New accountability framework will help ensure higher education provides strong outcomes for all students

Pursuing a college degree or credential should translate to increased earnings and greater social mobility. But unfortunately, some programs consistently leave students worse off than if they had never attended. That wastes students’ time, leaves them without a credential, or with a credential that does not meaningfully improve their ability to succeed in the workforce or society. A new provision in the One Big Beautiful Bill Act aims to change this and takes an important step toward ensuring that higher education provides strong outcomes for all students. 

The new outcomes-based accountability framework establishes an earnings premium test that assesses whether students are, on average, better or worse off after having attended a given program. For undergraduate degree programs, the median earnings of students who complete will be compared to the median earnings of high school graduates. For graduate certificate and degree programs, the median earnings of completers will be compared to the median earnings of bachelor’s degree recipients. If a program fails the earnings premium test for two years in a three-year period, it will lose eligibility to offer federal loans to its students.  

By tying federal loan eligibility to a minimum standard for program graduates’ outcomes, the earnings premium test creates important incentives for institutions to ensure programs leave students better off. The test is similar to other measures of a minimum economic return, such as the Postsecondary Value Commission’s Threshold 0, which we analyzed in our 2023 report, Rising Above the Threshold: How to Increase Equitable Postsecondary Value.  

As the U.S. Department of Education works to implement this “do no harm” accountability framework, we have four major recommendations:

1) Maintain strong regulations for Gainful Employment and Financial Value Transparency, to ensure that all types of programs are covered by a minimum earnings test.

The new accountability framework omits undergraduate certificate programs, but a supporting document about the law released by Senate Health, Education, Labor, and Pensions Committee Chairman Sen. Bill Cassidy (R-LA) clarifies that lawmakers did not intend to exempt them from accountability. Instead, the document notes that undergraduate certificate programs are covered by a similar earnings test under the Gainful Employment regulation. Undergraduate certificate programs are more likely than other programs to fail the earnings premium test. In fact, the PEER Center estimates that one in five students pursuing an undergraduate certificate is enrolled in a program that likely wouldn’t pass the earnings test set out in the One Big Beautiful Bill Act—roughly 10 times the share of students in failing programs of any other credential type.

2) Calculate and release data for Financial Value Transparency and Gainful Employment as soon as possible.

Many of these program-level data elements will be available for the first time across all sectors and levels of higher education, going far beyond what is currently available in the College Scorecard or the Integrated Postsecondary Education Data System (IPEDS). Those new data on program costs and outcomes are essential to inform the Department’s implementation of the new law as well as empower students and families to make informed decisions about where to attend college and what to study, support institutional improvement efforts, and provide new policy insights. For example, colleges are reporting Financial Value Transparency data on program length and costs, which could help inform future efforts to measure student investment as part of strengthening this new accountability framework. Along with their earnings after college, students’ investments in college (such as tuition, fees, and other costs of attendance) shape their overall return on investment from postsecondary education.

3) Warn prospective students, not just enrolled students, if a program fails the “do no harm” standard.

The law requires institutions to notify students enrolled in programs that fail the “do no harm” standard in one year, since those programs will lose eligibility for federal loans after a second year of failure. The Department should require institutions to provide notice to prospective students as well, so that they can make an informed decision before committing time and money to a program.

4) Provide clear and timely guidance and support to institutions around the implementation of these higher education policy changes, particularly around new data reporting.

To ensure that institutions have the information needed to report accurate data, the Department should provide clear guidance, resources, detailed documentation, and trainings such as webinars. The Department should set up a dedicated email address to respond to institutions’ questions in a timely manner and staff a help desk to provide ongoing assistance with the implementation of this law. 

The transformative power of higher education is realized when a graduate enters the workforce with improved earning potential. To fulfill that promise, policymakers must ensure that programs provide a minimum level of value and do not leave students worse off than if they hadn’t attended. The new accountability framework passed into law, alongside the regulations and data for Gainful Employment and Financial Value Transparency, will help ensure that higher education provides strong outcomes for all students. 

For more details about our implementation recommendations for the outcomes-based accountability framework, read our letter to the U.S. Department of Education.