On Monday, ED officially published a Notice of Proposed Rulemaking with proposed regulations produced by the Accountability in Higher Education and Access through Demand-driven Workforce Pell (AHEAD) negotiated rulemaking committee.

As we covered when the negotiated rulemaking committee reached consensus back in January 2026, the new regulations would implement a requirement outlined in OBBBA that connects participation in the Title IV federal loan program with earnings outcomes. The earnings outcome test will replace Gainful Employment regulations that have gone back and forth across the Obama, Trump, and Biden administrations.

The new rules intend to measure whether a graduate is better off after completing a program relative to those who did not pursue a degree. Unlike Gainful Employment, the earnings outcomes apply to all institutions and programs, regardless of type (e.g., public, for-profit, private non-profit, etc.).

As expected, the proposed rules closely follow those the AHEAD Committee achieved consensus on, including:

  • Earnings Thresholds for Undergraduates: Earnings of completers will be compared to the median earnings of working high school graduates who were not enrolled in postsecondary education and are between 25-34 years old.
  • Earnings Thresholds for Graduate Programs: Earnings of completers will be compared to median earnings for working bachelor’s degree graduates ages 25-34.
  • Replace Financial Value Transparency (FVT) with STATS: Established by the Biden administration, the regulations rename the nascent framework for institutional reporting requirements as Student Tuition and Transparency System (STATS). Overall, the reporting requirements remain relatively similar and institutions must report most of the same data that was required by FVT on a yearly basis. Reporting requirements include program-level data on enrollment and student-level data on cost of attendance and loans disbursed to pay for the program.
  • Institutions Could Lose Title IV Eligibility: While the earning thresholds dictate a program’s ability to participate in the federal loan program, the rules also create a mechanism for institutions to be removed from Title IV altogether (including access to Pell grants) if more than half of its students enrollment and half of its total Title IV funding are in programs that fail the thresholds.

What’s Next

The regulations are now open for public comment until May 20. As comments are submitted, we’re keeping an eye two issues involving the earnings threshold:

  1. Regionality: A common criticism of using statewide averages for earnings is they will have different impacts on different parts of the same state with vastly different economies and may unfairly punish parts of the state where earnings are lower. Research from University of Wisconsin in 2025 found using “local earnings provide additional context that would be overlooked by using state-level earnings.”
  2. Wage Gaps by Gender and Race: Another common criticism of the earnings thresholds is gender and race inequities. A 2024 Inside Higher Ed op-ed by community leaders in South Texas pointed to issues in the previous Gainful Employment Rule in using averages that may in fact be not achievable given earnings gaps.

Once the comment period closes, ED will review the comments received for feedback and make any changes it deems necessary before publishing a final set of regulations in the Federal Register. Given that OBBBA sets a deadline for implementation of July 1, 2026, ED is expected to publish the final set of rules at some point on or before that date.

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