Proposed Sweeping “Earnings Accountability” Rule for Higher Education Programs Could Reshape Title IV Eligibility Across Nearly All Programs
On Friday, April 20, 2026, the U.S. Department of Education issued a Notice of Proposed Rulemaking (NPRM) titled “Accountability in Higher Education and Access through Demand-driven Workforce Pell: Student Tuition and Transparency System (STATS) and Earnings Accountability.” The proposal — focused on “earnings accountability” and the new Student Tuition and Transparency System (STATS) — would expand federal oversight to nearly all Title IV-eligible programs and introduce new compliance obligations for institutions, and have immediate and material implications for institutional operations, program viability, and student disclosures. In short, the NPRM introduces a new earnings premium standard, impacts direct loan eligibility, includes an expansion of STATS reporting, contains a new administrative threshold capacity requirement, requires additional student disclosures, and contains limited opportunities for institutions to challenge the data the Department will use to make eligibility determinations.
Institutions should treat this proposal as a near-term strategic risk issue rather than a long-term compliance exercise. The combination of program-level eligibility loss and institution-wide administrative capability thresholds introduces exposure that may require program restructuring, portfolio review, and governance-level decision-making within the next 6–12 months.
I. Background
The proposed regulations are intended to implement statutory changes to Title IV of the Higher Education Act of 1965 that were included in Public Law 119-21 (the “One Big Beautiful Bill Act”), signed into law on July 4, 2025. The proposed regulations reflect consensus reached during the Accountability in Higher Education and Access through Demand-driven Workforce Pell (AHEAD) negotiated rulemaking held December 8–12, 2025, and January 5–9, 2026.
II. Key Provisions
1. New Earnings Premium Standard
The proposed rule replaces the existing debt-to-earnings metric with an earnings premium measure that evaluates whether program graduates earn more than a comparable population, and would apply to both gainful employment (GE) and non-GE programs. This shifts the measurable standard from debt burden to labor market outcomes, which are less controllable by institutions and more sensitive to program type, geography, and student demographics.
2. Direct Loan Eligibility
Under the proposed rule, programs that fail the earnings premium measure in two out of three consecutive years would lose eligibility for federal Direct Loan funding, with limited extensions generally available only in connection with orderly program closures. Institutions should begin evaluating which programs will be at risk of failing this two-year measure now to assess institutional impact.
3. Expansion of STATS Reporting
The proposed rule includes reporting of detailed program-level data, including: tuition and fees, total grant and scholarship aid (including federal, state, and private), and student-level enrollment outcomes. The Department would use this data to publish enhanced cost and outcome disclosures.
4. Administrative Capability Threshold
The proposed rule contains a new administrative capability threshold that would require institutions to demonstrate that at least half of Title IV recipients and half of Title IV funds are not associated with low-earning outcome programs. This is a sweeping measure that could have significant impacts for IHEs at both the institutional and programmatic level. If programs with large enrollment or that draw significant aid dollars produce low earnings outcomes, an entire institution could be at risk, effectively aggregating program-level risk into an institution-wide compliance requirement. Failure to meet this threshold could result in provisional PPA status, bringing heightened oversight, additional reporting requirements, and discretionary conditions imposed by the Department, creating operational and reputation strain.
5. Student Disclosure Requirements
The proposed rule would require institutions to provide notice to students for programs found to be at risk of losing eligibility. Institutions would also be required to disclose students’ remaining Pell Grant lifetime eligibility at key points in enrollment and disbursement.
6. Federal Earnings Data
In calculating program earnings outcomes, the Department intends to rely primarily on Internal Revenue Service (IRS) data, with limited opportunity for institutions to challenge underlying data inputs.
III. Key Risks and Considerations
1. Institutional Exposure
The proposed administrative capability standard introduces cross-cutting program risk or institutions, meaning that a concentration of low-performing programs or students relying on Title IV funding could affect institutional eligibility more broadly.
2. Program Visibility
Programs with lower post-graduation earnings — particularly in public service, education, and certain liberal-arts fields — may face heightened risk of losing Title IV eligibility.
3. Data and Methodology
Reliance on federal earnings data raises potential issues regarding accuracy, completeness, and the treatment of certain income types (e.g., tipped income, non-taxable benefits) with limited opportunities for institutional review and input.
4. Equity Implications
Programs serving historically underserved populations may be disproportionately impacted if reported earnings outcomes reflect broader labor market disparities.
IV. Action Items
Institutions and stakeholders should consider taking the following steps:
Immediate (before May 20, 2026):
Conduct internal program-level risk assessments using available earnings and completion data to identify vulnerable programs.
Prepare and submit targeted comments outlining concrete concerns and measurable impacts on institutions and students.
Near-Term (0–60 days):
Evaluate compliance infrastructure for new STATS reporting and disclosure requirements.
Engage leadership and governing boards on potential strategic and financial impacts at the program and institutional level.
Prepare to update policies and infrastructure for student communications and disclosures.
V. Opportunity to Engage
Institutions and stakeholders that engage substantively in the comment process will have a meaningful opportunity to influence how earnings thresholds are defined and applied, particularly for specialized or mission-driven programs.
The Department is accepting public comment until May 20, 2026, and has specifically asked for feedback on:
The definition and scope of “earnings”
The reliability and limitations of federal earnings data
The methodology for calculating earnings thresholds, especially for small or specialized fields
Stakeholders and interested parties may submit comments on any portion of the proposed rule.
VI. How Sligo Law Group Can Help
We bring direct, senior-level experience from inside the U.S. Department of Education’s, including experience from the attorneys who have drafted regulations, advised on Title IV implementation, evaluated institutional compliance, and shaped the administrative record underlying federal education policy decisions.
This includes deep experience not only in rulemaking and grants oversight but in civil rights enforcement, institutional compliance reviews, and high-stakes administrative decision-making — the mechanisms through which rules like this are ultimately applied in practice.
We support institutions, associations, and other stakeholders with:
· Targeted rulemaking strategy and public comment development grounded in how the Department evaluates, prioritizes, and responds to stakeholder input during the rulemaking process
· Program-level and institution-wide risk modeling, including earnings threshold exposure, administrative capability risk, and cross-program portfolio analysis
· Strategic advisory on program visibility and institutional positioning that helps leadership teams make defensive, forward-looking decisions about program continuation, restructuring, or closure
· Compliance architecture and implementation planning designed around how those requirements are operationalized in audits, program reviews, and enforcement actions, not just how they appear in regulations
· Civil rights and equity risk analysis assessing how earnings-based accountability frameworks may intersect with Title VI and Title IX exposure, particularly for institutions serving high-risk or historically underserved populations
This analysis is informed by how the Department actually builds, interprets, and enforces these rules and how institutions are evaluated when compliance is tested.
For institutions facing potential exposure under this rule, early and informed action materially expands available options.
For more information on how we can assist your institution or association in preparing comments and evaluating risk, please contact us at contact@sligolawgroup.com.