What's Happening?
Starting next July, a new earnings test, known as the Do No Harm standard, will determine colleges' access to federal student loans based on graduates' earnings. Programs whose graduates earn less than
an adult without a high school diploma could lose loan access. This change aims to hold degree programs accountable for their graduates' financial outcomes. However, undergraduate certificate programs are currently exempt from this test, despite being associated with poor returns on investment. The Biden-era gainful-employment rule, which applies to certificate programs and for-profit colleges, uses a similar earnings test and a debt-to-earnings ratio. The Department of Education is set to discuss these accountability measures in upcoming rule-making sessions.
Why It's Important?
The introduction of the Do No Harm standard represents a significant shift in federal oversight of higher education, potentially affecting funding for numerous programs. By linking loan access to graduate earnings, the policy aims to protect students from high tuition costs without adequate financial returns. This could lead to increased scrutiny of educational programs and pressure on institutions to improve graduate outcomes. However, the exclusion of certificate programs from the new test raises concerns about accountability and equity. The ongoing debate over gainful employment and the Do No Harm standard highlights the complexities of regulating higher education and balancing accountability with institutional autonomy. The outcome of these discussions could have lasting implications for students, educational institutions, and federal education policy.
