The federal government has put forward a major change to how college programs are evaluated and how students access federal aid. According to a public notice published in the Federal Register on 2026/04/20 and an article that appeared on 17/04/2026 18:03, the Administration would replace the former debt-to-earnings (D/E) framework with a new earnings premium standard. Under the draft rules, institutions would feed program-level information into a new reporting platform called the Student Tuition and Transparency System (STATS), enabling the Department to disclose a program’s net cost and median graduate earnings to prospective students and the public.
This is intended to strengthen oversight of title IV, HEA programs and to align funding with programs that deliver measurable labor-market value.
Table of Contents:
Key changes and how they would work
The rule would remove legacy D/E terminology from regulatory text and insert clarified terms such as earnings, cohort period, and earnings threshold. A revised earnings premium measure becomes the central accountability metric: the Department would obtain median annual earnings for program completers in the fourth tax year after completion, drawing on data from a Federal agency with earnings data such as the Internal Revenue Service (IRS). Programs that fail the earnings premium in two of any three consecutive award years would be designated as low-earning outcome programs and would lose Direct Loan eligibility after required termination procedures. The proposal also allows limited, student-centered flexibility: institutions may negotiate an orderly program closure lasting up to three years if the Secretary finds it protects students’ interests.
Reporting and public disclosure
Under the proposal institutions offering eligible programs would report comprehensive program data to the Department, including tuition, fees, and the total amount of grants and scholarships—Federal, State, private, or otherwise—received by students during their enrollment. The STATS platform would aggregate these inputs so the Department can publish net program cost and median earnings at the program level. Where a State-specific earnings threshold does not exist and a majority of students are from a single State, the Department would not calculate the earnings premium but would still place earnings data in the public record. These reporting requirements would apply to students who completed or withdrew during the award year, enabling more transparent consumer information about program outcomes and costs.
Institutional compliance and student protections
The draft rule introduces new operational standards for participation in title IV, HEA programs. Institutions must maintain accurate catalogs of their Direct Loan-eligible programs with the Department and are barred from listing programs that share a 4-digit CIP code and overlapping SOC codes with a program that lost eligibility. A new administrative capability test requires that at least half of a school’s title IV recipients and title IV funding not be concentrated in low-earning outcome programs. Institutions found out of compliance in two of three years could be placed on provisional status, with appeal rights specified. The Department would also tighten student notifications: colleges must inform Pell-eligible students about remaining Pell Grant lifetime eligibility at enrollment and again at disbursement.
Definitions, data sources, and appeals
The Department contemplates relying primarily on IRS wage data to compute median earnings because tax records offer a consistent, enforceable source of reported income. The proposed earnings definition would include taxable wage income as reported on IRS forms, and the Department explained that historically alternative survey or self-reported sources did not improve the accuracy of earnings calculations. Negotiators raised concerns about items like tip income or untaxed housing allowances; the Department noted these elements are often captured in tax filings or are reflected in self-employment tax reporting. The rulemaking would preserve an appeal process for programs designated as low-earning, but it does not guarantee appeals at every step of the data collection sequence.
Projected impacts and next steps
The Regulatory Impact Analysis accompanying the proposal predicts mixed effects across sectors. Some degree programs—particularly at certain public and private non-profit schools—may lose access to title IV funds, while many proprietary and certificate programs could remain or become eligible under the new measure, producing a net increase in students attending programs that will qualify for federal aid. Students may face added costs if programs they attend lose eligibility, though others could benefit from improved prevention of enrollment in low-value, high-cost programs. Taxpayers may see higher transfers to institutions overall because the proposed rules expand eligibility for some programs. The Department poses directed questions to stakeholders—particularly about the precise earnings definition and data methodology—and requests public feedback as part of the rulemaking record in the Federal Register entry dated 2026/04/20.
Overall, the proposal aims to realign federal student aid incentives toward programs that demonstrably produce stronger labor-market outcomes while increasing program-level transparency through the STATS reporting system. Interested parties should review the Department’s Supplementary Information and the published notice for details on comment procedures and the specific regulatory text amendments, noting the public posting on 2026/04/20 and media coverage from 17/04/2026.
