Low-Earning Programs Could Lose Federal Loans

Students in programs whose graduates earn below federal benchmarks may lose Direct Loan access under the new rule.

Updated on Nov. 11, 2026 in Financial Aid

Bold flat-color editorial illustration of a steel gate partly lowered across a stone walkway, blocking access to the path beyond. — The U.S. Department of Education announced a rule tying federal student loan eligibility to graduate earnings, with most provisions taking full effect July 1, 2027. AI Illustration. Upload story photo >

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Should federal student loans be cut off from college programs with low graduate earnings?

The U.S. Department of Education announced a new rule under its STATS and Earnings Accountability system on June 29, linking federal student loan eligibility to graduate earnings. Programs whose graduates fail to meet earnings benchmarks could lose access to federal loans, with most of the rule taking full effect July 1, 2027.

Why it matters

The framework targets programs whose graduates do not earn enough to show a financial return on their cost, a question that directly shapes whether federal borrowing for a given degree remains available. The Department cites rising rates of default and delinquency across the federal student loan portfolio as the reason for the change.

Undergraduate programs are measured against median weekly earnings of $977 for full-time workers aged 25 and over with a high school diploma (2026), and graduate programs against $1,541 for bachelor's degree holders (2024). A program that fails the test in two of three consecutive award years loses Direct Loan eligibility, and after three years of consistent failure, an institution's low-earning programs can lose Title IV eligibility, including Pell Grants.

The players

U.S. Department of Education

The federal agency that sets the rules for Title IV student aid, including Direct Loans and Pell Grants, and that administers the $1.7 trillion federal student loan portfolio.

The details

Each program is compared with earnings benchmarks tied to the education level a student would have without the credential in question. If graduates of a program do not show a financial return on their investment in two of three consecutive award years, students in that program lose access to federal Direct Loans. Continued failure across three years can extend the penalty to all of an institution's low-earning programs, cutting off Pell Grant eligibility as well. Students in affected programs would need to look to other funding sources, and federal loans are made under terms set by law, while private loans from banks and credit unions are generally more expensive.

June 29: The Department of Education announced the STATS and Earnings Accountability rule.
July 1, 2027: The majority of the rule, including the earnings requirements, takes full effect.

Education Landscape

The new framework adds a return-on-investment test to federal aid eligibility, shifting the focus from whether a student can borrow to whether a program's graduates earn enough to support repayment. It arrives as the federal student loan portfolio reaches $1.7 trillion and the Department cites rising default and delinquency rates as its motivation.

Students considering a program should ask the school's financial-aid office whether that program is likely to meet federal earnings benchmarks before relying on federal loans to pay for it. Undergraduate and graduate students in programs with lower graduate earnings should plan with their aid office for how to fund the degree if federal Direct Loans become unavailable.

The takeaway

The rule makes a program's post-graduation earnings part of its federal aid eligibility, so the earnings picture now matters alongside tuition when comparing schools. Before enrolling, ask the financial-aid office how the school's programs are measured under the framework.