Accountability in Higher Education and Access Through Demand- Driven Workforce Pell: Student Tuition and Transparency System (STATS) and Earnings Accountability

On April 20, 2026, the Secretary published an NPRM for these regulations in the Federal Register (91 FR 21088) (April 20, 2026). The Department received 9,994 comments on the proposed regulations. The Department has grouped the comments by functional topics and by similar themes. We discuss substantive issues under the sections of the regulations to which they pertain. In instances where individual submissions appeared to be duplicates or near-duplicates of comments prepared as part of a write-in campaign, the Department posted one representative sample comment along with the total comment count for that campaign to www.Regulations.gov, which continues to be our standard practice. We considered these comments along with all the other comments received. In instances where individual submissions were bundled together (submitted as a single document or packaged together), the Department posted all the substantive comments included in the submissions along with the total comment count for that document or package to www.Regulations.gov. Generally, we do not address minor, non-substantive changes (such as renumbering paragraphs, adding a word, or typographical errors) within this final rule. Additionally, we generally do not address changes or comments recommended by commenters that the statute does not authorize the Secretary to make (such as forgiving all student loans), or comments pertaining to operational processes. Analysis of the comments and of any changes in the regulations since publication of the NPRM (91 FR 21088) follows. Process for Out-of-Scope Comments

The Department does not typically address comments that are out of scope. For purposes of this final rule, out-of-scope comments are those that are not addressed in the NPRM (91 FR 21088) altogether. Generally, comments that are outside of the scope of the NPRM (91 FR 21088) are comments that do not discuss the content or impact of the proposed regulations or the Department's evidence or reasons for the proposed regulations. General Comments Negotiated Rulemaking and Public Input

Comments: Several commenters argued that the Department failed to provide sufficient time for meaningful negotiated rulemaking and public comment. Some commenters requested the Department delay implementation until July 1, 2027, or later to allow for further study, stakeholder input, and adjustment.

Discussion: As mentioned in the Implementation Date of These Regulations section, except for changes to 34 CFR part 685, these regulations are effective on July 1, 2027. The changes to 34 CFR part 685 are effective on August 31, 2026. However, we note that one of the provisions that the Department is changing in section “Earnings of Program Completers--Use of IRS Data” would have the effect of delaying the application of program eligibility consequences for programs in certain fields associated with tip income. Please see that section for more information.

The Department is committed to conducting rulemaking in accordance with all statutory and regulatory requirements. For this rulemaking, we followed the procedures outlined in the HEA and the APA, including convening a negotiated rulemaking committee with representatives from a broad range of stakeholders and providing a public comment period consistent with Federal requirements. While we understand the desire for extended deliberation, the Department has a responsibility to implement timely reforms that protect students and taxpayers.

Changes: None.

Comments: One commenter urged the Department to engage in additional profession-specific outreach and operational consultation with institutions, accreditors, certifying organizations, and professional

stakeholders within the acupuncture and herbal medicine community before finalizing any earnings accountability framework that could significantly affect student access to graduate healthcare education and professional workforce entry within this field.

Discussion: The Department declines this suggestion. The Department strives to select negotiators with the goal of ensuring balanced representation across the communities most affected by the regulations. We will continue to apply this principle in future rulemakings.

Changes: None.

Comments: One commenter stated that the Department has already placed “lower earnings” warning labels on the Free Application for Federal Student Aid (FAFSA) form. They believed the warnings are premature since the rulemaking process is ongoing.

Discussion: The Department has provided these disclosures for transparent information about program outcomes as students and families make important decisions about their education. The warning labels are based on currently available data and are intended to inform, not to presume the outcome of this rulemaking process.

Changes: None. General Agreement With the Regulations

Comments: Dozens of commenters including students, graduates, instructors, beauty and massage industry professionals, educators, and program owners support the overall goal of protecting students from predatory programs, ensuring programs lead to meaningful economic outcomes, and improving transparency. Commenters shared personal experiences of debt burdens, poor instruction, unsafe or inadequate equipment, and misleading job placement claims. A few commenters also raised concerns about the cosmetology sector specifically and urged the Department not to grant exemptions for programs or institutions represented by the American Association of Cosmetology Schools (AACS). These commenters asserted that accountability is necessary in this field and expressed concern that certain stakeholders are seeking relief from regulations designed to ensure program value.

Discussion: We thank commenters for their support. The Department agrees with commenters that the earnings accountability framework in this regulation will help protect students from low-earning outcome programs. We agree with commenters who suggested that the rule may result in improved program quality, affordability, and outcomes. As explained in the “Earnings of Program Completers--Use of IRS Data” section, the Department also agrees that the earnings accountability framework must include cosmetology programs. The Department does not find a basis for providing the cosmetology sector with a blanket exemption to the rule; the intent of the rule is to ensure that all programs receiving title IV, HEA funds demonstrate that their graduates achieve earnings sufficient to support their educational investment.

Changes: None. General Opposition to the Regulations

Comments: Thousands of commenters are concerned that this rule will reduce Federal student financial assistance for beauty, wellness, early childhood, drama/theater programs, music programs, fine arts programs, and other fields. Commenters, including cosmetologists, estheticians, massage therapists, beauty school owners, parents, and students shared personal stories about how financial aid enabled them to attend school, pursue a career, achieve financial independence, support their families, and contribute to their communities. Many commenters stated they would not have been able to attend school or enter their profession without Federal student aid, and they are concerned that the earnings test would reduce economic activity and growth generally because it would lead to fewer educational opportunities as programs and colleges would be forced to close.

Many commenters noted the high graduation rates and job placement rates of cosmetology programs, suggesting that they are high-quality programs based on these measures. Commenters also noted that the Department's data suggested that approximately 93% of cosmetology programs would fail the proposed rule. Some commenters stated that protecting the cosmetology sector is essential because these workers provide critical services for weddings, graduations, job interviews, and other celebrations. Other commenters stated that cosmetology programs provide critical preventative health services that, without them, would have adverse consequences for society.

Many commenters also noted that this final rule could cause workforce shortages in essential service industries and create negative ripple effects on small businesses, local economies, and community services due to a shrinking pipeline of licensed professionals. Commenters further cited the effects of cosmetology program closure on unemployment and local communities and emphasized the inability of businesses to fill in-demand jobs if cosmetology and massage therapy programs and programs close. They also indicated that unemployment would increase from students who would otherwise have found jobs after attending these programs and because employees from these schools would lose their jobs. Commenters expressed the importance of protecting these programs and personal anecdotes about the success they have achieved by attending a cosmetology program.

Discussion: The Department appreciates the extensive feedback from commenters regarding the importance of Federal student financial assistance. The Department's intent is not to reduce access to high- quality programs and career pathways. The purpose of the earnings premium measure is to ensure that students are not left worse off financially after completing a program. Students who attend programs that do not support improved earnings are often stuck with debt and little ability to pay it off, resulting in long-term financial challenges for those students.

The Department has estimated the effects of the final rule on all types of programs, including specific analyses on the estimated impacts on cosmetology programs. Overall, we note that fewer students are anticipated to attend failing programs under this regulation relative to the current gainful employment regulation (Table 5.12). Regarding cosmetology programs, we note that compared with the current regulation, fewer cosmetology and massage therapy programs will fail the earnings test under the final rule (Tables 5.17, 5.18, 5.19, 5.20, and 5.28). Fewer of these programs are expected to fail the earnings test under the final rule because it measures earnings a year later than the current rule (4th year instead of 3rd year after completion) and it measures the median earnings of working individuals only (whereas the current rule measures the earnings of all completers regardless of whether they are working).

As described in the “Earnings of Program Completers--Use of IRS Data”, “Department Authority (Including GE and Quality Assurance Authority)”, and “Orderly Program Closure” sections, the Department has included certain provisions to mitigate the disproportionate impact the rule has on certain types of programs. First, the final rule amends the accountability framework so that certain programs are exempt from the earnings test if they did not receive Federal student loans for the five award years prior to the earnings premium calculation. Many types of

programs, including certain cosmetology programs, will be exempt from the earnings test due to this exemption (Table 5.27). Second, the final rule includes a new provision that allows failing programs to voluntarily remove themselves from the Federal student loan program after the first year they fail the accountability framework. In return, these programs preserve their Pell Grant eligibility in future years. Third, we amend the final rule to include a provision that delays the accountability framework for certain types of programs that are linked to predominantly tipped occupations.

Furthermore, as discussed in the Regulatory Impact Analysis, this regulation is estimated to cost $1.5 billion in Direct Loan cohorts 2027 to 2036 and $8.8 billion in Pell Grants in FYs 2027 to 2036 due to the higher amount of financial aid that will be available to students as a result of this regulation. Commenters mistakenly believe the regulation is removing financial aid from programs, when in reality, certain types of programs will receive a much greater amount of financial aid as a result of this regulation.

Ultimately, the Department's analysis and these included provisions suggests that the commenters' assertions about the harmful effects of this regulation are misguided: they incorrectly believe the rule is harming certain types of programs--including cosmetology programs, religious studies programs, and others--when in reality, this rule is often beneficial to those programs because fewer are expected to fail relative to the baseline policy. That said, the rule continues to hold all types of programs accountable, regardless of sector or credential level, to a fair and consistent accountability framework. The Department views this as critical because this framework helps protect students from programs that consistently deliver low-earning outcomes for their students.

In response to the many commenters who expressed concern about the rule's specific impact on the cosmetology sector, the Department clarifies that the final regulation only impacts cosmetology programs that participate in the Federal student loan program. Many cosmetology programs will not be impacted by the rule because they operate outside of the Federal student loan program. While precise data on the number of these programs is scarce, one study found that approximately 86 percent of cosmetology programs in Texas operated outside of the Federal student loan program.\11\ While this analysis is for a single State, it provides suggestive evidence that many cosmetology programs will be unaffected by the rule. Given this, the Department does not believe the commenters' assertions about the rule may result in workforce shortages in the cosmetology sector.

\11\ Cellini, S.R., & Onwukwe, B., (2022). Cosmetology Schools Everywhere: Most Cosmetology Schools Exist Outside the Federal Student Aid System. Washington, DC: PEER Center. www.american.edu/ spa/peer/upload/peer_cosmetology_b.pdf.

Changes: None.

Comments: Hundreds of commenters noted that the final rule's earnings test will have a large impact on religious studies and theology programs. Commenters pointed to the Department's analysis (Table 3.16 from the NPRM) showing that a large share of religious studies programs are estimated to fail the earnings test. Commenters argue that it is inappropriate to measure these programs based on their graduates' earnings because they are not intended to provide high earnings for their graduates but rather aim to achieve important spiritual and societal benefits. Some commenters requested that programs in religion, theology, and ministry studies be entirely excluded from the earnings premium measure.

The commenters argued that the income levels for religious programs are relatively low, at least during the first few years after graduation, but students enter faith-based programs knowing that they are accepting lower financial compensation in order to pursue religious service. One commenter pointed out that yeshivas do not participate in the Direct Loan program and therefore do not contribute to the problem of unsustainable student debt, which is the problem that the WFTCA was intended to address. The commenter further argued that the concern for such institutions is not the loss of Direct Loan program access, but rather the loss of Pell Grant funds.

Some commenters noted that many theology and religious studies programs only receive Federal Pell Grants and do not participate in the Federal student loan program. These commenters argued that it would be unfair to remove these programs' eligibility for Pell Grants because they do not participate in the Federal student loan program.

Discussion: The Department acknowledges the rule proposed in the NPRM would have had a significant impact on religious programs. However, as described in the “Department Authority (Including GE and Quality Assurance Authority)” section below, the Department is amending its regulations to exempt an institution's programs from the administrative capability penalty if the institution has not participated in the Direct Loan program for the five most recently completed award years, and to similarly exempt a program if an institution voluntarily agrees to forego disbursing Direct Loans to students in that program for at least five years. This provision will allow low-earning outcome programs to continue receiving Federal Pell Grants while preventing students in those programs from borrowing Direct Loan funds that they would likely experience difficulty repaying.

