The U.S. Department of Education announced Monday that it is finalizing new regulations that would condition schools' access to federal student loans on the post-graduation earnings of their students. The move represents the latest enforcement action by the Trump administration to exert pressure on colleges and universities.
Under the proposed Student Tuition and Transparency System (STATS) and Earnings Accountability rule, undergraduate programs must prove that their graduates earn higher incomes than the typical high school diploma holder. Similarly, graduate programs will need to demonstrate that their graduates out-earn the typical bachelor's degree holder. Institutions that fail to meet these benchmarks in two out of three consecutive award years will lose eligibility to participate in the federal Direct Loan program.
The Education Department confirmed that the final rule will be published on July 1, with 2027 marking the first year schools will be held accountable for meeting the earnings thresholds. The department also warned that institutions could face more severe penalties. After three consecutive years of failing the earnings premium measure, the Department of Education could terminate Title IV eligibility of the Higher Education Act (HEA), which includes Pell Grant eligibility, for all of an institution's low-earning outcome programs.
The Wall Street Journal earlier reported the finalization of the new lending requirements. This policy shift occurs as President Donald Trump intensifies scrutiny of top educational institutions, having previously attempted to freeze federal funding for several universities and colleges. The administration's pushback has centered on multiple policy disagreements, including pro-Palestinian protests against U.S. ally Israel's assault on Gaza, transgender policies, climate initiatives, and diversity programs.
Trump has specifically alleged that pro-Palestinian protests at universities were antisemitic and supported extremist groups. Conversely, protesters, including some Jewish organizations, argue that the government is wrongly conflating criticism of Israel's assault on Gaza and its occupation of Palestinian territories with antisemitism, and equating advocacy for Palestinian rights with support for extremism.
Rights advocates have expressed growing concerns regarding free speech, academic freedom, and due process. Some colleges have responded to the pressure by cutting programs, imposing restrictions on protesters, and laying off workers. In response, judges have in some instances ordered the Trump administration to restore frozen federal funds for universities. Additionally, the Trump administration has recently dismantled the Education Department.