Trump Administration To End Student Loans for Degrees That Don’t Boost Future Earnings

Hitting the reset button on higher education loans, the Department of Education says it will use the tax records of recent graduates to decide whether students entering certain college programs will be eligible for federal loans.Undergraduate programs will need to demonstrate that their graduates earn more than the typical high school diploma holder if the students are to remain eligible to participate in the federal direct loan program. Advanced degree programs will need to demonstrate that their graduates earn more than the typical bachelor’s degree holder. The new rule will replace a measure now in place that only requires programs to prepare students for “gainful employment in a recognized occupation.”Education officials will have until next July to prepare for the standards set out in a new rule aimed at holding colleges and universities accountable for low-earning programs. The schools will be required to report program and certain student-level data, including tuition, fees, and financial aid awards such as grants and scholarships to the department. The department will then provide “enhanced informational disclosures” of net program cost to the public.The American Enterprise Institute reports that nearly $3 billion a year in student loans flows into failing programs, with a large amount of that money going to private for-profit institutions offering undergraduate certificates.The department will look at students’ salaries in the four years after they graduate and compare them to workers who have only a high school diploma. If the graduates fall below that baseline, students in the program will be ineligible for loans. “Federal student loans are not a welfare program for failing college programs,” the Department of Education said in an X post. “American students deserve education and training pathways that prepare them for the workforce — and transparency about programs that will never pay off.”Degree programs geared toward artists, teacher aides, and social workers might fail to meet the standard. At the master’s program level, students working toward mental and social health services and similar professions are among the programs that are expected to have the highest disqualification rates. The American Council on Education says the government may need to find other ways to support students in those fields.“We need social workers,” the council’s president, Ted Mitchell said. “Whether it’s the fentanyl epidemic or homelessness in L.A., we need people who can work on the street with people who need it the most.”Still, the council says it supports the broad goal of holding low-performing programs accountable. “We think institutions should be better about providing programs that give a livable wage, and if they’re not, they should either fix the programs or stop them,” Mr. Mitchell said.More than 10,000 people offered feedback during a public comment period before the rule was finalized. Concerns were raised about the department relying solely on taxable income in determining whether a degree is worth the cost. Commenters noted that artists are sometimes offered a residency that provides food and housing; religious organizations also often offer clerics free housing, which is not reported as income.Those pleas did not sway the government. The education department said that a graduate cannot repay a loan with free housing.Degree programs for students in religious studies are among those most likely to fail under the new test. Senators James Lanford and Ted Cruz introduced a bill last month that could provide a different path for students training for religious vocations to receive federal tuition assistance. Their bill would amend the Higher Education Act of 1965 to allow educational programs classified as theology and religious vocations or philosophy and religious studies to be eligible for loans despite low earning prospects.“Young people who go into ministry are not in it for the money. Their calling is to serve God and to serve their neighbors — and the government shouldn’t punish students who pursue a religious vocation just because, in its judgment, they won’t earn ‘enough’ income,” the Alliance Defending Freedom’s senior counsel, Greg Baylor, said in a statement.The education department did address concerns involving occupations in which tipped income makes up a large share of a worker’s pay, such as hairdressers and cosmetologists. Because of the no tax on tips policy that took effect this year, IRS data could fail to reflect a substantial portion of what the person actually earned. The final rule will be delayed for a year until tax data reflects the new tip reporting rules.The vast majority of degree programs at public colleges and universities are expected to be safe under the new rule. The Education Department estimates that about 6,450 programs would fail the test, affecting about 4.4 percent of all college students.Inside Higher Ed carried out an analysis and found median debt levels for graduates in programs that are likely to fail the earnings tests are almost always higher.For-profit schools are expected to face a much higher fail rate under the new rule. One in three programs and more than half of the students enrolled at for-profit institutions are expected to fail the earnings test, according to the department. More than 825,000 students at those schools could be affected.

Trump Administration To End Student Loans for Degrees That Don’t Boost Future Earnings

Trump Administration To End Student Loans for Degrees That Don’t Boost Future Earnings

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