Many institutions with religious missions do not participate in the Direct Loan program, and the Department's estimates show that this provision will likely reduce the regulation's impact on undergraduate students attending such institutions and programs. Specifically, the Department estimates that the final rule will have roughly half the impact on students and title IV, HEA program funds disbursed to religious programs relative to the impact of the current regulation (Table 5.18 and 5.19). Ultimately, the final rule is expected to benefit the religious sector, as fewer students in religious programs will be negatively impacted by the final rule relative to the current baseline.

Changes: None.

Comments: Hundreds of commenters urged the Department to allow institutions to demonstrate a program's value based on a broad set of factors rather than solely relying on graduates' earnings. Commenters recommended a variety of alternative metrics, such as program completion rates, transfer rates, job placement rates, employment rates, loan repayment rates, long-term earnings growth, business ownership rates, licensure pass rates, default rates, debt-to-earnings ratios, and levels of student satisfaction.

Discussion: The Department declines the suggested proposals. The Department believes the accountability framework should rely on metrics that are standardized, consistently available across all programs, and derived from reliable administrative data sources. At present, nationally consistent data on long-term career progression, transfer outcomes, business ownership among graduates, student satisfaction, patient outcome measures, and lifetime earnings are not uniformly available across institutions or programs.

Furthermore, the Department agrees that many of the alternative metrics cited by commenters, including debt and repayment measures, completion rates, and licensure attainment, all

provide meaningful information on program quality. The Department intends to continue publishing this type of data through the STATS collection, which will provide important information for prospective students as they consider enrolling in higher education. However, the WFTCA specifically requires the Department to consider the earnings outcomes of degree and graduate programs. Congress did not include other metrics, such as job placement rates or licensure pass rates, in the accountability framework authorized under the WFTCA.

Changes: None.

Comments: Many commenters expressed concern that the earnings test will penalize programs that have low earnings but are in valuable fields. Commenters specifically pointed out the social value provided by early childhood education programs, K-12 education programs, special education programs, social work programs, counseling programs, museum and library science programs, religion/religious studies programs, health care programs, career & technical education programs, fine arts programs, and other types of programs.

Commenters expressed that these fields provide value to students beyond their earnings that benefit society through the “social returns” these programs offer. Commenters recommended the Department exempt these fields of study from the earnings test or that the Department create “field specific benchmarks” that would lower the earnings test threshold for certain fields that provide higher levels of social returns. Commenters also highlighted that many of these socially valuable fields are already facing worker shortages, and that the proposed regulation would worsen these conditions.

A few other commenters argued that a student may obtain a degree in one field and use it for a job in a different field. These commenters emphasized the broader value of higher education, noting that degrees can open doors to various career paths and that the skills and experiences gained are often transferable across industries.

Discussion: The Department recognizes that postsecondary education can create benefits beyond higher earnings and that some programs that will be heavily impacted by the earnings test may face worker shortages. The Department also notes, however, that students need sufficient earnings to afford and repay their Title IV student loans, which makes the earnings test in the final rule an appropriate policy for student loan access. While the loss of title IV, HEA program assistance may lead to closure of programs in high demand fields or those that face workforce shortages, the Department is concerned that these fields and credentials do not produce adequate earnings to support the growing student debt. The Department believes that institutions of higher education, employers, and State and local policymakers have the opportunity to respond to the effects of the earnings premium measure by creating or modifying programs so that they lead to higher earnings, or by reforming employee pay policies or credentialing requirements.

The Department is aware that the proposed earnings test will have a larger impact on certain fields and has provided an extensive analysis in the RIA (Tables 5.17, 5.18, 5.19, and 5.20) of which fields may be most affected. The Department's analysis shows that bachelor's degrees in the fine arts are estimated to fail the earnings test at relatively high rates. However, as many commenters noted, undergraduate students enrolled in Business/Management, Health, Vocational, and Technical programs all have lower fail rates (student-weighted) relative to the baseline policy (Table 5.18).

Furthermore, the commenters who argued that the Department should measure the “social returns” of programs provided no basis, data, or recommendation for how the social returns could be fairly and consistently measured. Lacking the data and methodology necessary to perform such an evaluation, the Department notes that any attempt to classify the social returns of programs would be arbitrary. For example, the Department does not have the ability to determine if electrical engineers have more or less “social value” in society than musicians.

Lastly, the Department does not have the statutory authority to set lower or different earnings benchmarks for the programs that commenters mentioned based on the potential social returns that these programs may offer. Congress provided specific statutory language on the way program earnings outcomes would be used to determine eligibility to title IV, HEA student loan programs. Congress did not provide any indication that the Department should also consider other factors, such as the “social value” of certain programs.

Regarding commenters' assertion that programs can often set up an individual for a variety of different career paths, we agree that this can also be a source of value for graduates. This point has long been acknowledged in the Department's CIP-SOC crosswalk, where many programs are linked with a variety of different occupations and career paths. The Department also acknowledges that some occupations and career paths may have higher earnings outcomes than others, despite those occupations being linked to the same program. However, the Department contends that the commenters' concern is already addressed in the regulation. The earning premium metric includes all program graduates, regardless of the particular career path they enter. Then, the Department calculates each program's earnings value based on the median earnings of its graduates, thereby reducing the extent that outliers in high-paying or low-paying career paths have on the overall median earnings value. If programs are routinely leading students to enter into occupations that are unrelated to their field of study, the Department is concerned about the potential value of these programs and wants to ensure those graduates are included in the program's median earnings measure.

Changes: None.

Comments: Commenters expressed concern that the earnings test would result in programs being judged during anomalous economic periods, like during the COVID-19 pandemic, when wages were unusually low. Some commenters expressed that this would particularly harm cosmetology programs, music programs, and theater programs. This is because many barber shops, massage therapy centers, theaters, and performing arts centers were forced to close or suspend services during COVID-19, negatively impacting the earnings of their graduates. Ultimately, commenters expressed concern that the regulation would unfairly penalize certain types of programs for factors that were outside of the institution's control.

Discussion: The earnings test in this final rule includes several features that will mitigate the effects the commenters raised. First, programs lose eligibility if they fail in two out of three consecutive years, which reduces the significance of a single year in the test. Second, the high school and bachelor's degree earnings threshold is aligned with the year that program graduates' earnings are measured. If earnings are depressed across the economy, then the earnings used to calculate median earnings for the test and the earnings of programs completers will similarly be depressed. Third, for small programs, the earnings of program graduates are based on completers from multiple years (see the cohort aggregation process described in the “Minimum Number of Completers, Privacy, and Statistical Reliability”

section). Because many cosmetology and music programs are small, the earnings premium measure may be based on the earnings of graduates from multiple different years, smoothing the effect that one anomalous year has on the overall earnings measure. Fourth, the first year of the earnings test will primarily be based on completers who graduated during the 2021 award year, with earnings measured during the 2025 calendar year. Thus, the earnings period used to evaluate programs often occurred well after the conclusion of the COVID-19 pandemic. Collectively, these features will likely prevent programs from failing the earnings premium metric due to one year of anomalous data, similar to what occurred during the COVID-19 pandemic.

Changes: None. Other General Comments

Comments: A few commenters argued that low wages in fields like massage therapy, cosmetology, and other skilled trades are primarily the result of employer pay practices, not the quality of educational programs. The commenters suggested that the Department should focus on why employers underpay skilled workers, rather than penalizing educational institutions or restricting student access to financial aid.

Discussion: The Department's regulatory scope is limited to educational institutions and the administration of Federal student financial assistance. The Department does not have authority over private sector wage-setting or employer compensation practices and therefore cannot adopt the commenters' suggestion.

Changes: None.

Comments: Some commenters argued that accountability rules should focus on fixing structural barriers that limit students' employment outcomes rather than penalizing academic programs for factors beyond their control. The commenters recommended a variety of things, including requiring universities to establish formal workforce agreements with government agencies, maintain dedicated staff responsible for securing paid public sector internships, and provide transparent data showing the different career pathways and job placement processes for career changers compared with students who enter programs with existing professional networks.

Discussion: The Department does not adopt these recommendations. These proposals extend beyond the Department's current statutory authority and the scope of this final rule.

Changes: None.

Comments: A few commenters argued that a person may obtain a degree in one field and use it for a job in a different field. Commenters emphasized the broader value of higher education, noting that degrees can open doors to various career paths and that the skills and experiences gained are often transferable across industries.

Discussion: Programs can often set up an individual for a variety of different career paths. As discussed above, the Department of Labor's CIP-SOC crosswalk specifically links academic programs with occupations, and in many cases links several occupations to a single program type. While students from the same program may choose different career paths, the Department believes that including all students in the program earnings calculation is necessary to appropriately determine program value. The Department is concerned that excluding certain students from program completers list based on the career path they enter into could result in gamesmanship by colleges, as they could potentially skirt the accountability framework by directing students into certain career pathways. Furthermore, if programs are routinely leading students to enter into occupations that are unrelated to their field of study, the Department is concerned about the potential value of these programs. Ultimately, the Department believes the commenters' suggestions would leave students unprotected from programs with low- earning outcomes.

Changes: None.

Comments: Several commenters suggested the Department compare a student's earnings before and after completion of a program to assess whether the program has provided economic value. Commenters argue that programs that improve their students' earnings outcomes relative to their pre-enrollment earnings should be exempt from the accountability framework regardless of whether the median earnings of program graduates exceeds the earnings threshold for the program. These commenters argue that this is a more appropriate comparison than between program graduates and the individuals surveyed on the ACS.

Discussion: The Department declines to adopt this approach for several reasons. The first reason is feasibility: Not all students have pre-enrollment earnings. For example, many traditional college students, especially dependents who recently graduated from high school, do not have pre-enrollment earnings. Second, for the subset of these students who do have pre-enrollment earnings, it is likely that these earnings occurred while the student was enrolled in high school, which would greatly bias the measure of pre-enrollment earnings. Third, a significant body of economic research finds that students' earnings in the years leading up to college enrollment are downwardly biased (i.e., “Ashenfelter's Dip” \12\), providing an improper counterfactual to judge graduates' post-enrollment outcomes. Fourth, this proposal is not aligned with what Congress requires in the WFTCA. Congress instructed the Department to use earnings benchmarks based on working high school and bachelor-degree holders from a certain age and in the same geography; Congress did not contemplate pre-enrollment earnings as the benchmark. For these reasons, the Department rejects the commenters' proposal to use pre-enrollment earnings as the earnings benchmark.

\12\ Heckman, J.J., & Smith, J.A., (1999). The Pre-Program Earnings Dip and the Determinants of Participation in a Social Program: Implications for Simple Program Evaluation Strategies. NBER Working Paper No. 6983. www.nber.org/system/files/working_papers/ w6983/w6983.pdf.

Changes: None.

Comments: Several commenters called for greater accountability and transparency regarding tuition and program costs and urged the Department to address the root causes of rising education costs rather than restricting financial aid or access to programs.

Discussion: With extremely limited exceptions,\13\ the Department does not have the statutory authority to regulate tuition and program costs. The HEA stipulates the amount of title IV, HEA program funds an eligible student can receive, not how much an institution can charge.

\13\ In the “Workforce Pell” provisions of the WFTCA, Congress established a “value-added earnings” framework applicable only to eligible workforce programs that would limit the tuition and fees that could be charged for such programs based on the earnings of graduates. See 91 FR 29254. Congress did not establish a similar framework for other programs.

Changes: None. Legal Authority/Department Authority Department Authority (Including GE and Quality Assurance Authority)

Comments: As described in the “Consequences for Failure to Demonstrate Administrative Capability” section below, many commenters objected to the loss of title IV, HEA eligibility for all of an institution's low-earning outcome programs if the institution fails the new administrative capability requirement at Sec. 668.16(t),

arguing that the WFTCA specifically only pertains to participation in the Direct Loan program and does not reference eligibility for other title IV, HEA programs.

