Did college boost your income? A federal test puts pressure on schools.

Bailey Pennington worked as an assistant during her first six months out of cosmetology school, learning the business before opening her own shop styling hair outside Detroit. She spent much of her first two years trying to build up her client list.While Ms. Pennington now has a successful business, she knows earnings in her profession can fluctuate, especially early on. So she worries that the federal measure implemented this year requiring colleges and professional schools to show that their graduates earn more than people without degrees, or risk losing the federal student loan support that allowed her to graduate, will make it more difficult for others.According to Department of Education data, more than 800,000 students are in danger of failing the earnings test, and more than half of them are in for-profit programs like the one Ms. Pennington graduated from. “Within the cosmetology, barber, and massage school segment, this is absolutely a big deal,” says John Russell, executive director of American Association of Career Schools, a national beauty and wellness organization that represents almost 700 schools. “We’re talking about the loss of access to Title IV funding, both direct funds and Pell Grants to over 92% of students in cosmetology, nearly 90% of students in massage therapy.”The earnings test applies to thousands of programs at schools ranging from professional certificates to arts programs at elite universities and seminaries. Jae C. Hong/APA graduate wears a cap decorated with the message "Now what?" during California State University, Los Angeles, commencement in Los Angeles, May 18, 2026. The regulation is supposed to address, in part, the country’s student debt crisis. In theory, students would not be able to take out federal loans to pay for programs that will not leave them in a position to pay them off. Supporters say the federal government should not be subsidizing educational programs that don’t give their graduates financial independence. Critics say some careers’ value cannot be measured only in income, and that in some fields applying the earnings test four years after someone graduated doesn’t provide enough time.Fields like Ms. Pennington’s, where it takes time to build a clientele, are especially vulnerable. Those programs – heavily dependent on tip income – received some recognition in the form of a one-year implementation delay. “You really have to separate yourself from everyone else, and that doesn’t always work for everyone,” Ms. Pennington says of building her business.AccountabilityThe requirement, which was part of the One Big Beautiful Bill Act passed in 2025, says that undergraduate programs whose graduates and certificate-holders don’t earn more money than median earnings of a high school graduate in the state four years past graduation, will be penalized. If a program fails the earnings test for two consecutive years, students can’t get federal loans. Similarly, graduate degree-holders will have to make more than workers with bachelor’s degrees.The Trump administration’s intent is to “drive down the cost of higher education and hold all institutions, regardless of sector, accountable for low earnings outcomes,” Under Secretary of Education Nicholas Kent said in a statement earlier this year. Jose Luis Magana/AP/FileThe U.S. Department of Education building is seen in Washington, Nov. 18, 2024. It is not the first time earnings have been tied to educational debt.The Obama administration targeted for-profit career-training programs by measuring the size of their graduates’ loan payments as a percentage of their annual earnings or discretionary income. For-profit and vocational programs that failed two out of three years, lost access to federal loans. The Biden administration added a minimum earnings test requiring that graduates were earning at least as much as a typical high school graduate.The Trump administration expanded the programs facing the earnings test beyond for-profit certificate and degree programs, and ditched the metric that considered the size of the loans and graduate’s income.Value“This is a very, very low bar right now,” says Andrew Gillen, a fellow at the Cato Institute’s Center for Educational Freedom. “You could go to school for four, five, six, seven years, pay tuition all of those years, and as long as you earn one dollar more than a high school graduate, your program is in the clear.”Dr. Gillen says this rule removes the absolute worst performing programs from the federal student loan program, but leaves off of the chopping block more schools that load students up with too much debt. It’s debt that he doesn’t think taxpayers should fund. “If you’re going into theater or if you’re going into religious rabbinical studies you aren’t necessarily going to do that for the career impacts, but that also means that we don’t want to be funding that with a student loan,” Dr. Gillen says.Lee Ann Scotto Adams and Joanna Woronkowicz, of the nonprofit Strategic National Arts Alumni Project (SNAAP), which conducts research on postsecondary arts and design career paths, disagree. They say that the new earnings metric doesn’t take into account contributions that artists add to society and will force colleges to start slashing arts or humanities programs.“Who’s to say what’s worth it for taxpayers and what’s not?” Dr. Woronkowicz asks.One SNAAP study that measured early career earnings of arts majors shows volatility for individuals in arts and design careers the first five years after graduation.For a better measurement, she says, the Department of Education should have looked at arts careers after 10 years. Ms. Scotto Adams believes that ultimately schools will pull through, but some will merge and programs might close. Big schools and conservatories with wealthy donors will see an increase in philanthropy, she predicts.“When you think about the arts, I think there is a tendency to think about painting and ceramics, but think about architecture, interior design, industrial design,” she says. “Everything in our day-to-day waking life has been designed by someone who most likely went to an arts program.”An experimentMs. Pennington took out $12,000 in loans to pay for what wasn’t covered by financial aid to finish her program at L’esprit Academy. She has paid down thousands and still pays $150 a month, which is manageable.That’s in addition to paying business insurance, rent for the suite that houses Hair by Bails, and health insurance. She also pays for a marketing campaign on social media. She had a child after graduating and took unpaid time off to care for her baby, which impacted her earnings early in her career.Jon Fansmith of the American Council on Education, a nonprofit public policy advocacy organization for more than 1,600 colleges and universities, says the earnings policy carries economic risks. He agrees that schools could be forced to cut programs or take from other programs or research money to help maintain struggling majors.Students could turn to private loans, but that’s not a safe bet, Mr. Fansmith says, because 40% of graduate students have poor credit and wouldn’t get approved, according to a study conducted this year by advocates for student loan relief. Students who do qualify face higher interest rates than federal loans. He sees two things coming.“The one that we can easily see coming is the basic collapse of the labor pipeline for these low-pay, high-need professions,” Mr. Fansmith says. He thinks there will be a dearth of health aid workers and culinary artists, for example. The second thought is that this regulation is unprecedented and will reshape college without a model of what’s to come after.“I think there could be some really positive outcomes there, but almost surely there’s going to be some negative outcomes, too. And we just don’t know because it’s a huge, living social experiment right now.” ALREADY A SUBSCRIBER? LoginReal news can be honest, hopeful, credible, constructive.The Christian Science Monitor was founded in 1908 to lift the standard of journalism and uplift humanity. We aim to “speak the truth in love.” Our goal is not to tell you what to think, but to give you the essential knowledge and understanding to come to your own intelligent conclusions. Join us in this mission by subscribing.