Today, the U.S. Department of Education (ED) finalized new rules that will put colleges and university programs on the hook for the earnings of their graduates, with their federal student aid eligibility on the line.

Sometimes referred to as “Gainful Employment for All” or “Do No Harm,” the new earnings accountability rules are based on the accountability metrics created by Congress with the passage of the One Big Beautiful Bill Act (OBBBA) in July 2025, and were the result of the Access through Demand-driven Workforce Pell (AHEAD) negotiated rulemaking committee.

This new set of regulations replace Gainful Employment (GE) with a new institutional accountability framework designed to apply across all institutions and higher education programs. Previously, GE regulations only applied to for-profit institutions and non-degree programs at all institutions. 

The Earnings Tests

Consistent with the text of OBBBA, the new regulations will use earnings outcomes data of program completers’ to determine which programs will retain or lose eligibility for access to federal student loans. The earnings premium tests are:

  • Earnings thresholds for undergraduate programs: Earnings of completers will be compared to the median earnings for working adults aged 25-34, with only a high school diploma (or recognized equivalent), who worked and were not enrolled in an eligible institution during the year of the associated measured earnings.  Programs at institutions with a majority of in-state students use a state-level benchmark; others use a national benchmark.
  • Earnings thresholds for graduate programs: Earnings of completers will be compared to the median earnings of working adults aged 25-34, with only a baccalaureate degree, who worked and were not enrolled in an eligible institution during the year of the associated measured earnings The benchmark for majority in-state graduate programs is the lowest of the statewide median, the national median, or the field-specific state median.

The Consequences

Programs whose median annual earnings are lower than the above thresholds in two of three consecutive years will lose eligibility for the Direct Loan program. After three consecutive years of failures, ED can also terminate Title IV eligibility altogether, including Pell grants, if the institution fails to derive more than half of its student enrollment and half of its total Title IV funding from programs that pass the earnings threshold.

Goodbye, Financial Value Transparency (FVT); Hello, Student Tuition and Transparency System (STATS)

The new regulations formally implement the STATS, which is similar to the FVT framework introduced by the Biden administration. STATS refers to the reporting requirements with which institutions will be required to comply under the new accountability system. Reporting requirements for institutions include program-level data on enrollment and student-level data on cost of attendance and loans disbursed to pay for the program.

Changes to the Proposed Rule

After receiving nearly 10,000 public comments on the Notice of Proposed Rulemaking (NPRM) published April 20, ED made a few notable adjustments in the final rule, including:

  • Tipped-income programs get a delay (relief for cosmetology schools): Cosmetology programs were viewed among the programs most at risk under the new accountability system, with some comments on the draft NPRM highlighting the regulations did not provide for a consideration of the impact of tips on the earnings of program completers. ED decided to delay the implementation of the earnings premium test for programs that primarily prepare students for occupations where a majority of workers receive tipped income for one year.
  • No loan program, no problem: Institutions that have not participated in the Direct Loan program for five years are exempted from the potential loss of Title IV eligibility. Additionally, programs not yet determined to be low-earning can negotiate with ED to voluntarily withdraw from the loan program for at least five years, in exchange for not having to face potential Title IV eligibility loss.
  • Disability-serving institutions are exempt: Institutions that exclusively serve individuals with documented disabilities are exempt from the program eligibility consequences.

What’s Next

Given the statutory requirements that the new accountability measures take effect on July 1, 2026, the regulations took effect immediately upon their final publishing in the Federal Register..

Similar to the previous iterations of GE regulations, we’re expecting that there may be legal action related to the implementation of the new earnings premium measure. We’re also watching closely for challenges related to the impact on regionality (including rural areas) and gender, which were two issues frequently commented on during the public comment period for the draft version of the regulations but not changed in the final rule.

With ED having finalized the RISE regulations and other AHEAD regulations governing Workforce Pell, the finalization of these accountability regulations completes ED regulatory efforts triggered by OBBBA.

For the past year, ED has prioritized these OBBBA rules to meet the statutorily required deadlines and is now likely to turn to other priorities of the Trump administration that were not addressed in OBBBA. Among them are the finalization of a new set of rules reforming the higher education accreditation system on which ED held negotiated rulemaking sessions earlier this year. The administration’s Unified Agenda also indicates that ED intends to undertake a deregulatory effort focused on for-profit and religious institutions in the near future which could include changes to regulations governing change of ownership, cash management, administrative capability standards, and financial responsibility requirements.

Our team will continue to track the implementation and any legal challenges to the new rules. Please do not hesitate to reach out with any questions.