Additionally, several commenters expressed concern about the applicability of these regulations to programs or institutions that exclusively serve students with documented learning differences-- Specific Learning Disabilities and Autism Spectrum Disorder (ASD)--all of which are considered disabilities under Section 504 of the Rehabilitation Act of 1973. The commenters pointed to well-documented differences in labor market outcomes for individuals with disabilities versus those without such disabilities. The commenters also noted that as a result of these documented earnings gaps, the proposed accountability framework may negatively impact the students who enroll in such programs and institutions solely on the basis of the students' disabilities. The commenters requested that if a program is offered by an institution that enrolls 100 percent of its students with such disabilities, the Department should exclude such programs offered by those institutions from the accountability framework.

Discussion: Commenters make a strong argument that Congress did not intend for such programs to lose eligibility for title IV, HEA programs other than the Direct Loan program. Therefore, Department finds their assertion compelling that the application of the administrative capability test under 34 CFR 668.16(t) to institutions that do not participate in the Direct Loan program is inappropriate. The Department's intent in adopting the administrative capability provision during negotiated rulemaking was to improve program integrity by addressing institutions whose results suggest a more systemic set of concerns which extend beyond outcomes for individual programs. However, this argument must be placed in relation to the intent of Congress, which chose to apply the earnings accountability metric to non-GE programs participating in the Direct Loan program, rather than institutions. As a result, the Department acknowledges the likely intent of Congress not to apply sanctions to institutions that have not participated in the Direct Loan program for an extended period of time and will exempt an institution from the administrative capability provision under 34 CFR 668.14(h) if it has not participated in the Direct Loan program for the five most recently completed award years prior to the year during which the earnings premium measure is calculated. Similarly, the Department will exempt a specific program from the administrative capability penalty if, shortly after the first time that program fails the earnings premium measure, the institution commits to preventing students from borrowing Direct Loan funds for the program for at least five years under 685.203(m)(2). The metric would still be calculated for programs in these situations, but the programs would not be subject to a loss of eligibility for title IV, HEA programs other than the Direct Loan program due to the new administrative capability test in 34 CFR 668.16(t). The Department chose a five-year period because that time period is longer than the published length of most postsecondary programs. Using a period of this length is intended to identify institutions that have made a long-term commitment to offering postsecondary programs without the support of the Direct Loan program, such that in most cases the most recent cohort of students in the institution's programs graduated without the ability to borrow. The Department seeks to avoid the possibility of institutions temporarily suspending Direct Loan participation for the purpose of avoiding the consequences of the administrative capability penalty.

We agree with the commenters that programs at institutions exclusively serving students with specific learning disabilities and related disabilities under Section 504 of the Rehabilitation Act of 1973 should be treated differently under this final rule. We believe that, without this change, the regulation could violate Section 504 of the Rehabilitation Act of 1973, which states that “no otherwise qualified individual with a disability in the United States . . . shall, solely by reason of her or his disability, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving federal financial assistance.” Therefore, we will exempt programs at such institutions from the program eligibility consequences of these regulations if they only enroll students with a Specific Learning Disability or Autism, as defined under the Department's Individuals with Disabilities Education Act, or IDEA regulations. Similar to the treatment of institutions not participating in the Direct Loan program, the Department would still calculate the metric for programs at these institutions, but the programs would not lose eligibility for any title IV, HEA program as a result of the earnings premium measure.

For similar reasons, the Department notes that it already excludes from inclusion in the earnings premium measure, Comprehensive Transition and Postsecondary (CTP) programs that serve students with intellectual disabilities. These programs are approved by the Department to help students with intellectual disabilities continue their education, build independent living and career skills, and prepare for competitive employment. These final regulations do not change that exclusion.

Changes: We have made two changes in response to the concerns described above. In 34 CFR 668.14(h) we added new paragraphs (3) and (4). In paragraph (3), we specify that a low-earning outcome program at an institution that is not participating in the Direct Loan program and that has not participated in the Direct Loan program for at least the five most recently completed award years shall not be subject to an automatic loss of title IV, HEA program eligibility. Additionally, we provided in that paragraph that a similar exception applies if the institution agrees not to permit students to borrow Direct Loan funds in that program under the provisions in 34 CFR 685.203(m)(2). In paragraph (4) we explain the conditions for such agreement, where an institution is required to agree within 120 days of the Secretary's determination that the program has failed for the first time, to add an amendment to the institution's program participation agreement disallowing borrowing in the program for at least five award years prospectively. The paragraph also explains that the exception will remain in effect for as long as the institution agrees to prevent Direct Loan borrowing in the program.

We also added a new paragraph (b) to Sec. 668.601 that exempts institutions from the program eligibility consequences of 34 CFR Subpart S if they only enroll individuals with documented Specific Learning Disability or Autism, as defined under 34 CFR 300.8. Master Calendar and Effective Dates

Comments: Some commenters argued that the July 1, 2026, effective date of the final rule violates the HEA's master calendar requirements, due to the fact that the final rule was not published by November 1, 2025. Several of these commenters stated that, insofar as the WFTCA provides an implied waiver of the HEA's master calendar requirements, that this waiver does not extend to portions of the rule that impose the earnings accountability

framework on certificate programs below the graduate level, as such programs were not addressed in the WFTCA.

Discussion: As discussed fully in the “Authority for this Regulatory Action” section, above, the WFTCA implicitly provides a limited waiver of the HEA's master calendar requirement, so far as it is necessary to promulgate regulations that give effect to provisions of the WFTCA that must take effect on July 1, 2026. See Dorsey, 567 U.S. 260, 274 (stating that an agency's compliance with an existing statute “cannot justify a disregard of the will of Congress as manifested either expressly or by necessary implication in a subsequent enactment” (quoting Great Northern R. Co., 208 U.S. 452, 465).

The WFTCA was enacted on July 4, 2025, and directs the Department to implement roughly a dozen provisions by July 1, 2026. Many of these provisions are not self-executing and could not be implemented absent the Department promulgating regulations to provide details for institutions on how to comply with the WFTCA. Congress gave the Secretary discretion within the WFTCA to implement the provisions impacting the title IV, HEA programs and knew that its commands were not self-executing when directing the Secretary to take action. Congress expected the Secretary to act via rulemaking before July 1, 2026, to enable these provisions to actually go into effect. Therefore, Congress's command to implement certain provisions of WFTCA by July 1, 2026, functions as an implicit waiver of the HEA's master calendar requirements for rulemaking actions taken to implement those provisions in regulation.

The Department agrees with those commenters who stated that the WFTCA's implied waiver of the HEA's master calendar requirements does not extend to the regulations outside of those necessary to implement the provisions of WFTCA. Those provisions would normally take effect on July 1, 2027. However, the Secretary is designating such regulatory provisions as one that an entity subject to the provision may, in the entity's discretion, choose to implement prior to the July 1, 2027, effective date of such regulations.

Changes: None. First Amendment and Religious Freedom Restoration Act Concerns

Comments: Several commenters stated that they believe that the application of the earnings accountability framework to religious degree programs violates the requirements of the First Amendment and the Religious Freedom Restoration Act (RFRA), with such commenters alleging that the application of the earnings accountability framework to religious degree programs will substantially burden the exercise of students seeking to pursue careers in religious fields, but will not be the least restrictive means of furthering a compelling government interest. These commenters stated that the application of the earnings accountability framework to religious degree programs will substantially burden the religious exercise of individuals seeking to pursue careers in religious fields by potentially precluding their ability to receive title IV, HEA funds to attend the programs necessary to prepare for such careers. Several commenters suggested that this burden will be substantial because of the many religious occupations that are generally low-paying in nature.

Some commenters further stated that the proposed requirement that as a component of administrative capability an institution must demonstrate that at least half of the institution's recipients of title IV, HEA funds and at least half of the institution's total title IV, HEA funds are not from low-earning outcome programs, constitutes an additional substantial burden on religious exercise. These commenters further state that, because of the low-paying nature of many religious occupations, institutions where a large percentage of students are enrolled in programs designed to prepare individuals for employment in religious occupations will be disproportionately likely to lose eligibility to participate in all title IV, HEA programs. These commenters stated that this will disincentivize institutions from offering programs that prepare individuals for employment in religious occupations, restrict the ability of individuals to obtain such employment, and harm religious organizations by reducing the number of individuals who are qualified to fill certain positions within those organizations.

Several commenters further argued that the Department has not adequately demonstrated that application of the earnings accountability framework for religious programs is the least restrictive means of furthering a compelling government interest. One commenter stated that the NPRM lacked sufficient analysis of the burden being imposed on the exercise of religion, despite acknowledging the substantial impact on religious programs that the rule would have. This commenter and others stated that they believed that the Department failed to adequately consider alternative earnings accountability measures for religious programs that they contend would impose a less severe burden on religious exercise, such as allowing alternative earnings appeals for religious programs.

Discussion: The Department has considered the impact the Rule will have on religious institutions and programs and on religious exercise. Congress provided broad protection for religious liberty from the federal government through RFRA. 42 U.S.C. 2000bb et seq.; see also Little Sisters of the Poor Saints Peter & Paul Home v. Pennsylvania, 591 U.S. 657, 680(2020). RFRA provides that the federal “Government shall not substantially burden a person's exercise of religion even if the burden results from a rule of general applicability” unless the burden is “in furtherance of a compelling governmental interest and is the least restrictive means of furthering” that interest.” 42 U.S.C. 2000bb-1(a)-(b). A general rule of general applicability “substantially burdens” religious exercise when it forces someone to act in a way that violates his religious beliefs or denies him “`rights, benefits, and privileges enjoyed by other citizens'--even if `the challenged Government action would interfere significantly with private persons' ability to pursue spiritual fulfillment according to their own religious beliefs.” Real Alternatives, Inc. v. Sec'y Dep't of Health & Hum. Servs., 867 F.3d 338, 357 (3d Cir. 2017) (quoting Lyng v. Nw. Indian Cemetery Protective Ass'n, 485 U.S. 439, 449 (1988)); accord Hobby Lobby Stores, Inc. v. Sebelius, 723 F.3d 1114, 1138 (10th Cir. 2013) (the law substantially burdens religious exercise if it “(1) requires participation in an activity prohibited by a sincerely held religious belief, (2) prevents participation in conduct motivated by a sincerely held religious belief, or (3) places substantial pressure on an adherent . . . to engage in conduct contrary to a sincerely held religious belief.” (internal quotation marks omitted, alteration in original)), aff'd sub nom. Burwell v. Hobby Lobby Stores, Inc., 573 U.S. 682 (2014)).

The Department does not believe the Rule substantially burdens religious exercise. Applying the low earning outcome test to religious programs that accept Direct Loans does not require anyone to participate in an activity that violates or places substantial pressure on his or her religious beliefs. While many commenters pointed out that students who graduate from religious programs take jobs that often have lower salaries, none alleged it would violate a religious belief to accept a higher salary.

And even if “[t]raining [ ] to lead a congregation is an essentially religious endeavor,” Locke v. Davey, 540 U.S. 712, 721 (2004), the government does not have to fund that training, see id. at 725. While the final rule may cause a small number of programs to become ineligible to receive federal student assistance--thus potentially making it more difficult or costly for some to enter these programs--it will not prevent students who are motived by religious belief to enter into religious programs from doing so. Students will be able to use Pell Grants to participate in many programs even if some lose Direct Loan eligibility.

To the extent that this could constitute a substantial burden on religious practice, the Department believes it is justified by a compelling governmental interest. As discussed, the federal government has a strong interest in ensuring that federal student aid goes to programs that result in students earning more than they would have without having attended the program. This is true regardless of the subject matter of the program or the religious or non-religious affiliation of the school.

Finally, the rule is narrowly tailored because it only applies to programs that accept Direct Loans, which as stated, many religious programs do not. This ensures that these programs can continue to operate as they have been, with accepting Pell Grant funds, while also ensuring that those programs that receive Direct Loans lead to higher earnings for their students. Commenters did not demonstrate that all religious programs would fail the accountability framework in the regulation. The Department's analysis suggests that fewer than 4 percent of undergraduate students in religious/theology programs will be impacted by our regulation, and this represents a large reduction in impact relative to the current regulation (3.9 percent vs. 7.8 percent) (Table 5.18). While the Department does acknowledge that graduate students in religious/theology programs will be slightly more impacted under this rule relative to the current baseline, only approximately 1 percent of such students are estimated to attend failing religious/ theology graduate programs (Table 5.18) under the final rule.

