The Department of Education (ED) Friday finalized the second session of the Accountability in Higher Education and Access through Demand-driven Workforce Pell (AHEAD) Committee, reaching consensus on, most notably, establishing a single accountability framework that will apply to all higher education programs. The negotiated rulemaking committee, in its fifth day of the session, signed off on regulations that would require all postsecondary programs to pass a single earnings premium test. Set to take effect this July, this new accountability measure is intended to ultimately cut off programs defined as failing from receiving any federal student aid funds, as Inside Higher Ed reported. Programs would need to fail the earnings premium test two out of three years to be ineligible to receive Federal Direct Loans, meaning it would take several years total to lose all access to student aid funds.
One compromise agreed to by ED that helped reach consensus on the issue involved establishing an additional test that measures whether a failing program accounts for either half of an institution’s students or more than half of federal student aid funds received by the institution. Failing programs that meet either of these thresholds
would not only lose access to Federal Direct Loans but all Title IV
federal student aid, including Pell Grants.
The effort to “harmonize” the new statutory accountability standards in the One Big Beautiful Bill Act (OBBB)—also known as the “Do No Harm” provision—with the existing gainful employment (GE) regulations was at the center of ED’s efforts in this rulemaking session. The result eliminated the GE debt-to-earnings test and replaced it with the universal earnings premium test included in OBBB. Programs would be required to demonstrate that their graduates earn more, on average, than a comparison group of 25–34 year-old adults with either a high school diploma (for undergraduate programs) or a bachelor’s degree (for graduate programs).
While the statutory accountability provisions in the OBBB are scheduled to take effect on July 1, 2026, the department indicated that the earnings test itself would not be applied to programs until July 1, 2027. Institutions would begin receiving their program-level earnings data in early 2027, based on cohorts of students who completed programs beginning in 2021, using the most recent available IRS earnings data.
While this is expected to become final with the consensus reached Friday, there will be a public comment and review period before the department issues the final rule. For a summary prepared by ACE about the outcomes of the session, click here.
