, one concern is that the rulings could impact colleges of education, because teachers and other public school employees are often underpaid relative to other professionals. It’s a big concern for colleges like mine, whose primary mission is and will remain training future educators—teachers, support professionals, school and district leaders, and educational researchers—and who we’re scrambling to sustain long-term enrollment for anyway.
But in this instance, nearly all educators pass the federal test, in part because both formal (i.e. collectively bargained) and informal salary structures explicitly reward diplomas and educational credits.
On the other hand, the new federal guidelines put in both writing and in regulation a trend that’s been of major concern among educators at all levels for quite some time. The worry is that explicitly linking educational productivity to earnings pushes the direction of higher education further toward the notion of economic rather than social, cultural, or civic value.
Indeed, demonstrating “economic value” is an explicit goal of both the new federal guidelines and the financial Do No. Harm legislation in OBBBA.
Which philosophically undermines the idea of education for education’s sake, and pedagogically diverts focus from learning into production.
As Ryan Fewins-Bliss, a leading advocate for college access put it to CBS: “The arts — things that just don’t have high wages that people go into for reasons other than money, and you could say contribute to the culture of the United States in ways that are not necessarily economic.”
Fewins-Bliss also raised a practical concern with the new federal system: “It also hinges on early earnings, so it’s something like four years out, when we know a lot of careers take a while.”
To that I would add the fact that we know that employment discrimination—in the hiring, compensation, and promotion phases of work—is real and persists. To the extent that certain institutions recruit and place students who are historically marginalized in the workforce, or train in professions where discrimination is especially rampant, the federal guidelines would appear to completely ignore that reality.
As far as I can tell, the new rules also ignore something called institutional value-added: the conceptually unique contribution schools make to student success net of any pre-existing or fixed attributes students themselves bring to the outcome.
I happen to think that institutions of higher education need to become much more serious about changing standards for student success. Too many reports, lobbying initiatives, and public relations campaigns focus on the economic impact of colleges and universities in terms of employment, research, and development. Not enough are focused on the more individualized question of future lifetime pathways for their students.
And across the board, serious conversations need to be had about university cost—especially in the public sector—as the concerns over student access and affordability are, it turns out, far more prevalent among average people than political debates about culture wars and classroom teaching.
So at a high level, I generally support state and federal efforts to guide that shift. All the more so when it comes to for-profit institutions for which the market is clearly not enough when it comes to guarding against predatory student recruitment practices and the selling of what amounts to junk degrees and programs.
But as with so many things the Trump Administration has done, it’s difficult to separate this particular higher education accountability endeavor from the other, overtly political attacks on higher education more generally. Or from the origin of “Do No Harm” in Trump’s One Big Beautiful Bill Act.
I’ll also note that these are far more robust requirements than anything the Trump Administration (or individual states) have required from publicly funded K-12 private schools through school voucher systems. So it’s a pretty stark example of the American Right selectively applying accountability standards to a sector they dislike, while turning a blind eye on behalf of institutions they prefer.
Still, leaders in and around higher education—as well as policymakers working on their behalf—do need to recognize that a focus on dollars will continue to dominate major questions. Especially when it comes to revenue generation on the input side, and student earnings and economic impact on the output side.
Chalk the latest Trump effort as a shift in the details, with the overall direction remaining largely consistent in that focus.
The challenge for all of us in the education community is to work within that reality, while fiercely defending our commitment to training students for life, citizenship, and a sense of human purpose.
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