The Department also considered the First Amendment implications of the rule on religious programs and institutions and does not believe the rule violates religious liberty. The First Amendment provides “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.” U.S. Const. amend. 1. This amendment offers a more limited protection than RFRA. As discussed above, the Department does not believe the rule violates RFRA because it does not substantially burden religious exercise, and, even if it did, the rule advances a compelling government interest and is narrowly tailored to meet that interest.

The First Amendment does not require the Department to provide funding for devotional programs or religious degrees for ministry. Locke v. Davey, 540 U.S. 712, 725 (2004). Rather, it prohibits the Department from denying funds to religious programs or institutions solely because of their religious nature. Trinity Lutheran Church of Columbia, Inc. v. Comer, 582 U.S. 449, 462-63 (2017). Religious programs and institutions should be allowed to “compete on an equal footing” for a government benefit. Id. at 463.

That is exactly what the Rule allows. Religious and non-religious programs and institutions alike are eligible to participate in the title IV Program. All programs and institutions that participate in the title IV program are subject to the low-earnings test. Should a program fail the test and lose Federal student aid eligibility, it will not be because of its religious nature. It will be because the earnings of program graduates fail in the same way as a secular program that fails.

Changes: None.

Comments: Some commenters who raised religious liberty concerns (both under the First Amendment and RFRA) urged the Department to apply an alternate appeals process for religious institutions. They suggested that using ministry-related CIP codes and Bureau of Labor Statistics (BLS) wage data would more accurately and equitable reflect ministry programs while being consistent with Congressional intent and administratively feasible for the Department.

Discussion: The Department declines to apply an alternate earnings appeal for religious programs or institutions. As discussed above, the Department includes a provision that will exempt any program that has not accepted Federal direct loans for at least five award years prior to the enactment of the WFTCA. The Department's analysis indicates that this will exempt approximately 600 religious programs from the earnings test, making an alternative appeals process unnecessary for many such programs. The Department also declines to create an alternative appeals process for the remaining programs for many of the reasons already discussed.

Changes: None. Loper Bright Concerns

Comments: One commenter argues that the Department lacks statutory authority to apply the earnings accountability framework to all credential levels. The commenter states that the only statutory outcome requirements GE programs are completion and placement rates set forth in HEA Sec. 481(b) applicable to those short-term programs and that the WFTCA only explicitly applied the earnings accountability framework to for undergraduate degrees, graduate degrees, professional degrees, and graduate certificates and only intended for such programs to lose eligibility to participate in the Direct Loan Program. Therefore, the commenter asserts that the proposed regulations are in conflict with the Supreme Court's ruling in Loper Bright and are not entitled to deference by a reviewing court.

Discussion: The Department disagrees with the commenter's contention that the Department lacks statutory authority to extend the earnings accountability framework to all sectors and credential levels, including undergraduate nondegree programs. The Department has clearly identified its statutory authority for the proposed regulations, more fully discussed in the “Authority for This Regulatory Action” section of this rule.

The Department further disagrees with the commenter's contention that the proposed regulations violate the standard established by Loper Bright. While the Department agrees that Section 454(c) of the HEA, as added by the WFTCA, only explicitly applied the earnings accountability framework to undergraduate degrees, graduate degrees, professional degrees, and graduate certificates, the Department does not believe that this precludes the implementation of a universal earnings accountability framework across all credential levels, because it possesses separate statutory authority to apply this framework to programs that “lead to gainful employment in a recognized profession.”

As previously discussed, in challenge the Department's previous FVT/GE rule, a post-Loper Bright court stated that, through the HEA, the Congress had clearly granted the Secretary to promulgate rules necessary for the administration of the title IV, HEA programs: “the Supreme Court in Loper Bright recognized that Congress may `delegate[ ] particular discretionary authority to an agency' by leaving it with `flexibility' through terms `such as `appropriate' or `reasonable' ” and that the HEA confers such authority [on the

Secretary] by including the additional specific direction to `prescribe such regulations as may be necessary to provide for . . . any matter the Secretary deems necessary to the sound administration of the financial aid programs[.]' ” American Assoc. of Cosmetology Sch. *6 (citing 20 U.S.C. 1094(c)(1)(B); 1099c).

Section 481(b) of the HEA provides that certain non-degree programs are eligible for title IV, HEA program funds if they “prepare students for gainful employment in a recognized profession.” However, nowhere in the HEA is the term “gainful employment” defined. In Loper Bright the Supreme Court held that when the “best reading of the statute is that it delegates discretionary authority to an agency,” then “the role of the reviewing court” is to “recogniz[e] constitutional delegations, fix[ ] the boundaries of the delegated authority, and ensur[e] the agency has engaged in `reasoned decision making' within those boundaries.” Loper Bright at 371. Because the term “gainful employment” is undefined, and because courts have found that the HEA confers upon the Secretary authority to promulgate regulations that Secretary deems necessary to the sound administration of the financial aid programs, the Department believes that the “best reading' of the HEA is that Congress intended to grant the Secretary discretion to promulgate regulations which interpret what “gainful employment” means and such definition is entitled to deference so long as the Secretary engages in “reasoned decision making.” The Department believes that that requirement has been more than satisfied, as the Department has offered a multitude of bases for imposing a universal earnings accountability framework, most importantly, ensuring that students who complete GE programs obtain employment that is truly “gainful,” insofar as it leads to such students obtaining better economic returns than similarly placed individuals who received no postsecondary education.

Changes: None. Title IX Exemption

Comments: Some commentators urged the Department to create an exemption for religious programs or institutions similar to the Title IX exemption the Department provides for faith-based institutions. They claim that the Title IX exemption provides a workable model for the Department to create an exemption from the earnings test for religious institutions and programs.

Discussion: The Department declines to adopt an exemption for religious institutions and programs similar to that provided by the Department's Title IX regulations. 34 CFR 106.12 provides that an “educational institution which is controlled by a religious organization” does not need to comply with Title IX to the extent doing so “would not be consistent with the religious tenets of such organization.” 34 CFR 106.12(a). This exemption applies when the organization submits to the Department a statement explaining precisely which provisions of Title IX conflict with a specific religious tenant.

Title IX's prohibition on sex discrimination, though, is different in kind than the rule's earnings outcome requirement. No specific provision of the rule compels any religious organization to violate its religious tenants in order to continue receiving title IV, HEA funding. The burden, if any, on religious exercise comes from the outcome of the earnings test, not from the complying with the test. For this reason, the Title IX exemption does not create a workable framework for an exemption under this rule.

Changes: None. Procedural Concerns

Comments: A few commenters argued that the Department provided an insufficient amount of time to submit comments on the proposed rule. Several of these commenters argued that 30-day comment period did not allow institutions and other affected stakeholders a meaningful opportunity to analyze the proposal and provide informed feedback, with one commenter noting that some (but not all) previous rulemakings which dealt with gainful employment regulations utilized longer comment periods.

Additionally, a few commenters challenged the composition and conduct of the negotiated rulemaking committee. One commenter took issue with the qualifications of negotiators chosen to represent specific constituencies. Another commenter took issue with the fact that civil rights groups that represent students were not given a separate, dedicated place on the committee. Finally, two commenters argued that the negotiated rulemaking committee did not actually reach consensus, because one negotiator abstained from the final consensus vote and, with the commenters claiming that the negotiator stated that she was coerced to do so. Still another argued that no negotiator represented the cosmetology industry, which would be the industry most negatively affected by the proposed regulations.

Discussion: The Department disagrees that the comment period following the NPRM offered stakeholders an insufficient amount of time to submit comments on the proposed rule. As discussed in the “Authority for this Regulatory Activity” section, above, the Congress imposed a very short window of time for the Department to implement those provisions of WFTCA which are required to be given effect beginning on July 1, 2026. Despite these time constraints, the Department has still provided the public opportunity to comment on the proposed regulations for just as long as it did during the 2018 and 2023 rulemakings dealing with accountability metrics and gainful employment issues. Furthermore, the Department notes that, in spite of these commenters' assertion that the comment period was insufficient, over 9,900 comments were submitted regarding the NPRM.

Regarding the composition of the negotiated rulemaking committee, the Department disagrees that any negotiator serving on the committee lacked the competence to do so. Negotiators were chosen by the Department from list of individuals nominated by groups involved in student financial assistance programs, in accordance with the requirements of Section 492(b)(1) of the HEA and all negotiators possessed demonstrated expertise or experience in the relevant topics proposed for negotiations. And, although there was no negotiator specifically from the cosmetology industry, that industry was represented by negotiators for for-profit institutions, and to a lesser extent, community colleges. These negotiators brought up concerns that were specific to the cosmetology industry on several occasions during negotiated rulemaking.

Furthermore, in regard to the composition of the negotiated rulemaking committee, the Department rejects the assertion that the Department acted improperly by not providing a dedicated seat at the table for civil rights groups that represent students. Section 492(b)(1) of the HEA does not require the Department to provide a dedicated seat for that constituency and believes that the interest of that constituency was ably represented by the negotiators who jointly represented both that constituency and legal assistance organizations that represent students.

Finally, the Department rejects commenters' contention that consensus was not reached because one negotiator abstained from the consensus vote. Prior to the vote, negotiators were very clearly informed about the effect of abstaining from the consensus vote. See

Accountability in Higher Education and Access through Demand-Driven (AHEAD) Workforce Pell Committee, Session 2, Day 5, Afternoon, at 15 (statement of Ms. Mack)(Jan. 9, 2026)(“I would like to clarify that I will ask everyone to exhibit their thumb [in] show of consensus. If you are a thumbs up, this means you are in support of the text as we just reviewed. If you are a thumb down, that would mean that you are, in fact, blocking consensus. If you wish to give a sideways thumb, we are going to treat that as abstaining. So, it will not be in support of the text, but it will also not block consensus.”) Furthermore, the Department rejects commenters' assertion that the negotiator who chose to abstain from the consensus vote was the product of coercion. Contrary to commenters' claims, the negotiator who abstained did not state that her decision was coerced, merely that it was made clear that certain bargains for provisions and compromises would be lost if consensus was not reached. See Id. at 17 (statement of Ms. Hoffman). Rather than improper, the Department contends that this statement simply demonstrates the give-and-take nature of the negotiated rulemaking process.

Changes: None. Earnings and Earnings Threshold (Including Responses to Directed Questions) Earnings of Program Completers--Use of IRS Data

Comments: Many commenters asserted that the earnings calculation in the regulation would not be accurate for programs that are designed to train students for occupations that rely on tipped income, cash payments, or freelance work, all of which may go under-reported in Federal tax data. Many commenters argued that the Department should apply an earnings multiplier (whereby the Department increases the actual reported median earnings to account for unreported or under- reported income) to cosmetology programs and other programs where graduates often receive a significant portion of their earnings through tips, as a way to account for this potential under-reporting. Some commenters asserted that most tipped income was not included in Federal tax data at all, arguing that the earnings test would therefore be biased against cosmetology and other programs that prepare students for occupations that customarily and regularly receive tips.

Other commenters argued that cosmetology programs should not receive an earnings variance or exemption from the accountability framework. These commenters explained that all tipped income is required to be reported by law, and if any under-reporting occurs, based on past research, it is a relatively small percentage--usually around 8 percent of income, according to one study.\14\ For those reasons, commenters argued that these programs should not be treated differently from other types of programs, stating that they should not receive an earnings multiplier, exemption, or any other special treatment.

\14\ Cellini, S.R., & Blanchard, K.J., (2022). Hair and Taxes: Cosmetology Programs, Accountability Policy, and the Problem of Underreported Income. Washington, DC: PEER Center. www.american.edu/ spa/peer/upload/peer_hairtaxes-final.pdf.

