95% programs are expected to pass<\/strong>. The remaining 5% still represents 644,000 students and $2.7 billion in annual federal loan disbursements.<\/p>\nCertification Programs: Highest Failure Rates<\/h3>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
Banning federal loans would not eliminate demand for cosmetologists, but it could make it harder for low-income students to access the profession.<\/p>\n
Associate Degree Program<\/h3>\n
Most two-year programs pass, but two areas stand out for high failure rates: health and medical administrative services, and design and applied arts.<\/p>\n
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.<\/p>\n
graduate degree program<\/h3>\n
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.<\/p>\n
Exceptions are concentrated in the arts and humanities \u2013 programs in the fine arts, studio arts and related disciplines where the average salary of graduates runs below the benchmark.<\/p>\n
Master’s Degree Program: Mental Health Paradoxes<\/h3>\n
At the graduate level, about 4% of programs are expected to fail\u2014but the distribution is uneven.<\/p>\n
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.<\/p>\n
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.<\/p>\n<\/div>\n
\n
mental health license issue<\/h2>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
Basic problem: <\/strong>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.<\/p>\nThe earnings test measures average wages, which is largely influenced by these low-paying settings.<\/p>\n
This matters for more than just programs. America is in the midst of a well-documented mental health workforce shortage<\/a> (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.<\/p>\nGraduates 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.<\/p>\n
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. <\/p>\n
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.<\/p>\n<\/div>\n
\n
What does this mean for future students<\/h2>\n
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.<\/p>\n
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.<\/p>\n
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\u201329 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.<\/p>\n
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.<\/p>\n
Don’t miss these other stories:<\/strong><\/p>\n<\/div>\n