Is Your Institution Ready for the Earnings Premium Buzzsaw?
On Wednesday [October 29th, 2025) I’m launching the Beta version of an Education Accountability Website (”EDU Accountability Lab”). It analyzes federal student aid, institutional outcomes, and accountability metrics across 6,000+ colleges and universities in the US.
Our Mission
The EDU Accountability Lab delivers independent, data-driven analysis of higher education with a focus on accountability, affordability, and outcomes. Our audience includes policymakers, researchers, and taxpayers who seek greater transparency and effectiveness in postsecondary education. We take no advocacy position on specific institutions, programs, metrics, or policies. Our goal is to provide clear and well-documented methods that support policy discussions, strengthen institutional accountability, and improve public understanding of the value of higher education.
But right now, there’s one area demanding urgent attention.
The Earnings Premium Buzzsaw
Most institutions don’t yet realize they’re about to face the most comprehensive accountability requirement in higher education history—and they have less than eight months to prepare.
On July 4, 2025, President Trump signed the “One Big Beautiful Bill” into law. Buried in the budget reconciliation package was a fundamental change to the Higher Education Act: the Earnings Premium requirement.
Starting July 1, 2026, every degree program at every institution receiving federal student aid must prove its graduates earn more than people without that credential—or lose Title IV eligibility.
This isn’t about institutions passing or failing. It’s about programs Every Bachelor’s in Psychology. Every Master’s in Education. Every Associate in Nursing. Each one assessed separately. Each one facing the same pass-or-fail tests.
Here’s why this is a buzzsaw:
The Scale Is Staggering
There are approximately 165,000 individual degree programs across nearly 4,000 institutions that must be assessed under the Earnings Premium requirement. About 48,000 of those programs (29%) are large enough to generate reliable earnings data—they have sufficient graduates to calculate a meaningful median.
Think about what that means: the Department of Education must determine which 48,000 programs pass or fail, notify institutions of failures within 30 days, process appeals, track three consecutive years of data per program, and enforce penalties. That’s not 4,000 institutional compliance determinations—it’s nearly 50,000 separate assessments, each with three years of rolling data.
The median institution has 28 programs to monitor. But 368 institutions have more than 100 programs each. Ninety-two institutions have more than 200 programs. The University of Washington has more than 500 programs—each one requiring separate tracking, separate earnings calculations, separate pass/fail determinations.
ED must build a data infrastructure to handle nearly 500,000 data points (165,000 programs × 3 years of tracking) using IRS and Social Security Administration records—a system that doesn’t exist today—and have it operational in some capacity by July 1, 2026.
Two Tests
Each program must pass two tests. Fail either one, and you’re at risk. Fail the same test for 2 out of 3 consecutive years, and the program loses all federal aid eligibility.
Test 1: The Earnings Premium Test
Do your graduates earn more than people without your credential?
- Undergraduate programs: Graduates must earn more than high school graduates (aged 25-34) in your state. State thresholds range from $27,362 (Mississippi) to $37,850 (New Hampshire).
- Graduate programs: Graduates must earn more than the lowest of: (1) bachelor’s holders in your state, (2) workers in your field statewide, or (3) workers in your field nationally.
Test 2: The Debt-to-Earnings Ratio
Can your graduates afford their student loans?
Programs must meet one of these thresholds:
- Annual loan payment ≤ 8% of median annual earnings, OR
- Annual loan payment ≤ 20% of median discretionary earnings
Example: A graduate earning $50,000 with $40,000 in debt (annual payment ~$4,400) would pass at 8.8% of earnings but fail if debt were any higher. At $60,000 in debt (payment ~$6,600), they’d fail both tests.
The Timeline Is Brutal
The first assessments in 2026 will evaluate graduates who completed in 2022-2024. Those students enrolled before this law existed. They had no idea their programs would face this accountability. Yet their earnings will determine whether current and future students can access federal aid for those programs.
The Consequences Are Severe
If a program fails either test in a single year, institutions must notify all students within 30 days that the program risks losing federal aid eligibility. That notification alone will crater enrollment.
