The "Do No Harm" Earnings Test: How to Check If a College Program Passes

The federal government now measures whether college programs pay off, and programs that fall short lose access to federal student loans. The rule is final. It was published on July 1, 2026, and the first results land in early 2027.

The idea behind it is simple: a college program should not leave graduates worse off financially than if they had stopped at high school. The mechanics are more involved, and they matter if your student is choosing a program, already enrolled in one, or weighing a certificate against a degree.

This guide covers what the test measures, which programs tend to struggle, and how to check any program's earnings data yourself before you commit. For the news coverage of the rule itself, see our explainer on what the STATS rule means for your family.

What the Earnings Test Actually Requires

The test came out of the 2025 budget law, sometimes called the One Big Beautiful Bill Act and sometimes the Working Families Tax Cuts Act. The Department of Education turned its earnings requirement into a specific, measurable standard through the Student Tuition and Transparency System, or STATS.

The Two Benchmarks

For an undergraduate program, whether certificate, associate, or bachelor's, the typical graduate must earn more than a typical working adult aged 25 to 34 who has only a high school diploma.

For a master's or doctoral program, the typical graduate must earn more than a typical worker aged 25 to 34 with a bachelor's degree.

Two details are easy to get wrong:

• Earnings are measured four years after completion, not three. The old gainful employment rules used three years. The new rule adds a year, which generally helps programs whose graduates start slow.
• The benchmark can be state-level or national, depending on the institution's enrollment makeup. There is no single nationwide number that applies everywhere.

For rough orientation, federal data puts median earnings for full-time, year-round workers aged 25 to 34 with only a high school diploma at about $42,000 in recent reporting. Treat that as a ballpark. The Department has not published the official thresholds it will apply, and your state's figure may sit meaningfully above or below it.

What Changed From the Proposed Version

The final rule differs from the proposal in ways worth knowing:

• The debt-to-earnings test is gone. Earlier rules judged programs partly on how much debt graduates carried relative to income. That metric was eliminated as redundant.
• The measurement window moved from three years to four years after completion.
• Certain tipped occupations got a delay. More on that below.

The Timeline That Actually Affects Your Family

Nothing happens to a student's aid overnight. The sequence runs like this:

• October 1, 2026. Colleges submit their first STATS data, then annually each October.
• Early 2027. The Department runs the earnings test for the first time.
• 2027-28. First warning letters reach students in at-risk programs.
• Early 2028. Second calculation.
• 2028-29. Earliest a program can actually lose Direct Loan eligibility.

A program has to fail in two of three consecutive years before losing anything. So the earliest real consequence for students is the 2028-29 award year.

What a Warning Letter Means

This is new, and it is the part most families will encounter first.

When the Department flags a program as at risk, the school must notify current and prospective students. If you receive one of these letters, here is what it does and does not mean.

It does not mean:

• Your program is closing
• Your current aid is being cut
• Your degree is worthless or will not be honored
• You need to transfer immediately

It does mean:

• The program failed the earnings test once
• If it fails again within the next two years, it loses Direct Loan eligibility
• You should ask the school directly what it plans to do

Schools also now have to tell you how much lifetime Pell eligibility you have left every time Pell is disbursed. That is a genuinely useful number that used to take effort to find.

What the School Can Do After a First Failure

Understanding the school's options helps you read their response. After a first failure, an institution picks one of three paths:

1. Voluntarily pull the program out of the Direct Loan program for at least five years. This preserves Pell Grant eligibility for the program. Students can still get grants, just not federal loans.
2. Close the program in an orderly way, with a teach-out so enrolled students can finish. Aid continues through the teach-out or three years, whichever is shorter.
3. Do nothing and face the test again.

Option three matters most to you. A school that takes no action after a first failure cannot later choose options one or two. If you get a warning letter, asking which path the school is taking is a fair and revealing question.

Which Programs Are Most Likely to Struggle

The test targets programs whose graduates consistently earn less than high school workers four years out. Based on federal earnings data and earlier gainful employment reviews, the flagged programs tend to share traits.

Programs That Tend to Fall Short

• Short certificate programs in lower-wage fields, including some health technician and culinary programs
• Some for-profit associate and bachelor's programs where tuition is high and graduate earnings have lagged
• Certain fine arts programs where graduates enter low-paying fields and do not continue to graduate school within four years
• Some master's programs in fields where the pay ceiling sits close to bachelor's-level wages

Worth saying plainly: failing the earnings test does not make a program bad. Teaching, social work, and the arts are valuable, and many graduates build meaningful careers. But the federal government is going to stop lending for programs that do not clear the benchmark, and that is the practical reality to plan around.

Programs That Usually Clear It Easily

Nursing, engineering, computer science, business, and most health professional programs typically sit well above the benchmark. That does not automatically make them right for your student. Fit, graduation rate, and total cost still decide whether a program is worth it. But the federal aid picture for these is steadier.

