US Department of Education 'Do No Harm' Rule for College Financial Aid

Federal Accountability Test for Higher Education Earnings

The U.S. Department of Education has begun rolling out a new accountability test, known as the "do no harm" rule, which mandates that college programs must demonstrate that their graduates are financially better off than non-college-educated workers to maintain access to federal student loans. Under this rule, an undergraduate program risks losing federal financial aid if its graduates do not earn more than workers who never attended college; similarly, graduate programs must show that their graduates earn more than those with only a bachelor's degree.

This policy, stemming from the One Big Beautiful Bill Act, is based on the principle that federal taxpayers should not underwrite programs that fail to leave students financially better off after graduation.

Implementation and Metrics

The "do no harm" test uses a low earnings floor to determine program viability. In many states, the minimum annual earnings required for a bachelor's program to pass are estimated between $30,000 and $41,000.

Key operational details include:

• Failure Criteria: A program is designated as "low-earning" and loses aid if it fails the earnings requirement for two out of three consecutive years.
• Calculation Method: The Department of Education calculates the median earnings four years after graduation for every institution and program (identified by CIP code). This is compared against the median earnings of high school graduates in the same state.
• Timeline: The Department will begin calculating graduate earnings in early 2027, with potential aid cuts beginning in the 2028-2029 financial aid award year.
• Debt Exclusion: The current test does not account for the amount of student loan debt incurred, focusing solely on gross earnings.

Impacted Programs and Student Demographics

Department of Education data indicates that while the vast majority of programs will pass, over 800,000 students are currently enrolled in programs likely to fail.

High-risk categories include:

• For-Profit Schools: Roughly half of the students in failing programs are enrolled in for-profit institutions.
• Certificate Programs: Approximately 18% of undergraduate certificate programs are predicted to fail, with cosmetology and somatic body work showing the highest failure rates.
• Two-Year Associate Degrees: 6% of these programs are likely to fail, particularly those training specialized educators, such as early childhood educators.
• Bachelor's Degrees: Only 1% of traditional four-year programs are predicted to fail, though this often occurs in theater, music, and studio art.
• Master's Degrees: 4% of programs are predicted to fail, with the highest rates found in mental and social health services.

Notably, some prestigious music programs, including The Juilliard School and the New England Conservatory, fall within the 14% of bachelor music programs predicted to fail.

Debate Over the Purpose of Higher Education

The implementation of the "do no harm" rule has sparked significant debate regarding whether the primary purpose of college is economic advancement or cultural and intellectual enrichment.

Arguments for the Rule

Proponents argue that federal loans are financial instruments intended for career preparation and should not be used to fund degrees with poor ROI.

"The purpose of a college degree is NOT a job... but the purpose of a college LOAN is 100% a job," noted one commentator on Hacker News, arguing that taxpayers should not fund degrees unless students are on a path to become taxpayers themselves.

Others suggest that limiting federally subsidized loans will curb the rapid inflation of college costs and prevent students from taking on "crushing debt" for degrees with dim career prospects.

Arguments Against the Rule

Critics, including representatives from the Strategic National Arts Alumni Project (SNAAP), argue that earnings are a limited metric for success. They contend that artists often have nonlinear careers with unpredictable early earnings that stabilize over time.

Furthermore, critics argue that this rule encodes a "credentialing system" into law, prioritizing future earnings over actual education. There are concerns that this may lead to a less educated populace by pulling the "ladder up" on younger generations who cannot afford expensive education without federal aid, particularly in essential but lower-paying fields like teaching.

Summary of Program Failure Rates

Program Type	Predicted Failure Rate	High-Risk Fields
Undergraduate Certificates	18%	Cosmetology, Somatic Body Work
Associate Degrees	6%	Early Childhood Education
Bachelor's Degrees	1%	Theater, Music, Studio Art
Master's Degrees	4%	Mental/Social Health Services