A few other commenters argued that tipped income may be more accurately reported by tax filers after the “No Tax on Tips” policy from the WFTCA is implemented. These commenters argued that many individuals working in occupations where workers customarily and regularly receive tips do not currently fully report their tipped income. They also acknowledged that the “No Tax on Tips” provision was passed in the same law as the earnings test, and it may likely change the way that tipped workers report their tips in the future. Other commenters recommended the Department consider a “more comprehensive and equitable evaluation method” for tipped workers, proposing a delay in the implementation of the accountability framework. Noting the challenges currently associated with the reporting of tipped income, commenters specifically requested the Department delay the rule until July 1, 2028, to allow for “sufficient time to address outstanding concerns.”

Discussion: After considering the totality of feedback the Department received on the issue of unreported and under-reported tipped income, the Department has decided to delay the implementation of the accountability framework for certain programs that prepare students for employment in occupations where workers customarily and regularly receive a predominant percentage of their income through tips, in order to use earnings from the tax years when the “No Tax on Tips” policy is in effect, which began with the 2026 tax year.

The Department made this determination based on the following comments and feedback. First, commenters argued that Federal tax data may often not reflect amounts of tipped income customarily and regularly received by certain types of workers.

Conversely, other commenters argued that significant amounts of under-reported tipped income is rare and unlikely to make up a significant share of a tax-filer's total income. However, these commenters still acknowledged that unreported tips may comprise around 8 percent of individuals' total earnings in cosmetology and related occupations. Notwithstanding these issues identified by commenters, the Department continues to believe that the earnings data reported annually by tax-filers to the IRS are the most accurate and comprehensive information available to determine the earnings of individuals.

To address some of the situations identified by commenters and to increase the accuracy of the earnings calculations, the Department is adopting a solution suggested by some commenters: To delay the implementation of the accountability framework for certain programs that train individuals for occupations where workers customarily and regularly receive tips until the earnings of those individuals can be measured after the “No Tax on Tips” policy is in effect. Beginning in the 2026 tax year, the new policy removes the potential incentive that certain tax filers previously faced to under-report or not report tipped income. Because of this, the Department believes the accuracy of the earnings data for workers in tipped occupations is likely to increase starting in the 2026 tax year, further enhancing the precision of the IRS data.

To implement this, the Department determined the types of programs that prepare students for employment in occupations that customarily and regularly receive tipped income. For this determination, the Department used the list of occupations included in the IRS and Treasury final rule listing occupations that qualify for the “No Tax on Tips” policy.\15\ We then limited those occupations to those where tipping is most predominant, meaning that 50 percent or more of tax filers in these occupations reported at least $100 in tipped income. The Treasury Department and the IRS identified occupations listed on the income tax returns (as reported on page 2 of Form 1040 next to the taxpayer's signature) described in the prior sentence as having customarily and regularly received tips based on the percentage of taxpayers who reported at least $100 in

annual tip income within a given occupation as reported on Form 1040. The Department used the threshold of 50 percent because it is unlikely that a program's median earnings value would be significantly affected by occupations where fewer than half of individuals receive tipped income. Then, the Department linked those occupations (defined by 6- digit SOC codes) to programs defined by 6-digit CIP codes.

\15\ 26 CFR part 1. “Occupations That Customarily and Regularly Received Tips; Definition of Qualified Tips.” 91 FR 19026. www.federalregister.gov/documents/2026/04/13/2026-07104/occupations- that-customarily-and-regularly-received-tips-definition-of- qualified-tips.

Ultimately, this process results in 20 fields that are associated with predominantly tipped occupations. These 20 fields are listed in Table 5.22. For programs in these 6-digit CIP codes, the Department will not apply the accountability framework in this regulation until the measurement year(s) for the earnings test includes only year(s) that the “No Tax on Tips” policy is in effect (2026 through at least 2028 under current law).

This change results in at least a one-year delay for affected eligible programs because the first cohort of students included in the earnings test are those who completed during the 2020-21 award year. These students will have their earnings measured under the regulations during tax year 2025--a year before the “No Tax on Tips” policy was in effect. During the second year the Department will calculate the earnings test, the single-year cohort covers students who graduated in the 2021-22 award year, and their earnings will be measured in tax year 2026. This year occurs after the “No Tax on Tips” policy is in effect, so programs with 6-digit CIPs matching those listed in Table 5.22 that have sufficient N-size for a single-year cohort will begin being counted as passing or failing the earnings test in the second round of calculations. However, if the program is small and requires cohort aggregation with prior years, those programs will take longer to reach a stage where their earnings premium metric can potentially lead to consequences for a failing result. For the smaller programs in this group, it may take several rounds of calculations until the program's aggregated cohort is fully comprised of completers from 2021-22 or later. These programs could potentially see up to four years with the earnings premium metric being published on an informational basis (after which point all cohorts with sufficient N-size to receive median earnings would consist of completers from award year 2021-22 or later).

The Department acknowledges that the “No Tax on Tips” policy is currently set to expire after tax year 2028. While it is likely that this provision would be extended or made permanent, should this policy expire at a future point, the Department will continue to apply the accountability framework to these programs and will revisit the issue of data quality. This is because, as stated above, the Department continues to believe that the income data maintained by the IRS is the most comprehensive information available on individual earnings. Additionally, the Department notes that tipped income is included in Federal tax data, as it is legally required to be reported under the tax code. The IRS directs employees to keep a daily tip record, to report all cash tips to the employer (unless tips are less than $20 per month), and to report all tips on the individual's Federal income tax return.\16\ Therefore, the possibility of under-reported tipped income would only occur if program graduates were unlawfully not reporting tipped income en masse, which is why we continue to believe the issue of under-reported tipped income is likely to be much smaller than what some commenters suggested.

\16\ www.irs.gov/businesses/small-businesses-self-employed/tip- recordkeeping-and-reporting.

The Department further clarifies that it will continue to measure and report the earnings outcomes for the programs listed in Table 5.22, though these will not be subject to the accountability framework during years where their graduates' earnings are measured in 2025 or before. The Department believes this provides important information to students about the possible earnings outcomes they may experience if they attend such programs, and furthermore, it provides colleges with information to help it gauge whether their particular programs may be likely to pass or fail the earnings premium measure once the program becomes subject to the penalties of the accountability framework during a future year.

The Department has broad authority to provide this delay under 20 U.S.C. 1221e-3, as well as from its express authority to establish and manage an appeals process for programs that do not meet the low- earnings requirements, 20 U.S.C. 1087d(c)(5). The Department anticipates if the programs included in Table 5.22 are not found to meet the low-earnings requirements, many would likely try to appeal the outcome on the basis that the 2026 tax year data does not accurately reflect the earnings of their graduates. By the time of such an appeal, the Department will have the benefit of the enhanced data brought about by tax filings made under the “No Tax on Tips” provisions, which, as stated, the Department anticipates will reflect higher earnings because more workers in these occupations will report more of their tipped income. Given the number of programs potentially affected, these avoidable appeals could prevent the Department from adjudicating appeals from other programs in a timely, efficient manner. And because the Department cannot end a program's participation in a title IV, HEA program while the appeals processes is ongoing, this could result in many programs that have failed to meet the low-earnings requirements, and whose data the Department has no reason to believe is inaccurate, continuing to use funds for an extended period. So, the Department has determined that the appeals process can be more efficient if the Department institutes the one-year delay for the programs listed in Table 5.22.

The Department disagrees with commenters who requested an earnings multiplier for cosmetology programs and other types of programs that prepare students to work in occupations where workers customarily and regularly receive tips. As we discussed in the NPRM, the Department specifically evaluated how an earnings multiplier for cosmetology programs would impact the extent that these programs fail the earnings test in the final rule (Table 8.2). The Department's analysis showed that an 8 percent earnings multiplier to income reported to the IRS by graduates of cosmetology programs would result in only a roughly 8-9 percentage point decline in the fail rates of cosmetology programs. Instead, we believe the approach discussed above more adequately addresses the concern about the accuracy of tipped income by tax- filers. Many cosmetology programs, approximately 77 percent, will qualify for at least a one-year delay in when the accountability framework first applies (Table 5.24). The Department believes this provision addresses the commenters' concerns about unreported tipped income while also maintaining a consistent earnings premium metric and protecting students from programs that regularly leave students with low earnings after attending.

To determine which programs are designed to prepare students for employment in occupations that predominantly receive tipped income, the Department will use the following process. First, we will use the list of occupations included in the final rule “Occupations That Customarily and Regularly Received Tips; Definition of Qualified Tips” from the Internal Revenue Service and Treasury (91 FR 19026). We will then narrow the list to the occupations where 50 percent or more of workers report tipped income to

the IRS. Then, we will use the Department's CIP-SOC crosswalk to link occupations (defined using 6-digit SOC codes) to programs (defined using 6-digit CIP codes).

Ultimately, twenty unique programs (defined using 6-digit CIP codes) will qualify for this provision. These CIP codes and program names are listed in Table 5.22. For these programs, the Department will continue to compute and publish median earnings information and the benchmark that the program would have been compared against. However, these programs will not be held accountable for the sanctions associated with failing the earnings premium metric until the program graduates are measured using earnings from the 2026 tax year or later.

Programs would not be held accountable for results occurring prior to consequences taking effect. For example, if a program had informational metrics in the first round of calculations that would have resulted in failing the earnings premium and passed the earnings premium metric in the second round when consequences first could take effect, it would be in the same position as a non-tipped program that had passed both of the first two rounds of calculations. The tipped program would not be subject to warnings based on informational results from before potential consequences took effect.

Changes: The Department modifies Sec. 668.402 to add a new paragraph (c)(4), which specifies that programs that are designed to prepare students for employment in certain occupations that predominantly receive tipped income, as defined under IRS regulations in 26 CFR 1.224-1(h), and in which the IRS has determined that 50 percent or more of the individuals in the occupation receive income from tips, will not be considered to have passed or failed the earnings premium measure for any award year in which the Secretary evaluates earnings data from the 2025 tax year or prior. We also specify that we will make earnings data and the earnings threshold used to calculate the earnings premium measure available to the public.

Comments: Commenters raised several concerns about how income from self-employment and independent contractors is treated in the earnings test. These include concerns that the earnings data used to assess programs does not include self-employment income, and that individuals working in certain careers (including individuals who conduct acupuncture, chiropractors, cosmetologists, massage therapists, and the fine arts) earn significant amounts of their income from self- employment. Some commenters also noted that self-employment earnings only include earnings after business deductions, which would therefore undercount the true earnings of program graduates who earn a significant share of their income through self-employment.

A few commenters stated that the methodology explained in the NPRM would fail to capture partnership income as reported on IRS Form K-1 and the business distribution portion of earned income arising from an S-corp. Other commenters voiced concern that graduates working in gig- style employment involving cobbling together many engagements, most if not all of which fall under the reporting threshold, would show up with inaccurately low income.

One commenter indicated that they understood the Department's emphasis on maintaining comparability with ACS and were not proposing a change in the data source, but instead requested that the Department apply a methodology-based correction factor, grounded in the IRS's own tax gap research, for fields in which freelance work is the predominant employment outcome. The commenter argued that this approach would preserve consistency with ACS thresholds while addressing a known and measurable bias.

Discussion: Earnings data available to the Department through the IRS includes self-employment income from IRS Form 1040-SE records. This data includes “the sum of wages and deferred compensation from all non-duplicate W-2 forms and positive self-employment earnings from IRS Form 1040 Schedule SE (Self-Employment Tax) for each student measured.” \17\ The IRS form 1040 Schedule SE captures self-employment income earned from a partnership and reported on form 1065 Schedule K- 1, and it captures self-employment income from a sole proprietorship reported on form 1040 Schedule C. The Department acknowledges that the 1040 Schedule SE captures the net profit or loss from a business or self-employment and therefore reports income that is the net of certain business-related deductions that individuals claim.

\17\ https://collegescorecard.ed.gov/files/ InstitutionDataDocumentation.pdf.

