Last week, the Department of Education (ED) concluded its intense, rapid-fire negotiated rulemaking (neg reg) sessions for the higher education provisions of the One Big Beautiful Bill Act (OBBBA). The two distinct committees, the RISE Committee and AHEAD Committee, both managed to reach consensus on new regulations to implement OBBBA:

A major question debated among the D.C. policy community at the start of 2025 was whether the second Trump administration would handle federal accountability—specifically with regard to tax status—for higher ed institutions. So far, this administration and congressional Republicans have chosen parity, where new regulations (first mentioned in OBBBA and now implemented via neg reg) will apply equally across institution types.

So, What’s in the Proposed Rules?

The draft proposed rules largely add in details from the accountability requirements for Title IV federal loan programs first laid out in OBBBA

Earning Thresholds: The earnings thresholds, which are billed as  “do no harm” measures, are meant to help identify if a graduate is better off after completing a program compared to those without a degree.

  • Undergraduate Programs: 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 of age, as calculated by the U.S. Census Bureau. Programs at institutions with majority in-state students will be measured against an in-state benchmark earnings, while others will use a national benchmark.
  • Graduate Programs: Earnings of completers will be compared to median earnings for working bachelor’s degree graduates ages 25-34.  Programs at institutions with a majority of in-state students will be compared to a benchmark based on the lowest of either the median statewide, the national median, or the median of those in their field in their state.  Graduate programs at institutions with a majority of out of state students will be compared to the lower of either the national median, or the national median of those in their field. 

Changes To Gainful Employment. While the new law in OBBBA only applies to degree programs, the new rules will apply to non-degree programs as well. The new rules remove the old non-degree debt-to-earnings ratio test and apply the new earnings threshold test to all programs at all institutions, including non-degree programs. The new proposed rules also change the penalty for failure of GE earnings threshold tests to only include eligibility for the Direct Loan Program (vs. all types of Title IV aid). If a program fails the earnings test twice within a three year period, they will lose eligibility for the Direct Loan program.

Institutions can still lose eligibility for Title IV. Negotiators brought up concerns during the session around needing to have harsher punishments for the lowest-performing institutions. The proposed rules add in new administrative capability standards that mandate that an institution derive more than half of its student enrollment and half of its total Title IV funding from programs that pass the earnings threshold. If they do not meet this standard twice in a three year period, they will lose eligibility for Title IV, including Pell grants.

What about Financial Value Transparency? The new rules keep many aspects of the Biden-era Financial Value Transparency (FVT) framework, but remove a handful of reporting elements and change the name of FVT to the “Student Tuition and Transparency System” (STATS). ED will continue to require that institutions report required data by October 1 each year, so that ED can publish earnings thresholds calculations by the following July. 

An end to higher ed regulatory pendulum swings? Since the last reauthorization of the Higher Education Act in 2008, there have been considerable swings between Republican and Democrat administrations involving higher education regulations related to accountability, with a focus on for-profits. The new regulations may feel like a breath of fresh air for those worried about the pendulum swinging farther out, given they build from concepts started during the Biden administration. Under Secretary Nicolas Kent noted on Friday his appreciation for negotiators’ work to “end the regulatory whiplash.”  While there may be more swings in store, these negotiated rulemaking sessions felt like a gentler shift than in years past.

What’s Next

By reaching consensus, ED will finalize the regulations agreed to by the committees with only minor technical changes allowed. 

The new regulations will then need to be reviewed by the Office of Information and Regulatory Affairs (OIRA), which is a subagency of the Office of Management and Budget. During the review, OIRA will ensure that the proposed regulations are consistent with all applicable law, not just the OBBBA language that their creation is predicated upon.
After the review is complete, regulations are then posted to the Federal Register as proposed rules for public comment. Once ED collects and reviews all public comments, the regulations will go back to OIRA for a final review and will then be promulgated as final rules. Since the effective date of the new statutes on which the regulations are based is July 1, it is likely that the regulations crafted by both the RISE and AHEAD committees will be finalized by then.