WASHINGTON — At least half of graduates have higher earnings than a typical high school graduate in their state’s labor force who never enrolled in postsecondary education, and these lifetime earnings increase with master’s and doctoral degrees. Data compiled by the U.S. Bureau of Labor Statistics show those with bachelor’s degrees had a 2.2% unemployment rate in 2022, while high school graduates with no college education had a 4% unemployment rate. College graduates are also more likely to own a home and are less likely to be in poverty or need social services, according to findings from the Public Policy Institute of California (PPIC).
However, it matters a great deal not only which institution a student chooses, but also which major they choose.
The Biden-Harris Administration released final regulations late last month giving students more information to make better choices about their pursuits of education and establishing safeguards against unaffordable debt or insufficient earnings for postsecondary students.
The final rule has two key parts.
First, a revitalized and strengthened Gainful Employment (GE) rule, will protect approximately 700,000 students a year from career training programs that leave graduates with unaffordable loan payments or earnings no better than what someone who did not pursue postsecondary education earns in their state.
Second, a new Financial Value Transparency framework will provide students and families with the most detailed information ever available about what they are likely to pay out-of-pocket for programs, how much debt they can expect to take on, and how much money students are likely to earn after graduation. The program will help students understand potential risks involved in their program choices while requiring them to acknowledge viewing the information before enrolling in certificate or graduate programs whose graduates have been determined to face unaffordable debt levels.
“We are fixing a broken system and making sure that students know, before they take out loans, when college programs have a history of leaving graduates with high debts, low earnings, and poor career prospects, said U.S. Secretary of Education Miguel Cardona. The Biden-Harris administration believes that when students invest in higher education, they should get a solid return on their investment and a greater shot at the American dream.”
“These protections are about ensuring career college programs live up to higher education’s promise as a pathway to a better a life,” said U.S. Department of Education Under Secretary James Kvaal. “Students overwhelmingly say that they’re going to college to find a good job and build financial security, but too often their programs leave them no better off financially than those with no postsecondary education at all.
In addition to forgiving student debt, the Biden-Harris Administration has championed the largest increase to Pell Grants in a decade and is fighting to put the grant on a path to doubling the maximum award by 2029. President Biden will also continue to fight for tuition-free community college and tuition assistance at Historically Black Colleges and Universities, Tribal Colleges and Universities, and Minority-Serving Institutions.
The “earnings premium” assesses whether the program enhances its students’ earnings potential, while assessing whether programs offered by private for-profit institutions and certificate programs at all types of colleges meet the statutory requirement to prepare students for gainful employment in a recognized occupation. Under the rules, the share of annual earnings typical graduates need to devote to paying their debt (i.e., their “debt-to-earnings ratio”) must be less than or equal to 8 percent, or less than or equal to 20 percent of their discretionary earnings (defined as their annual earnings minus 150 percent of the federal poverty guideline).This metric captures whether a program’s debt is affordable.
Programs that fail either metric will need to warn students that the program is at risk of losing access to the federal student aid programs. Those that fail to meet the standards on the same metric twice in a three-year period will not be eligible to participate in the Department’s Federal student aid programs.
The Department focused the Financial Value Transparency (FVT) framework acknowledgements on certificate and graduate programs in the final rule because they are the programs where unaffordable debt is most common, and students tend to enroll directly into particular programs. Enhanced transparency under the FVT program includes new reporting requirements for institutions related to costs (including tuition and fees, books, and supplies), non-federal grant aid, and typical borrowing amounts (for both private and federal loans). This information will be made publicly available to students on a website run by the Department. By contrast, many students seeking undergraduate degrees do not select a program when they enter the institution.
The GE accountability and FVT reporting provisions will go into effect on July 1, 2024. The first official financial outcome rates will be published in early 2025. Programs that fail the same GE metric in the first two years the rates are issued will become ineligible in 2026.An official copy of the regulations can be found at https://www.federalregister.gov.