The Department believes that the claimed possibility that some types of earnings, like earnings from partnerships and business distributions, may be missing from Federal tax data is unlikely to have an impact on median program earnings values. First, the commenter did not provide data or evidence on the extent of this potential problem, and the Department is not independently aware of data demonstrating either that people underreport earnings from partnerships and business distributions or, if there is such underreporting, the scope of the underreporting. Even if there is underreporting, the Department believes that many individuals from the same program--usually more than half--would need to have unobserved income from partnerships and business distributions for this to influence the median value, which the Department has no evidence to support and views as unlikely.

Furthermore, the Department believes the income data that are available from Federal administrative sources are well-suited for the purposes of these regulations. Only Federal administrative sources, such as earnings records maintained by the IRS, contain such a comprehensive view of earned income. As discussed in prior versions of the Gainful Employment regulations (such as the 2014 and 2023 prior rules), earnings data reported though other channels--such as by self- reported survey data collected by colleges--are implausibly high. Issues such as recall and selection bias likely contributed to inflated earnings measures when colleges conducted surveys to gather self- reported income information. Therefore, the Department believes that if it allowed colleges to supplement earnings data through self-reported surveys to account for sources of potentially unobserved income, as the commenters requested, it would introduce another larger problem that the earnings data would likely be arbitrarily inflated due to the issues of recall and selection bias.

Additionally, while self-employment income reflects income after business deductions, the Department believes that this measure is appropriate because it more accurately reflects the income the individual has available to pay a loan, and because measures self- employment income prior to business deductions are not accurately capturing the actual income that the individual has available.

For all the reasons described above, the Department also believes that applying adjustments to earnings is unnecessary, and moreover would violate the statute's requirements. Regarding the request by one commenter to specifically make such an adjustment for individuals engaged in freelance work, we are concerned that the nature of freelance work varies greatly by profession, so applying a one-size- fits-all “correction factor” would

likely result in large-scale distortion. Therefore, we decline to adopt that commenter's recommendation.

Changes: None.

Comments: Some commenters suggested that the Department should use earnings data from BLS rather than the IRS to determine whether programs would remain eligible for Federal student financial assistance. Under the proposed approach, a program would pass the earnings test if BLS data showed that a worker with a specific credential earns above the high-school or bachelor's degree tests. Similarly, other commenters noted that BLS data show that earnings for certain fields of study are higher than those the Department has cited and reported using data from the IRS.

Discussion: The Department does not have the statutory authority to use earnings data from the BLS when measuring earnings for degree programs as the commenters requested. The earnings data from the BLS are based on the earnings of all individuals who have a certain level of educational attainment and who work in a certain industry. However, the statute clearly requires that the earnings data be based on individuals who graduate from specific degree programs. Therefore, data from the BLS do not satisfy the statutory requirements to determine the median earnings measure of graduates from each program as outlined in Section 84001 of the WFTCA.

The Department further notes that the observed differences between the earnings data in the PPD:2026 data that the Department released and the BLS data stem from a difference in what these two sources attempt to measure. Whereas the PPD:2026 data measure earnings for all individuals who graduate from specific programs, regardless of the industry they enter four years after completion, the BLS data cited by the commenters measures the distribution of earnings for individuals who successfully work in a given industry, irrespective of their path into the industry or the stage of their career. We do not believe it is appropriate to evaluate a postsecondary program on the basis of the earnings of individuals who were not enrolled in that program and who are successfully employed, as this would not recognize any impact by the postsecondary institution on the student's employment success.

Changes: None.

Comments: One commenter requested the Department incorporate safeguards or complementary measures that account for variability in earnings realization and reporting to improve the accuracy and fairness of the framework while maintaining administrative flexibility.

Discussion: The Department thanks the commenter for their feedback, but without a concrete suggestion, it is difficult to come up with further ideas for what those improvements might be. We would note, however, that the statutory framework's use of two failures in three consecutive calculations for a program to reach the low-earning outcome designation would protect programs having uncharacteristic outcomes occurring in a single year.

Changes: None.

Comments: One commenter suggested supplementing IRS data with payroll-based sources such as the National Directory of New Hires or State Unemployment Insurance (UI) wage records, where data-sharing agreements are permitted. The commenter felt the alternative payroll data captured earnings closer to real time and with greater accuracy for wage earners than annual tax filings.

Discussion: The Department thanks the commenter for their suggestion, but we believe that data from the IRS is currently the best available data for these purposes. The data is measured after sufficient time has passed for the IRS records to be compiled and validated, so the use of prior real-time data would not provide the enhancement that the commenter describes. Requiring earnings data from a Federal source is consistent with prior approaches and provides both statistical reliability and the option to use a different Federal source in the future should operational needs arise. Furthermore, the Department is concerned that supplementing the earnings data from the IRS with other sources of income, such as State UI data, will create a significant burden on the Department and would likely be infeasible given the privacy protocols of other agencies.

Changes: None.

Comments: Several commenters stressed concern with which income or tax return line items would be used when calculating median earnings and the real differences that can exist when reporting income for different comparison groups due to occupational variances. As an example, if using the adjusted gross income (AGI) as a measure of income, there are several occupations that due to self-employment or freelance work, are able to claim legitimate deductions that will reduce taxable income thus reducing the formal AGI reported.

Several commenters noted that for the creative workforce, disproportionately composed of sole proprietorships and independent contractors, income would be drawn from Schedule C after legitimate business expenses have been deducted. These commenters believed that this would be an unfair net profit vs. gross income penalty since an artist's direct receipts would be reduced by the costs associated with inputs such as rent, materials, and equipment.

Discussion: The Department will not be directly using AGI because that number is shaped by household choices, such as directing funds to a tax-advantaged retirement account or to a health savings account, but the Department will be sourcing reported earnings from IRS data.

While self-employed individuals have some amount of discretion in how to allocate funds that employees do not, such as moving to a less expensive office to free up more funds for household income or accepting lower household income to cover investment in new equipment, funds allocated to business expenses are not available to cover household expenditures or savings. These expenses are not considered income.

Change: None.

Comments: One commenter requested that the definition of earnings be revised to include self-employment and gross business revenue. Their proposed language would change Sec. 668.2(b)'s definition of earnings to read “For the purposes of Subparts Q and S of this part, wages, income as reported to the Internal Revenue Service, and other earned income, including self-employment and gross business revenue.”

Discussion: The Department declines to adopt this definition, and notes that using gross business revenue would result in a massive distortion of an individual's earnings and funds available for living expenses, debt repayment, and other expenses, and would certainly not represent an earnings boost from an educational credential. Gross business revenue includes the prices of any inventory sold, or costs of other inputs, and counting this as part of an individual's income could have a drastically misrepresentative multiplicative effect on the amount stated. For example, if an individual sold goods purchased for $950,000 at a markup, receiving $1,000,000, their gross revenue would be $1,000,000 and their profit would be $50,000 (minus any additional expenses); claiming the $1,000,000 as income would be inappropriate.

Changes: None.

Comments: Several commenters expressed concerns that occupations compensated with housing allowances, such as many ministerial vocations, will not have their full earnings factored in when evaluating IRS income data because, though listed on W-2s, housing allowances are not reported as part of taxable income since they are excluded before the IRS calculates taxable income. One commenter also requested an alternative earnings metric covering all elements of the compensation structure for clergy and religious workers, including housing allowances, in-kind benefits, and stipend arrangements.

One commenter mentioned that it is a common experience for early career artists to work in residencies that provide room and board which can last from two weeks to a full year. This commenter indicated that these benefits dramatically impact the income required by an artist to live and create that gets reported to the IRS.

One commenter recommended including all earned income regardless of whether such compensation is taxed, including non-monetary or in-kind compensation from the employer such as food, lodging, use of a company car, etc.

A couple of commenters also requested that the Department clarify if, or how, certain types of compensation for physician residencies such as housing stipends, meals or education will be factored into the earnings measurement to ensure all appropriate income is fully captured. The commenters indicated that these issues highlight concerns that certain program completers will not have their full income compensation used when comparing earnings to the benchmark earnings causing potential discrepancies.

Discussion: The Department carefully considered possibilities recommended by commenters and reached the decision to limit earnings to forms of monetary compensation, as these are fungible earnings available to cover household expenses and loan repayments and to otherwise be directed by the recipient.

Housing stipends are unlikely to be observed in Federal tax data used by the IRS to compute program earnings. However, the Department believes these data are still the best available data to determine program earnings. While the Department acknowledges that occupations where non-taxable allowances are common may affect how earnings appear for individuals, developing or mandating new data collections would be burdensome for institutions and would introduce significant variation that could undermine comparability across programs. Furthermore, for the reasons discussed in prior comments about tipped and self- employment income, the Department views administrative data from Federal agencies with earnings data as the highest quality data that currently exist that could be utilized to fulfill the statutory requirements. Alternative sources of income data, such as data collected through self-reported surveys conducted by colleges, would likely produce inflated earnings values due to issues of selection bias and recall bias.

Changes: None.

Comments: One commenter stated that they believed the description in the regulatory text was inconsistent with the discussion in the NPRM's preamble guidance as to how earnings would be sourced. The commenter believed that the regulatory definition of earnings as “wages, income as reported to the Internal Revenue Service, and other earned income, including from self-employment” is inconsistent with the preamble's clarification that earnings would be defined as “wages, and other earned income as reported to the IRS, including net income reported from self-employment. This does not include other forms of income (whether taxed or untaxed).” The commenter stated that the latter frames the calculation as one that excludes any income not reported to the IRS regardless of whether it is earned.

Discussion: The Department does not view these as inconsistent. In both cases, the Department has expressed its view that earnings information will be sourced from data held by the IRS.

Change: None. Graduate Earnings--Alternative Data Sources

Comments: One commenter stated that it is incumbent upon the Department to review the school-conducted earnings surveys submitted in 2018 under the 2014 Gainful Employment rule as a means of evaluating the accuracy of government-reported income.

Discussion: The Department disagrees with this commenter's recommendation. Small samples taken by schools without any means of controlling for non-response bias and other sources of statistical distortion are not an authoritative source to evaluate whether tax data, covering all individuals and required by law to be reported truthfully, are accurate.

Changes: None. Graduate Earnings--Adjustments

Comments: One commenter requested that the Department adjust wages for certain occupations, such as chiropractors, who are often forced to accept lower fees in order to be included in various State or private insurance networks.

Discussion: We thank the commenter for raising their concern; however, the statute does not allow the Department to individually adjust earnings for particular occupations or academic programs. In our effort to harmonize across all eligible title IV, HEA programs, we want to ensure all students and programs are treated as consistently as possible when calculating an earnings premium measure.

Changes: None.

Comments: Many commenters expressed concern that the earnings test does not account for the race or sex of program graduates, noting that certain groups of individuals may experience challenges in the labor market that impact their earnings outcomes. Consequently, commenters expressed that this would unfairly penalize certain programs who serve marginalized or disadvantaged groups.

Discussion: The Department disagrees with commenters who requested to adjust program earnings based on the characteristics of program completers, such as student race/ethnicity and sex. First, several studies have found that, after controlling for State location and program, that differences in the compositions of students in programs are unrelated to the program earnings outcomes.\18\ This research contradicts the commenters' assertion that programs serving different types of student populations--such as Black and Hispanic populations-- will be unfairly treated under the earnings test. Second, the earnings benchmark also includes individuals from a variety of different racial/ ethnic and sex categories. This will likely mitigate the extent to which programs are penalized based on the composition of students they serve, because the geographic area and population they are compared against will likely contain a similar mixture of

characteristics. In effect, the Department believes this “nets out” any potential influence that such factors would have on program outcomes. Third, the Department may not treat programs differently based on the racial composition of their students. Absent (at the very least) any findings that the Department had discriminated against students on the basis of race in the title IV, HEA program and that this course of action would rectify that discrimination, any consideration of race would violate the students' Equal Protection rights. Students for Fair Admissions, Inc. v. President & Fellows of Harvard Coll., 600 U.S. 181, 205 (2023). The Department believes that preferencing or penalizing programs for the immutable characteristics of students would likely violate Civil Rights law, which we decline to do.

