College Programs Face Federal Loan Restrictions Under New GOP Legislation

Understanding the “Do No Harm” Provision

The Republican Party’s recently passed “big, beautiful bill” includes a significant change to how federal student loans are distributed to colleges across America. Starting in July, college programs whose graduates earn less than people with only a high school diploma could lose their access to federal student loan funding. This sweeping change, tucked within the GOP’s tax and spending overhaul, is based on a provision appropriately nicknamed “do no harm.” According to analysis from the HEA Group, a respected higher-education research firm, approximately 40,000 U.S. college students could be affected by these changes, representing about 2% of associate and bachelor’s degree-granting programs nationwide. The new rule requires educational programs to demonstrate that their graduates earn more than high school graduates when measured four years after completing their degrees. If a program fails this earnings test in two out of three consecutive years, it could be completely barred from offering federal student loans to finance students’ education. Programs most at risk include those in the arts, religion, and certain trade fields like cosmetology, which have traditionally struggled to produce graduates with high starting salaries despite providing valuable skills and services to communities.

The Growing Debate Over College Value

This legislative change reflects a broader national conversation about whether college education is worth its increasingly steep price tag. The value proposition of higher education has come under intense scrutiny in recent years, particularly as tuition costs have skyrocketed while wage growth for many graduates has stagnated. Americans now collectively shoulder a staggering $1.8 trillion in student loan debt, a burden that has sparked political debates, delayed major life milestones for millions of young adults, and raised serious questions about the return on investment for various degree programs. According to the U.S. Senate Committee on Health, Education, Labor and Pensions, the Republican effort behind this provision aims to prevent federal student loans from funding degrees that “leave students worse off than if they never went to college.” Michael Itzkowitz, president of the HEA Group, explained the reasoning simply: “There is an intuitive understanding that if you go to college, you should make more than someone who doesn’t go to college.” This sentiment resonates with many Americans who have watched tuition costs climb while questioning whether all degree programs deliver proportional economic benefits. The provision attempts to create accountability in higher education by tying federal funding to measurable economic outcomes, forcing institutions to consider whether their programs genuinely improve graduates’ earning potential or simply saddle them with debt.

Most Programs Will Survive the Earnings Test

Despite the dramatic nature of this policy shift, the analysis suggests that the vast majority of college programs will successfully meet the new earnings threshold and retain access to federal student loans. Programs in STEM fields—science, technology, engineering, and mathematics—are expected to pass with flying colors, as their graduates consistently far outearn those with only high school diplomas. Even graduates from elite universities studying liberal arts, fields often criticized for producing students who struggle financially, generally enjoy a significant wage premium over high school graduates. The data reveals some surprising findings about programs traditionally thought to be economically questionable. For instance, English major graduates from Kent State University earn approximately $36,241 annually four years after graduation, which is about $1,433 more than the typical high school graduate earns. While this amount might seem modest—and is indeed far below the median income of about $60,000 for recent college graduates according to the Association of Public and Land Grant Universities—it still clears the bar set by the new provision. “Even if you’re majoring in history or philosophy, they generally are also outperforming high school students, so they’re not at risk” of losing access to federal student loans, Itzkowitz explained. This finding challenges common assumptions about the economic value of humanities degrees and suggests that the earnings test, while consequential for some programs, won’t devastate the liberal arts landscape as some might have feared.

Programs Most at Risk of Losing Federal Funding

While most programs will survive scrutiny, certain fields face genuine danger of losing federal loan access. According to a January 15 analysis from the American Enterprise Institute, a nonpartisan think tank, approximately 8% of studio and fine arts programs at four-year colleges nationwide are at risk of failing the new earnings test—the largest share of any bachelor’s degree major. These programs have long struggled with the tension between artistic value and economic returns, as careers in fine arts often involve years of low-paying work before artists can command higher compensation, if they ever do. Additionally, roughly 3% of design and applied arts programs and 1% of English major degrees could fail to meet the earnings threshold. The HEA Group’s analysis identified some particularly troubling cases, with the bachelor’s program showing the largest earnings gap being Brigham Young University’s dietetics and clinical nutrition services program. Graduates from this program earned approximately $18,300 annually four years after graduation—shockingly, about $18,800 less than typical high school graduates earn during the same period. When contacted for comment about these findings, BYU did not respond. These statistics raise important questions about program quality, career counseling, regional job markets, and whether some programs are adequately preparing students for employment in their chosen fields. For students currently enrolled in or considering these at-risk programs, the implications are significant and immediate.

The Success Stories: Top-Earning College Programs

On the opposite end of the spectrum, some college graduates achieve exceptional returns on their educational investments, particularly those from prestigious universities who study engineering, mathematics, and other STEM-related fields. These programs consistently produce graduates who far exceed the earnings of high school graduates, justifying their tuition costs and demonstrating clear economic value. “Consistent with previous studies, we do see students who concentrate in the STEM fields earning more, but we see strong outcomes across all different kinds of majors, whether that be sociology or operations research or nursing,” Itzkowitz noted. His research reveals that the earnings advantage isn’t limited exclusively to technical fields—many social science, healthcare, and even some humanities programs produce graduates with solid earning potential. This diversity of successful programs suggests that the quality of the institution, the specific curriculum, networking opportunities, internship programs, and career services all play crucial roles in graduate outcomes beyond just the choice of major. The data provides valuable information for prospective students and their families as they navigate the increasingly complex and expensive college decision-making process. By examining which specific programs at which institutions produce the best economic outcomes, students can make more informed choices about where to invest their time, money, and energy in pursuit of higher education.

Financial Implications for Taxpayers and Students

Beyond the immediate impact on affected programs and students, this provision carries significant implications for U.S. taxpayers and the broader student loan system. Preston Cooper, a senior fellow at the American Enterprise Institute, points out that the measure may help protect taxpayers from losses tied to low-earning graduates who struggle to repay their student loans. His analysis found that almost $3 billion in student loans were granted to students enrolled in programs that failed the earnings test during the 2024-25 academic year alone. “Given the low earnings of these programs’ graduates, much of that debt is unlikely to be repaid in full,” Cooper wrote in a blog post about the new provision. “Cutting these programs off from federal loans is therefore a significant win for taxpayers.” This perspective frames the policy as a fiscally responsible measure that prevents the government from subsidizing educational programs that don’t deliver economic returns, thereby reducing the likelihood of loan defaults and the associated costs borne by taxpayers. However, Cooper also acknowledges that colleges with programs failing the earnings test need to begin preparing now for the changes. Students in affected programs won’t be completely shut out of higher education—they could still seek private financing options or pay out of pocket—but losing access to federal loans with their typically favorable terms will make education significantly more expensive and difficult to access for many students. This situation creates a complex ethical and practical dilemma: while protecting taxpayer dollars is important, restricting access to education for students from lower-income backgrounds could perpetuate inequality and limit opportunities for social mobility, potentially creating long-term societal costs that outweigh the short-term savings.