New Rule Could Strip Funding from Underperforming College Programs: 600,000 Students at Risk
The Department of Education's proposal may cut federal loan access to college programs leaving graduates with low earnings. This could affect 600,000 students and force institutions to rethink their offerings.
Are college degrees losing their value? That’s the question at the heart of a new Department of Education proposal aimed at making sure students actually benefit financially from their education. The rule targets programs where graduates' earnings fall below those of peers with less education. It's a wake-up call for higher education.
The Numbers
Let's break down the data. Nearly 20 million students are enrolled in higher education programs. Yet, 2,000 colleges and universities have at least one program potentially failing the proposed earnings test. This puts over 600,000 students at risk of losing access to federal student loans. The stakes are high when you're talking about $1.7 trillion in outstanding student debt and graduates saddled with degrees that don't pay the bills.
Why It Matters
This isn't the first time such concerns have surfaced. The Obama administration previously tried to tackle low-earning outcomes, but their “gainful employment rule” was limited to for-profit colleges. Now, this new initiative under Trump's administration aims to cover a broader range of institutions, injecting a dose of transparency long overdue in higher education. The financial burden on taxpayers could lighten, as they won't be subsidizing underperforming programs.
What Insiders Are Saying
According to Preston Cooper from the American Enterprise Institute, the focus isn't just on career prospects. It's about the risk of financial harm to students already drowning in debt. Steve Taylor, from Stand Together Trust, echoes this sentiment, emphasizing the need for programs that deliver real value. But are we just trading degrees for diplomas in fields that won’t exist thanks to AI advancements? This debate raises the question: How should education evolve to meet tomorrow's workforce demands?
What's Next
If finalized, these changes will start rolling out by 2028. In the meantime, programs failing to meet the earnings benchmarks in two out of three years could lose federal loan eligibility. Colleges would need to alert students of “low earning outcomes,” a move that could drive many to rethink their choices. The phase-out of the Grad PLUS loan program by 2026 adds another layer to the financial world. Professional students will face new borrowing limits, shifting the calculus for many pursuing advanced degrees.
Ultimately, this might push colleges to either innovate or cut back on programs that don't justify the costs. And just like that, students could find themselves exploring other paths, such as high-value trade programs. Is this the shakeup higher education needs? The market's verdict: It's a brutal but necessary reality check.