ED Issues Final STATS and Earnings Accountability Rule

On June 29, 2026, the Education Department finalized the Student Tuition and Transparency System and Earnings Accountability rule, implementing provisions of the Working Families Tax Cuts Act passed in July, 2025. The rule replaces the former debt-to-earnings metric with an earnings premium measure that applies to virtually all postsecondary programs eligible for federal aid, requiring undergraduate programs to demonstrate that graduates earn more than an average high school graduate and graduate degree holders out-earn the average bachelor’s degree holder. Programs that fail the earnings premium in two out of three consecutive years will lose Direct Loan eligibility, and institutions with a larger share of failing programs will face broader Title IV consequences. The rule expands the prior Biden-era Gainful Employment framework (which had applied only to for-profit and vocational programs) into a universal accountability standard across all sectors and credential levels. The final rule includes several differences from the proposed version, including exemptions for programs that don’t participate in the Direct Loan program, a delayed application for programs tied to tipped-wage occupations, a voluntary opt-out pathway allowing failing programs to forego Direct Loans while preserving Pell Grant eligibility, and an exemption for programs exclusively serving students with certain documented disabilities. The rule takes effect July 1, 2027, with some provisions effective August 31, 2026. The regulation drew nearly 10,000 public comments, with significant opposition from cosmetology, fine arts, religious studies, and social services program advocates who argued the earnings-only metric fails to capture the social value of their fields—concerns the Department largely declined to incorporate, holding that Congress did not authorize alternative accountability metrics.