How Colleges With Low‑Earning Graduates Could Get Cut Off From Student Loan Access
A major shift is coming to higher education—and it could directly affect which colleges students can afford to attend. New federal rules are targeting college programs whose graduates consistently earn less than the average high school graduate. If a program fails to meet earnings benchmarks, it risks losing access to federal student loans, a change that could impact thousands of students and families.
For college applicants and parents, understanding these rules is essential for making informed decisions about affordability, financial aid, and long‑term return on investment.
This blog explains what’s happening, why it matters, and how to protect yourself.
📉 Why Low‑Earning Programs Are at Risk
Federal policymakers are increasingly focused on ensuring that college degrees lead to meaningful economic outcomes. Under new provisions, programs whose graduates earn less than workers with only a high school diploma may lose access to federal student loans.
The goal is to prevent students from taking on debt for degrees that do not improve their financial prospects.
⚠️ How the New Rules Work
1. Programs Must Show Graduates Out‑Earn High School Graduates
Under the “do no harm” provision, programs must demonstrate that their graduates earn more than typical high school graduates. About 2% of U.S. associate and bachelor’s programs are currently at risk.
2. FAFSA Will Flag Low‑Earning Programs
Starting July 1, 2026, FAFSA will warn students if a program’s graduates earn less than high school graduates in that state. If a program is flagged for two to three consecutive years, it will lose direct loan eligibility for two years.
3. States May Implement Their Own Restrictions
Indiana has introduced a bill that would eliminate public college degrees classified as “low earning.”
🎓 Which Programs Are Most at Risk?
According to higher‑education research groups, the programs most likely to lose loan access include:
- Arts programs
- Religion programs
- Certain trade programs (e.g., cosmetology) that often show lower median earnings compared to other programs.
🧭 What This Means for Students and Parents
1. Financial Aid Options May Shrink
If a program loses loan eligibility, students may need to rely on:
- Private loans
- Personal savings
- Scholarships
- Choosing a different major or institution
2. Choosing a Major Becomes Even More Strategic
Students will need to weigh passion against financial outcomes more carefully.
3. FAFSA Will Provide More Transparency
The new earnings indicator helps families compare programs based on real graduate outcomes.
4. Some Programs May Be Eliminated
Colleges may discontinue low‑earning majors to avoid losing federal funding.
🛡️ How Applicants Can Protect Themselves
1. Review Earnings Data Before Applying
FAFSA and federal databases now show median earnings for each school and program.
2. Compare Programs Across Schools
A major that is low‑earning at one institution may perform better at another.
3. Ask Colleges Directly About Earnings and Loan Eligibility
Admissions offices can clarify whether any programs are at risk.
4. Consider Long‑Term ROI
Look at:
- Job placement rates
- Average salaries
- Internship opportunities
- Industry demand
🧠 Final Thoughts
The landscape of college financing is changing fast. Programs with low‑earning graduates are under increasing scrutiny, and some may lose access to federal student loans in the coming years. For applicants and parents, this means doing deeper research, comparing outcomes, and choosing programs that offer both academic value and financial stability.
A college degree should open doors—not create long‑term financial strain. Understanding these new rules can help families make smarter, more informed decisions.