The Limited Impact of New Federal Earnings-Based Accountability Rules

Check out our online Earnings-Based Accountability Explorer at peer-center.org to estimate the impacts of new federal earnings-based accountability rules by state, institution, program of study, control, and more.

On July 1, a new federal accountability framework for higher education programs—the first national earnings-based accountability standard to be applied to postsecondary education programs across all sectors—took effect. Crafted by Republicans in Congress as part of the One Big Beautiful Bill Act (OBBBA) that passed in July 2025, the measure drew inspiration from a similar earnings standard adopted for all non-degree and for-profit college programs under the Biden Administration. Specifically, the new earnings-based accountability standard requires that:

• For undergraduate programs, the median earnings of program graduates (excluding non-workers) measured four years after graduation must exceed the median earnings of individuals aged 25 to 34 with only a high school diploma in the same state; and

• For graduate programs, the median earnings of program graduates (excluding non-workers) measured four years after graduation must exceed the median earnings of individuals aged 25 to 34 with only a bachelor’s degree for the lowest of three subgroups: (A) all bachelor’s degree-holders in the same state and in the same field of study; (B) all bachelor’s degree-holders in the same state; or (C) all bachelor’s degree-holders nationally in the same field of study.

Using data released by the U.S. Department of Education during the rulemaking process, we explore the anticipated impacts of the new rules (i.e., both the statutory OBBBA provisions and the gainful employment regulations) across programs and institutions, including how the new standards may affect enrolled students who receive federal financial aid.

Key Takeaways

• The new standards will affect a very small share of all students enrolled in higher education programs, with low-earning programs enrolling just 2.5 percent of federally aided students (2.9 percent among only those with federal student loans).

• The impacts are heavily concentrated among undergraduate certificate programs and certain fields (including cosmetology, allied health, and medical administration). While undergraduate certificate programs account for just 10 percent of all Title IV enrollment, they account for 63 percent of the total federally aided enrollment in programs projected to fail the new accountability standards. Among graduate programs, graduate certificates, master’s, and professional degrees in mental and social health services all have relatively higher failure rates, concentrated at institutions operating primarily online.

• Low-earning programs are also heavily concentrated in the for-profit sector. For-profit institutions enroll both the largest number and the highest share of federally aided students in failing programs — approximately 13.7 percent of students (281,000), compared with 0.8 percent at public institutions and 2.3 percent at nonprofit institutions.

• The vast majority of institutions have none of their students in failing programs (including just under 70 percent of community colleges, 75 percent of public four-year colleges, and 84 percent of private nonprofit four-year institutions). The impact of the accountability rules is also smaller among Historically Black Colleges and Universities (HBCUs), Minority-Serving Institutions (MSIs), and rural colleges than among colleges overall.

In sum, the rule targets a thin slice of the lowest-performing (in terms of earnings) layer of the higher education system – leaving most institutions and programs unaffected, generating little risk to the status quo and little incentive to improve outcomes for most programs.

Data

We encourage users to further explore the estimated impacts of the rule using the Earnings-Based Accountability Explorer on our website; supplemental analyses in Appendix A (all federally aided students) and Appendix B (student loan borrowers only) of this report; and the full data file and codebook we make available here as Appendix D. For details on the methodology for our analysis, see Appendix C of this report.