\18\ Christensen, C., (2024) Unintended Consequences of an Earnings-Based Accountability Test for Master's Degree Programs. Washington, DC: Urban Institute. January 2024. www.urban.org/ research/publication/unintended-consequences-earnings-based- accountability-test-masters-degree; Christensen, C., & Turner, L.J., (2021). Student Outcomes at Community Colleges: What Factors Explain Variation in Loan Repayment and Earnings? Washington, DC: Brookings Institution. www.brookings.edu/articles/student-outcomes-at- community-colleges-what-factors-explain-variation-in-loan-repayment- and-earnings/.

Changes: None.

Comments: One commenter suggested that the Department consider whether annualized earnings measures could be supplemented with quarterly earnings data to capture short-term post-completion gains that the annual snapshot may obscure, especially for students enrolled in nonstandard programs with rolling start dates who complete programs at various times throughout the award year.

Discussion: The Department believes that the commenter may be misunderstanding the time frame under which earnings are measured. The Department looks at earnings for students who completed the program four award years prior to the calendar year from which we source earnings, allowing time for students to finish their programs, find jobs, and become established in their career. The short-term gains the commenter describes would not be as relevant by that point, and the timing with which students graduate within the July-June award year would not have the materiality the commenter cites.

Changes: None.

Comments: One commenter asked the Department to “expand Sec. 668.2(b) earnings definition to include Schedule E income--royalties, licensing, and performance residuals--which represent another post- graduation revenue stream for working film, music, and literary professionals.”

Discussion: The Department declines the commenter's request for several reasons. First, the request is not feasible, as the data maintained by the IRS is not positioned to observe this type of income. Second, the Department believes this type of income is relatively rare and is unlikely to influence the overall median earnings value of a program. A large share of individuals from the same program would need to receive royalties and licensing income, which seems implausible. Third, the Department continues to contend that the income information maintained by the IRS, which includes W-2 income and 1040 self- employment income, is the best and most comprehensive income information available. Furthermore, income from royalties that is earned through self-employment is captured on form 1040 SE, which is included in the earnings information provided by the IRS to the Department. Income earned from royalties reported on other IRS forms (such as form 1040 Schedule E) are more similar to investment or passive income than employment income, which the Department believes should be excluded from the earnings measure.

Changes: None.

Comments: One commenter recommends that the Department adjust the earnings definition for self-employed graduates to use gross receipts or measures based on the Current Population Survey (CPS) or to adopt a longer multi-year measurement window analogous to Social Security benefit calculations, to mitigate the structural downward bias in IRS administrative data for independent-practice professions.

Discussion: Gross receipts include items such as business expenses that cannot be reasonably interpreted as income. CPS measures are not specific to a program's exact completers and would therefore not fit with this framework. The statute requires us to source earnings covering one calendar year, but we would point out that in the case of small programs such as the commenter mentioned, the fact that completers are sourced from different years to complete the cohort will also mean that earnings from different calendar years are being covered.

Change: None.

Comments: One commenter indicated that artists often participate in a barter economy, exchanging services and creative product for other goods and services, which would dramatically impact the income required by an artist to live and create that gets reported to the IRS thus artificially lowering their median earnings as compared to benchmark earnings where the majority of income is fully reported to the IRS.

Discussion: The Department thanks the commenter for this information, but there is no viable way for us to incorporate it. Earnings derived from the barter economy are not captured on the IRS's W-2 earnings or 1040 self-employment reporting. The IRS data are the best and most accurate income information available and attempts to otherwise capture this data (such as through institution-constructed surveys) would introduce bigger problems, including non-response bias, social desirability bias, and recall bias. Any of these would make our data less likely than the IRS's records, not more accurate. We do believe that this type of income is likely to be rare, or not on a large scale, making it unlikely to influence a program's median earnings value.

Change: None. Earnings Threshold--Data Source

Comments: A few commenters suggested that it was unfair that both baccalaureate degrees and undergraduate certificates were being compared to a threshold based on working adults with only a high school diploma, with one claiming that this was the equivalent to comparing a graduate of a highly selective institution with a baccalaureate degree in a more lucrative science field to a graduate of a cosmetology certificate program. The commenter suggested instead comparing undergraduate nondegree programs to a group with proportionately lower earnings, such as working adults without a high school diploma. One commenter suggested creating a special group for nondegree certificate programs tied to state licensure.

Discussion: The use of an earnings threshold comparing completers of undergraduate-level degree programs to individuals with only a high school diploma is a statutory requirement; therefore, the Department does not have the authority to change this comparison for degree programs. In order to provide high school graduates seeking higher education with meaningful and comparable data across program types, we need to use a harmonized and standard comparison for undergraduate- level programs. We would point out, however, that the metric is designed to approximate the change in earnings from pursuing a career after earning a higher education credential versus solely with the education level a student would have before. Not only do students in undergraduate certificate programs most commonly enter their programs after earning a high school diploma or equivalent, but receipt of title IV, HEA funds usually requires a high school diploma or equivalent for eligibility, with few exceptions. In this context, working adults without a high school diploma or equivalent would not be a meaningful comparison group. It sounds as though the commenter requesting a comparison group tied to state licensure

would want a comparison to the earnings of other licensed professionals instead of to individuals with only a high school degree, which would likely set a higher threshold and regardless would not meet the requirements of the statute.

Changes: None.

Comments: The Department received comments in response to its directed question in the NPRM regarding limitations with the ACS when calculating one of the graduate-level earnings thresholds described in Section 668.2(b), specifically the “same-state, same-field bachelor's degree median earnings benchmark” (Table 5.5). Some commenters believed that the policy proposed in the NPRM would unfairly harm these graduate programs, which are more likely to be in rural areas and in specialized fields.

Some commenters suggested that the Department should exempt these programs from the earnings test. Other commenters suggested that the Department partner with the Census Bureau to obtain statistical estimates that could serve as the earnings threshold for bachelor's degrees in the same field of study, or that the Department should conduct a full analysis of its own administrative data to determine which undergraduate fields feed into each graduate credential and use those to define the threshold instead.

Discussion: The Department believes the commenters are correct that, in some instances, it may not be possible to calculate the median earnings of working adults aged 25-34 with a bachelor's degree in the same field of study (defined using 2-digit or 4-digit CIP codes) in the State in which the institution is located and who are not enrolled in college. In some cases, especially in uncommon graduate fields of study and in less-populated states, the ACS may not sample any individuals (or only a very small number of individuals) who meet all of these criteria. We estimate ACS data are unreliable for approximately 2,650 graduate programs.

The Department agrees with the commenters who stated that it is necessary to avoid unfairly comparing certain graduate programs to the lower of two earnings thresholds, when the statute calls for these programs to be compared to the lowest of three earnings thresholds. The Department considered the suggestions it received about working with the Census Bureau to produce more detailed earnings estimates, but we believe that obtaining such estimates from the Census Bureau would significantly increase the administrative burden for the Department.

Therefore, in cases where the ACS data are unreliable, the Department will amend Section 668.2(b) to use a value of $1 for the “same-state, same-field of study” earnings threshold. The Department will use $1 because it has no reliable way to determine the income of individuals who should be included in the calculation for this particular earnings threshold, and therefore uses the smallest possible value that working individuals could earn during a year--one dollar. This safeguards graduate-level programs from being held to an unfairly high threshold if they are at an institution where at least 50% of enrolled students come from the State of the main campus and if the data for their field of study has an insufficient n-size in the ACS data.

The Department will use this earnings threshold value for programs where there are fewer than 16 individuals who meet the criteria to be included in the “same-state, same-field” earnings threshold. This aligns with sample size criteria used by the Department and other Federal agencies for the purposes of protecting student privacy. Furthermore, we believe that calculating a median earnings value based on fewer than 16 individuals would be unreliable and arbitrary.

Changes: The final rule adjusts the language in Sec. 668.2's definition of earnings threshold under paragraph (3). This paragraph now specifies that for States where the Census Bureau data necessary to perform the calculations set forth in subsections (1) and (2) are not available, the earnings threshold will be one dollar. As a conforming change, we also struck the language in 34 CFR 668.402(c)(3), which indicated that the Department would not calculate an earnings premium in cases where there no earnings threshold could be determined. The change to the earnings threshold definition obviates this provision.

Comments: One commenter voiced concern with the methodology behind the use of same-field comparison groups to construct the earnings threshold and how individuals with graduate degrees might affect the earnings threshold in different subject areas. They incorrectly stated that the earnings threshold would consist of students who earned a bachelor's degree or higher, and listed an example with a respondent with an undergraduate degree in history and a law degree, claiming that individual would pull up the earnings statistics for history bachelor's degrees, leading to problematic comparison groups for graduate-level programs in history when the bulk of the individual's earnings stem from their studies in the legal subject area.

Discussion: The commenter misdescribes how ACS data works. The ACS asks individuals to answer with the highest level of education they have attained. While all individuals with at least a bachelor's degree are asked to name their bachelor's degree major in a separate question, the category for individuals whose highest level of education is a bachelor's degree strictly pulls individuals whose highest level of education is a bachelor's degree. Joining a higher-level category would mean departing the lower-level category. The individual in the commenter's example would not be counted in ACS data as an individual holding only a bachelor's degree in history because they hold a higher degree than a bachelor's degree, and therefore, would not impact ACS statistics for individuals holding only a bachelor's degree.

Changes: None.

Comments: Some commenters requested that the Department not use the ACS data when calculating the earnings benchmarks for programs. Commenters expressed that this data is not granular enough to implement the statutory requirements of the WFTCA, and instead proposed that the Department delay implementing the regulations until such a data source exists.

Discussion: The Department rejects the commenter's request. Congress directed the Department to use a dataset maintained by the Census Bureau for this calculation. Presumably, Congress was referencing the ACS because it is the only data set that is updated annually and that is granular enough to calculate the specified earnings benchmarks.

The Department does note, that in response to some commenters' suggestions, that it has modified the final rule (see “Discussion” and “Changes” related to the changes above) to exempt such programs where ACS data are unreliable to produce a particular benchmark. Specifically, certain graduate level programs at institutions that enroll a majority of students from in-state will be exempted from the earnings test if they are offered in a State and field where ACS data are not granular enough to produce the “same-state, same-field earnings benchmark” among bachelor's degree-holders. The Department believes this modification alleviates the commenters' concern about the ACS data not being granular enough to implement the policy, while also allowing us to move forward with implementing the earnings

test for all other programs for which data are available.

Changes: No changes directly relate to this comment, but see other changes pertaining to States where no earnings threshold is available referenced above.

Comments: Several commenters voiced concern that the data used from the ACS would be insufficiently accurate to construct the earnings threshold, citing the fact that ACS uses voluntary self-reported data for earnings as opposed to tax data reported under legal obligation. Concerns were raised that using two fundamentally different data sources (treatment-group earnings from IRS and comparator-group earnings from the ACS) for a binary pass/fail regulatory determination falls short of the experimental design standards reflected in the Department's own What Works Clearinghouse Procedures and Standards Handbook (Version 5.0, 2022) [14].

Several other commenters expressed concern with using the ACS data as the primary source for the earnings benchmarks because they argue the data may be unreliable. These commenters noted that the ACS data is limited because it often has wide confidence intervals and may suffer from non-response bias, both of which may result in earnings values being overestimated in the ACS. One commenter alleged that self- reported earnings may be inflated. Another commenter requested an across-the-board “haircut” to all of the earnings thresholds to offset these perceived weaknesses in the ACS.

Discussion: Individuals selected by ACS are legally obligated to answer all of the questions as accurately as they can under Title 18 U.S.C 3571 and 3559, so those questions are also completed under legal obligation. The Census Bureau also has methods to combat nonresponse bias, including mailing reminders on a broad scale and conducting telephone or in-person interviews for a targeted sample. Moreover, as discussed in more detail throughout this document, the WFTCA requires the Department to construct the earnings threshold using data from the Census Bureau.

