Students applying for financial aid via FAFSA will now be informed whether a college or university they’re applying to won’t return a strong financial outcome.
The Department of Education introduced an earnings indicator that alerts applying first-year undergraduates as to which institutions graduates earn less than those with only a high school diploma.
Colleges and universities that fail to meet the threshold will be accompanied by a “low earnings” disclosure in the FAFSA Submission Summary, which is generated once students signal interest in attending a specific institution.
The new tool uses publicly available data from the department’s College Scorecard, which allows users to track median earnings of undergraduates 10 years after enrolling. Students and families can also compare outcomes across different institutions.
The earnings indicator compared working graduates’ salaries four years after completing a credential from a select institution during the 2014–15 and 2015–16 academic years. It was then assessed against the median high school salaries in their state or nationally.
“Not only will this new FAFSA feature make public earnings data more accessible, but it will empower prospective students to make data-driven decisions before they are saddled with debt,” U.S. Secretary of Education Linda McMahon said in a statement.
More than 2% of today’s undergraduate students attend an institution where median earnings from graduates are less than a high school completer, according to a press release. These institutions receive more than $2 billion in federal student aid.
About 23%, or over 1,300 institutions, are now flagged for lower earnings, according to earnings data submitted by Federal Student Aid.
However, 88% of the flagged programs are for-profit institutions, the majority of which award certificates rather than degrees, according to data compiled by James Murphy, a senior fellow at Class Action, a nonprofit dedicated to higher education reform.
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Additionally, no public four-year institution was identified as “lower earnings,” while only 4% of community colleges were.
“It’s good that the Department of Education is calling out institutions of higher education that are wasting our tax dollars, but it should be much clearer on which institutions are the main problem,” Murphy wrote.
The new earnings indicator aligns with another earnings outcome accountability measure spearheaded by the Trump administration.
Beginning next summer, the “Do No Harm” framework, passed by Congress in the One Big Beautiful Bill Act, will revoke an academic program’s eligibility for federal financial loans if student earnings fail to surpass those of a control group in at least two of the three assessed years.
The control group will comprise learners with less esteemed credentials. For example, a graduate program’s reported earnings will be compared to a similar group of bachelor’s degree holders.
Similarly, the benchmark for undergraduate degree programs is equal to the median earnings of 25- to 34-year-olds in the same state with only a high school diploma.
