By Michael Bilfinger, Assistant Director of Public Policy, AACRAO
The One Big, Beautiful Bill, passed on July 4, 2025, made several changes to higher education that are now being steadily implemented through regulations in a process known as negotiated rulemaking.
In October, 2025, the negotiated rulemaking committee, Reimagining and Improving Student Education, reached consensus to finalize regulations addressing changes to the student loan system. For an overview of those changes, please refer to “A Complete Overhaul to the Federal Financial Aid System.”
Then, in December 2025, part 1 of the Accountability in Higher Education and Access through Demand-driven Workforce Pell (AHEAD) Committee concluded, where negotiators were able to reach consensus regarding the creation of a Workforce Pell program. For an overview of AHEAD Part 1, please refer to “Rule by Rule: Making the One Big Beautiful Bill Real in Regulation - AHEAD Committee Part 1.”
What’s AHEAD in 2026?
The AHEAD Committee reconvened early January 2026 for part 2 to address a new accountability metric introduced in OBBB, the Earnings Premium, as well as to make changes to the Gainful Employment rule, including eliminating the debt-to-earnings ratio. Unlike the Gainful Employment rule, which only applies to for-profit institutions and certain nondegree programs, all institutions receiving Title IV funds will be assessed by the new Earnings Premium, which requires that at least half of an institution’s recipients of Title IV funds and half of the institution’s total Title IV funds are not from low-earning outcomes programs. Low-earning outcome programs will be determined by comparing, program by program, the median earnings of college graduates with those of working adults who did not complete a comparable postsecondary degree in the same state. This new accountability measure affects both undergraduate and graduate programs, although it's calculated differently at the two levels.
To put it succinctly, the Earnings Premium will be used to assess whether college graduates fare better financially than non-college graduates in the same state. Failure to exceed the median for two out of three consecutive award years, as measured, could result in an institution risking losing its Title IV funds.
To better understand how the earnings premium is calculated, I have an example from Ingrid Nuttall, one of the hosts of the AACRAO H.E.A.R.D podcast, which has a new episode coming out soon that discusses the Earnings Premium, along with much more. At the undergraduate level, the median earnings of an English major who graduated from Hypothetical University, and who received Title IV funds, must exceed the median earnings of those who have a high school diploma or equivalent, and who didn't enroll in college in the same state where Hypothetical University is located (regardless of whether or not they graduated at all). This will be measured for three years. If the median earnings for our English major from Hypothetical University do not exceed the median earnings of individuals who didn't graduate for two out of the three consecutive award years measured, the institution risks access to Title IV funds, including student loans and Pell, for all of its low-earning programs.
For graduate programs, including graduate certificates, the median completer earnings of Title IV recipients must exceed the lowest of the median earnings of those who completed only a bachelor's degree in the same state and work in the same field as the graduates, anywhere in the country. One potential pitfall of this calculation at both levels is that it doesn’t account for cost-of-living differences, meaning that Hypothetical University English majors living in an area with a high cost of living could be compared with people living in an area with a lower cost of living in the same state.
In the event that a program fails the new metric, there are escalatory stages of enforcement.
In the first year of implementation, if a program fails the metric, then it must send a warning to students that their program’s Title IV funding eligibility is in jeopardy.
During the second year of noncompliance, programs could lose direct student loan eligibility.
In the third year of noncompliance, the institution’s low-earning programs would lose Title IV eligibility for good.
Please refer to the draft consensus language from part 2 of the AHEAD Committee. The next step is for the education department to post the draft regulations on the Federal Register and take public comment. Then, officials will have to review and respond to the public comments before issuing the final rule.