If a program fails the same test for 2 out of 3 years, it loses all Title IV eligibility. No federal loans. No Pell grants. For programs serving students who depend on federal aid—often 50-70% of enrollees—that’s a death sentence.
The institution cannot offer that program or any “substantially similar” program for three years.
Who’s Most At Risk?
Based on preliminary analysis using institutional-level data (program-level data isn’t publicly available):
- For-profit institutions: 45-58% face significant challenges across multiple programs
- Public two-year colleges: 40-45% are at risk, especially certificate and associate programs competing against high school diploma holders
- Public and nonprofit four-year institutions: 8-15% have programs at risk, concentrated in fine arts, humanities, and social services fields
But these are institutional averages. A university showing “low risk” overall might still have 10+ programs in serious jeopardy. Programs in teacher education, social work, counseling, and creative fields face particular scrutiny—not because they lack value, but because starting salaries often hover just above (or below) state thresholds.
Why The Timeline Matters
Most institutions aren’t yet focused on Earnings Premium compliance because the scope hasn’t been widely understood. But the regulation doesn’t assess institutions as a whole—it assesses each program individually.
Program-level risk assessment requires graduate earnings data by program, by cohort, by year. It requires debt data. Modeling various scenarios. These analyses take months. If changes to programs are warranted, those discussions involve faculty, administrators, and stakeholders—more months. If curricular changes are needed, those work through academic governance on semester timelines.
The clock is running. July 2026 isn’t far away.
What The Dashboard Provides
Wednesday’s launch includes a dedicated Earnings Premium Analysis section with:
- Risk assessment for 5,000+ institutions comparing median earnings to state thresholds
- Interactive maps and visualizations showing risk distribution nationally, by state, and by sector
- Institution lookup tools to find your risk profile and see peer comparisons
- Program portfolio analysis showing how many programs each institution must monitor
- Detailed methodology explaining data sources, calculations, and critical limitations
IMPORTANT LIMITATION: The dashboard will provides institutional-level risk estimates because program-level earnings data isn’t publicly available. Actual EP testing will occur at the individual program level using confidential IRS/SSA data. This tool gives directional guidance for strategic planning—it cannot replace internal program-level analysis.
But it might tell you whether you should be worried. And if you’re at an institution with earnings near your state threshold, you probably should be worried.
The Bigger Picture
The dashboard also includes comprehensive analysis of federal loan flows, Pell grant distributions, return on investment metrics, completion patterns, and equity indicators.
The platform is built on the principle that a single metric provides a one dimensional picture of an institution and its program. Yet the new law mandates primarily earnings-based assessment. A program can have excellent completion rates, serve disadvantaged populations effectively, and prepare graduates for vital public service roles—but if median earnings fall short, it loses Title IV eligibility.
That’s the reality now. Whether you think it’s good policy or terrible policy doesn’t change the fact that it’s the law and it takes effect in eight months.
Important Caveat
Based on the official government materials reviewed—particularly the legislative text of the One Big Beautiful Bill and the Department of Education’s implementation guidance—the evidence strongly supports that the new accountability tests will be applied at the program-of-study level, meaning specific degrees or majors (e.g., a B.A. in Psychology) rather than institution-wide. The Department’s rulemaking announcements and accompanying FAQs consistently use “program” in this granular sense, echoing the structure of prior “gainful employment” regulations that evaluated outcomes by CIP code.
However, there remains some regulatory ambiguity: the statute itself does not yet define how “program” will be operationalized in federal data systems, and ongoing negotiated rulemaking may refine whether sub-specializations or combined degrees are grouped together. Until final regulations are published, “program-level” remains the best-supported interpretation—albeit one still awaiting technical confirmation through formal Department of Education rulemaking.
Thought community colleges are at risk. Your estimate shows that nearly half might be. Wrote to you earlier that I can’t find the date and time of our next Zoom on my calendar. I’m thinking it might be tomorrow at 10 am. Please confirm. The work you put into this is quite extraordinary. You’re amazing.