U.S. Finalizes Student Loan Rules Linking Federal Aid Access to Graduate Earnings

BY MIRAABEL ODETA

The U.S. Education Department announced Monday that it is finalizing new federal student loan requirements that would link colleges’ access to federal loan programs with the earning potential of their graduates, marking another major policy move by the Trump administration aimed at increasing accountability in higher education.

Under the new Student Tuition and Transparency System (STATS) and Earnings Accountability rule, colleges and universities will be required to show that their programs provide graduates with a measurable financial benefit. The department said undergraduate programs must demonstrate that their graduates earn more than the typical worker with only a high school diploma, while graduate programs must show that graduates earn more than the typical person with a bachelor’s degree.

Programs that fail to meet these earnings standards in two out of three consecutive award years could lose eligibility to participate in the federal Direct Loan program, according to the Education Department.

The final rule is scheduled to be published on July 1, with schools becoming responsible for meeting the new earnings requirements beginning in 2027.

The Education Department said that if programs continue failing the earnings test for three consecutive years, the government could also remove their eligibility for broader federal higher education benefits under Title IV of the Higher Education Act, including access to Pell Grants for low-performing programs across an institution.

The new lending requirements add to the Trump administration’s broader effort to reshape higher education policy and increase oversight of colleges and universities. The administration has previously taken steps to restrict federal funding and challenge policies at major educational institutions.

Those actions have focused on issues including campus protests related to the Israel-Gaza conflict, transgender policies, climate programs, and diversity initiatives. Trump has argued that some pro-Palestinian protests at universities crossed into antisemitism and supported extremist causes.

Opponents, including some Jewish organizations and civil rights advocates, have argued that criticism of Israel’s actions and support for Palestinian rights should not automatically be considered antisemitic or linked to extremism. They have raised concerns that government actions could affect free speech, academic independence, and students’ rights.

Several universities have faced pressure to change programs, limit certain activities, or adjust staffing as federal scrutiny has increased. In some cases, courts have ordered the administration to restore federal funding that had been frozen.

The administration has also reduced staffing at the Education Department while moving some responsibilities to other government agencies, part of Trump’s broader effort to restructure the federal education system.