The Cosmetology and Barbering Exception

Programs feeding occupations where most workers report tipped income got a one-year delay before consequences apply. This covers cosmetology, barbering, massage therapy, and similar fields.

The reasoning is that the No Tax on Tips policy changes how tipped income shows up in earnings data, and the Department wants the numbers to reflect that before penalizing programs. During the delay these programs are neither passing nor failing, but the Department still publishes their earnings data.

If your student is considering one of these fields, you get extra time, and you can still see the earnings numbers while you decide.

How to Check a Program's Earnings Today

You do not have to wait for federal results. The underlying earnings data is already public, and CollegeLens pulls it into your plan.

Use the Compare Schools Tool

The fastest route is the Compare Schools tab inside your free CollegeLens plan. Add a school and you will see:

• Median earnings of graduates after completion
• Median debt students take on
• Completion and graduation rates
• The net cost your family would actually pay, side by side with other schools

The advantage is that earnings sit next to real net cost rather than in a separate browser tab from your award letter. As you scan, compare each undergraduate program's median earnings against that rough $42,000 benchmark. A program comfortably above it is unlikely to be affected. A program near or below it is worth a closer look, especially if net price is high.

Ask the School Directly

Financial aid and admissions offices can usually share program-level outcomes. Useful questions:

• "What are median earnings for graduates of this program four years out?"
• "What share of graduates work in their field within a year?"
• "Has the Department flagged any of your programs under the earnings test?"
• "If this program received a warning, which of the three options would you take?"

How quickly and clearly a school answers tells you a lot. Schools confident in their outcomes share data willingly.

Read Net Cost Against Earnings

A lower-earning program is not automatically a bad choice. A lower-earning program at a high net price is. Compare what you would actually pay against what graduates actually earn, using our guide to net cost versus sticker price.

A workable rule of thumb: total borrowing for a degree should stay at or below the graduate's expected first-year salary.

What Happens If a Program Loses Federal Loans

The program does not vanish. The school can still enroll students and charge tuition. What changes is how students pay.

Families in this position generally have these options:

• Switch to a passing program at the same school, which keeps federal loans, Pell, and work-study intact.
• Transfer to a similar program elsewhere that passes. Transferring can be smart but may reset some aid, so check before moving.
• Cover it another way, through savings, scholarships, employer tuition benefits, or private loans. This is the most expensive path, since private loans carry higher rates and fewer protections. Read what to do when aid isn't enough and our comparison of federal versus private loans before signing anything.

If you are already enrolled when a program loses eligibility, schools generally have to notify students and often teach out the program so current students can finish. Ask the financial aid office in writing what their plan is. Do not rely on hallway conversations.

There is also an institution-level risk worth knowing. If more than half a school's federal aid recipients, or more than half its federal aid dollars, sit in failing programs, the school can lose Title IV eligibility entirely, including Pell. That is rare and aimed at institutions where most programs underperform, but it is the reason a warning letter deserves a real conversation rather than a shrug.

How This Fits With the Other 2026 Changes

The earnings test arrived alongside several other changes from the same law:

• Parent PLUS loans are capped at $20,000 per year and $65,000 lifetime per dependent student.
• Grad PLUS loans ended for new borrowers, with a grandfather window for existing graduate students.
• SAVE ended and the Repayment Assistance Plan replaced it, charging 1 to 10 percent of income.
• Federal loan rates for 2026-27 are 6.52 percent for undergraduates, 8.07 percent for graduate loans, and 9.07 percent for PLUS.

Together, the system is getting stricter about what it finances and how much it lends. Families who understand how to build a college funding stack are in a much better position than families assuming federal loans will cover whatever tuition is left.

What Families Can Do Now

• File or update your FAFSA. Filing at studentaid.gov tells you what federal aid your student qualifies for.
• Add every school on the list to Compare Schools and put earnings next to net cost for each one.
• If two similar programs are close, favor the stronger earnings data. All else equal, it is the more durable federal aid bet.
• For graduate programs, plan around the Grad PLUS phase-out. Compare direct unsubsidized loans, school aid, fellowships, and private options using our guide to comparing private loan options.
• If your student is already enrolled somewhere you are unsure about, ask in writing what the school will do if the program does not clear the benchmark.

The Bottom Line

The earnings test puts a number on something families have always wondered about: will this program pay off? Starting in 2027 the federal government answers that question on behalf of taxpayers. Your family can ask it earlier, and use the answer to pick a program that is both affordable now and likely to keep its aid eligibility through graduation.

The practical takeaway is not to chase whichever major pays most. It is to look at program-level earnings, compare them against what you would actually pay, and make a choice you will still feel good about five years out rather than only on decision day.

If that is a lot to hold in your head, you can create your free CollegeLens plan and see every cost layer, aid source, and remaining gap, school by school.

Sravani at CollegeLens