- A new federal law creates a “do no harm” income test: programs whose graduates earn less than comparable high school graduates will lose access to federal student loans starting in the 2028–29 academic year.
- 93% of cosmetology certificate programs are expected to fail. Mental health services master’s programs also face higher than average failure rates.
- There are currently 644,000 students enrolled in programs that are at risk of failing and receiving $2.7 billion in federal loans annually. Already enrolled students are protected and can complete their degree, but if newly enrolled students fail the program for two years they will eventually lose loan access.
Hundreds of thousands of college students enrolled in degree and certificate programs could soon be deducted from federal student loans under a new federal law. The One Big Beautiful Bill Act requires colleges to prove that their programs actually improve the earning power of graduates, and those that do not risk losing access to federal student loan programs.
The framework, informally called “Do No Harm,” sets a new standard: If graduates of a program earn less than comparable workers who never attended college, the program can no longer receive federal loan funds.
education department Preliminary data has already been released on nearly 50,000 programs, and the results reveal clear patterns in which fields are at risk – including some where college qualifications are legally required to work in the profession.
Memorization: It’s not just about the degree (like BS business). It’s about the program and school (e.g. University of Vermont, Bachelor of Science in Plant Sciences). It is individual programs and degrees offered by individual colleges that are at risk.
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Using Federal Data
This free tool analyzes federal datasets and will tell you whether your specific program passes or fails upcoming “do no harm” provisions.
How will the college degree income test work?
The new test is based on a basic premise: A college credential should boost your earning power above what you could earn without it. For graduate programs, the benchmark is the average earnings of comparable high school graduates in the same state. For graduate programs, this is the average earnings of holders of comparable graduate degrees.
The Department of Education measures a student’s earnings four years after leaving the program. If a program’s graduates fall below the benchmark for two out of three consecutive measurement years, the program loses access to Federal Direct Loans.
There are some protections for currently enrolled students: a teach-out provision allows programs that fail for one year to keep existing students using federal student loans, as long as the school stops admitting new students and completes the teach-out within three years. When restrictions take effect, students already in the failed program will No Stay stuck.
The department will calculate the first round of performance data in early 2027 and the second round in early 2028. Because two consecutive unsuccessful years are required, the earliest a program can lose student loan eligibility is in the 2028-29 academic year.
Which programs are most at risk?
The department’s initial dataset includes approximately 50,000 programs at all credential levels. of them, 95% programs are expected to pass. The remaining 5% still represents 644,000 students and $2.7 billion in annual federal loan disbursements.
Certification Programs: Highest Failure Rates
Graduate certificate programs face their greatest risk yet. Cosmetology is the most obvious example: 93% of cosmetology certificate programs are expected to fail the earnings test. Medical assisting certificate programs and somatic bodywork programs also have high failure rates.
The cosmetology figure is particularly striking because cosmetologists are legally required to hold a state-issued license and are required to complete an accredited program to obtain that license.
In other words, the credential is not optional: it is a legal prerequisite for employment. Yet nine out of ten of those programs produce graduates who earn less than the high school salary benchmark.
Banning federal loans would not eliminate demand for cosmetologists, but it could make it harder for low-income students to access the profession.
Associate Degree Program
Most two-year programs pass, but two areas stand out for high failure rates: health and medical administrative services, and design and applied arts.
These programs often lead to entry-level administrative or creative roles where starting salaries fall below high school earnings benchmarks, especially in states with high average salary levels.
graduate degree program
Almost all graduate degree programs are expected to graduate. Four-year degrees have a significantly higher earnings premium than a high school diploma, making it easier to exceed the benchmark for most fields.
Exceptions are concentrated in the arts and humanities – programs in the fine arts, studio arts and related disciplines where the average salary of graduates runs below the benchmark.
Master’s Degree Program: Mental Health Paradoxes
At the graduate level, about 4% of programs are expected to fail—but the distribution is uneven.
Mental and social health services is the only major graduate area where most programs fall below the earnings benchmark for graduate degree holders. More than 60% are using data provided by the Department of Education.
Collectively, failing graduate programs receive approximately $1 billion in student loan funds each year. This datapoint is one of the driving factors behind the new distinction between undergraduate and professional programs.
mental health license issue
Of all the programs identified by the department’s data, the finding of mental health services is one of the most challenging because it highlights a direct conflict between what the law requires and the penalties now imposed.
To practice independently as a Licensed Professional Counselor (LPC), a Licensed Clinical Social Worker (LCSW), or a Licensed Marriage and Family Therapist (LMFT), you need a master’s degree. These are mandatory qualifications set by state licensing boards. There is no way to obtain independent licenses in these professions without completing a graduate program.
Yet preliminary data from the department shows that many master’s programs in mental and social health services fail the earnings benchmark, which compares graduates’ salaries to those of comparable bachelor’s degree holders.
Basic problem: Many mental health professionals (especially early in their careers when they are getting the required hours and necessary training) work in community mental health centers, non-profit organizations, and government agencies, where salaries are significantly lower than in private practice.
The earnings test measures average wages, which is largely influenced by these low-paying settings.
This matters for more than just programs. America is in the midst of a well-documented mental health workforce shortage (PDF file). Restricting federal loan access to graduate programs that train licensed counselors and social workers could reduce the pipeline of mental health providers at exactly the time when demand is increasing.
Graduates who enter this field often carry substantial debt from master’s programs (typically $40,000 to $70,000) to prepare for careers with starting salaries in the $40,000 to $55,000 range, especially in nonprofit and public sector settings. They also rely heavily on programs like Public Service Loan Forgiveness to get relief for those federal student loans.
The income test, as written, does not take into account the public value of mental health services, the mandatory nature of the credential, or structural wage suppression in nonprofit and government settings.
Whether this is addressed through regulatory adjustments or public comment remains to be seen. There is already a bill in Congress to expand the new definition of professional degrees, but it does not appear to pass at this time.
What does this mean for future students
The teach-out provision provides protection for students currently enrolled in programs that are expected to fail. You will not be denied federal loans midway through the program.
Schools that fail the income test the first time can continue to use federal loan dollars to educate enrolled students as long as they stop admitting new students and complete closure within three years.
For prospective students, the implications are more significant. If a program fails the income test in both 2027 and 2028, it will lose federal loan eligibility starting in the 2028–29 academic year. Students starting a two- or four-year program today may be ending it just in time as these restrictions are beginning to feel onerous.
Nearly 2,000 of the country’s 5,000 colleges and universities are expected to have at least one program failing. The overall reputation of the institution tells you very little: what matters is the specific degree you are getting.
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