In response to the commenter pointing out that the framework's approach does not match experimental standards, the Department points out that the framework established by Congress is not an experiment. We are not working with a control group or a treatment group; we are working with a comparison mandated under statute according to criteria set by Congress. Additionally, the Department disagrees with the commenters' assertions about the quality of the ACS data. The ACS data are among the highest quality, nationally-representative datasets maintained by the Census Bureau. These data are routinely assessed for their quality and accuracy. Furthermore, the commenters did not provide or suggest an alternative dataset that they thought was stronger than the ACS. For these reasons, we disagree with the commenters who question the accuracy of the ACS data and those who requested that the ACS data be downwardly adjusted to account for its potential weaknesses.

Changes: None.

Comments: One commenter voiced the opinion that the margin of error and any additional statistical noise in the ACS make it an invalid source of data for the earnings threshold. This commenter also stated a belief that WFTCA requires the use of median earnings and not an estimate of median earnings in constructing the earnings threshold, and that a true median can only mean the exact midpoint of a complete distribution taken from full population data.

Discussion: The Department disagrees. Any survey using sampling will have some margin of error. Congress would have been aware of the impact of margin of error and statistical noise when drafting the WFTCA, and it still decided to specify the use of Census data in its requirements for the earnings threshold. WFTCA specifies that the data for incomes should be based on data from the Bureau of the Census, and as discussed in more detail earlier in the document, the ACS is the only dataset held by Census that matches the specifications set by Congress. Congress did not specify whether a population median or a sample median should be used in constructing the earnings threshold, but since they stated it should be sourced from datasets maintained by the US Census, the only reasonable conclusion is that they believed a sample median derived from the ACS would suffice for median earnings used in calculating the earnings threshold.

Changes: None.

Comments: Many commenters argue that the high-school earnings benchmark will inadvertently include individuals with undergraduate certificates, skewing the earnings benchmark higher than intended. They note that ACS treats individuals with apprenticeships, certificates, vocational training, or other types of workforce preparation beyond high school as having completed only a high school diploma as their highest level of education. Some commenters pointed to information from the Census Bureau that says vocational degrees are generally not included as a category of educational attainment because these credentials are “not part of the regular collegiate system” and that respondents are instructed to “exclude vocational degrees as a level of schooling.”

One commenter further extended this analysis to note that individuals with a graduate-level certificate but no graduate-level degree are categorized in ACS data as only having a bachelor's degree, potentially raising values used in the earnings threshold for graduate- level programs.

Discussion: The Department acknowledges that, in some instances, individuals the ACS categorizes as having only a high school diploma may have undergraduate certificates, as the survey is at times unclear about how these credentials are treated in the data collection. The Department does not believe, however, that the ambiguities in the survey would systematically categorize survey respondents who hold certificates as having only a high school diploma.

While some commenters argue that the ACS technical documentation instructs respondents with an undergraduate certificate to select a high school diploma as their highest level of education, the Department notes that the documentation is far from clear on this matter and it does not define key terms that would ensure that respondents complete the survey as commenters claim. For example, ACS technical documentation related to these issues uses the terms “vocational degree” and “trade school” and “regular collegiate system” but does not define these terms nor does it explain if these terms encompass a 1-year undergraduate certificate offered at a public community college.

The Department believes the ACS data are the best and only available dataset for assessing the typical earnings in each state of individuals aged 25-34 whose highest level of education is a high school diploma and who are not currently enrolled in college. This is because the ACS is the only annual dataset maintained by the Census Bureau that contains all the needed individual-level data elements to compute these calculations. Ultimately, to the extent that the education level of individuals in the ACS is misclassified, the Department contends that this dataset remains the only one available in which the statutory and regulatory requirements could be fulfilled. The commenters did not identify or suggest an alternative source of data that the Department could use to construct the high-school earnings threshold.

The Department also received comments citing analyses that suggest any effects of the misclassification of certificate holders in the ACS would be insignificant and unlikely to affect the earnings benchmark. The commenters note that alternative Census Bureau data sources show that only about 9% percent of high school diploma holders also hold an undergraduate certificate and that while their earnings are higher than their peers with only a high school diploma, the difference has a negligible effect (about $200) on the median earnings of the combined group. The Department verified these findings after conducting its own analysis of data from the Census Bureau's 2024 Survey of Income and Program Participation. For this reason, the Department believes that the ACS's treatment of undergraduate certificates would only have a de minimis impact on the earnings benchmarks produced using the ACS data.

The Department similarly believes that the impact of individuals holding a graduate-level certificate but no graduate-level degree potentially being included among individuals with only a bachelor's degree in the median earnings calculation is de minimis.

Changes: None.

Comments: One commenter stated that the Department's use of the 5- year pooled ACS data instead of single-year ACS data means that the resulting earnings thresholds are a temporal mismatch to program earnings data taken from the fourth calendar year following a student's program completion. The commenter voiced concern that this pooled estimate may differ substantially from a single-year benchmark.

Discussion: The Department is using the 5-year pooled ACS rather than the 1-year ACS out of necessity since the 1-year ACS will often have too few respondents to calculate all of the earnings thresholds called for in the statute. This data will be adjusted for inflation (using the CPI-U) to make comparisons fair. Many completion cohorts will also be taking data from several years, so we do not believe it will be a temporal mismatch as the commenter states. Most importantly, the use of 5-year pooled data helps smooth year-to-year fluctuations, protecting program metrics from some of the impact of fluctuations, which we believe will benefit schools.

Changes: None.

Comments: A few commenters requested that the Department take a hybrid approach to the 2-digit CIP level ACS data in the “same field of study” earnings threshold amounts used to evaluate graduate-level programs. In such a structure, the 2-digit CIP level data from ACS would be supplemented with 4-digit CIP level from the Department's own program-level earnings data (such as College Scorecard data and IRS- matched NSLDS earnings) to scale the earnings threshold for a 2-digit CIP program area up or down by a prorated percentage based upon earnings in their 4-digit CIP sub-field, so that programs in lower- earning sub-fields would be held to a lower benchmark and programs in higher-earning sub-fields would be held to a higher benchmark.

Another commenter suggested a similar approach, but with a plus or minus 25 percent cap. One commenter suggested that if a benchmark adjustment is not possible, use the 4-digit CIP data where available and 2-digit CIP data only when necessary.

Discussion: The Department thanks the commenters for their idea, but program level data sourced from IRS matches to data from NSLDS could not be adapted to statewide or nationwide medians at the 4-digit CIP level because the IRS does not return data for individual students; they return the median earnings for a program's completers anonymously and in the aggregate.

The Department also disagrees with the commenters' suggestion to match earnings data from the ACS to College Scorecard data to scale the earnings threshold values. The statute calls on the Department to use data from the Census Bureau for the calculation of the earnings thresholds, and the College Scorecard is maintained by the Department of Education. Therefore, the Department believes that it would be inappropriate to alter the Census Bureau data using additional datasets from the Department of Education, as the commenters request.

Furthermore, the Department believes the commenter's suggestion to use the College Scorecard data to scale the earnings of certain fields in the ACS data based on the percentage of individuals in 4-digit CIPs would not be feasible due to the high number of privacy-suppressed fields in the College Scorecard.

Changes: None.

Comments: One commenter suggested the use of the Census Bureau's CIP-PUMS crosswalk for the field-of-study comparison group for the earnings threshold for graduate-level programs, stating that the Public Use Microdata Sample (PUMS) could provide field-of-study data at a level of aggregation more granular than 2-digit CIP codes but less granular than four-digit CIP codes, providing 200 field groupings as opposed to dozens of 2-digit CIP instructional families and over 400 four-digit CIP codes.

Discussion: The Department declines the commenter's suggestion to use a hybrid field-of-study category that falls somewhere between the granularity of the 2-digit CIP code and 4-digit CIP code level. The ACS does not contain more granular field of study information beyond the 2- digit CIP classifications. The Department is concerned that any attempt to estimate the particular fields that individuals graduated from using a crosswalk (such as the CIP-PUMS crosswalk) based on their field of employment would result in making arbitrary estimations, as we do not actually have any information about the particular field of study an individual graduated from. As discussed above, using more granular field-of-study classifications also increases the possibility that more programs will have insufficient N sizes to calculate the “same-state, same-field” earnings threshold, and the Department is concerned about exempting additional programs because of this data limitation. For these reasons, the Department will use two-digit CIP classifications for the purpose of determining the same-state, same-field earnings threshold.

Changes: None.

Comments: One commenter stated that BLS data are inappropriate for use in constructing the comparison statistics used for the earnings threshold, explaining that BLS wage estimates rely on payroll data that exclude the self-employed.

Discussion: The Department is required under the statute to use data from the Census Bureau to determine earnings thresholds. Therefore, we are not considering using BLS data for the earnings thresholds.

Changes: None.

Comments: Many commenters expressed concern about the Department's method for classifying field of study categories to calculate the “same field of study” earnings thresholds for graduate programs. Commenters noted that the Department's approach, grouping fields using 2-digit CIP codes, may obscure meaningful differences between programs with distinct training pathways and labor market outcomes.

Discussion: The Department disagrees with the commenters' concern. The American Community Survey (ACS) identifies bachelor's programs using 2-digit CIP codes, meaning the Department would be unable to produce a more-granular definition for “field of study” as recommended by several

commenters. The Department believes that grouping programs based on common 2-digit CIP codes is necessary so that appropriate sample sizes can be achieved. The Department also notes that the use of the median value (rather than the mean) reduces the concerns raised by commenters that this method would obscure meaningful differences across programs.

Changes: None. Earnings Threshold--Characteristics of Working Adults

Comments: Numerous commenters argued that the proposed rule would arbitrarily penalize certain programs because the earnings test does not distinguish between full-time and part-time employment when calculating the median program earnings value. For example, some commenters explained that part-time work is temporary while building a clientele in some occupations, while others pointed to situations where individuals choose to work part-time work to accommodate family obligations. Because of this, commenters expressed concern that the earnings test would disproportionately impact programs whose graduates go on to work part-time at high rates. Commenters argued that it is inappropriate to compare the earnings of part-time workers to the earnings of full-time employees. Some commenters advocated that the Department incorporate a tiered system that scales program earnings based on the share of part-time workers in the program. Several commenters similarly suggested adjustments to compensate for completers who may experience gaps in employment due to temporarily leaving the workforce for family responsibilities.

Discussion: Both the earnings of program completers and the counterfactual earnings benchmark include full-time and part-time workers, which the Department believes will roughly cancel out for most programs. Because of this, the Department disagrees with commenters who assert the rule will unfairly impact programs who enroll graduates that go on to work part-time. Additionally, the Department notes that the program earnings value is based on the median earnings of workers. Programs would have to have unusually high levels of students who go on to work part-time for the program's median earnings value to be negatively skewed by these workers.

Furthermore, the Department is unable to scale earnings in the manner requested by some commenters because employment status and hours worked is not reported on the wage records with the IRS and therefore do not allow us to distinguish between full-time and part-time workers. In the Department's view, including an exemption or differentiated test for the lower earnings of part-time workers would undermine the purpose of the earnings test, which is to determine if the credential leads to sufficient earnings to justify the Federal investment and to allow the graduate to afford the loans they borrowed.

Additionally, the Department does not have the authority to differentially scale the earnings for degree programs that may enroll students who go on to work part-time. The earnings test outlined by Congress in Section 84001 of the WFTCA specifies that the median earnings value for programs is based on the earnings of working individuals, which is inclusive of both full-time and less-than-full- time workers.

Changes: None.

Comments: One commenter suggested that the Department use BLS information for average weekly hours by industry, crosswalk it to occupational SOC codes and program-level CIP codes and make proration adjustments to scale reported earnings up to full-time equivalents.

Discussion: The median earnings returned to the Department by the IRS are returned anonymously and in the aggregate. As previously mentioned, the Department has no way to know the hourly workload corresponding to the earnings of the individual at the median value for a program's completers, and such an adjustment could very well be misleadingly multiplying income already earned from full-time work. Regardless, the calculation is designed to evaluate whether a program's completers are actually earning enough to justify continued loan eligibility for the program under the framework's standard, not what they hypothetically could potentially be earning.

Changes: None. Earnings Threshold--Geographic Scope of Data

Comments: Many commenters emphasized that the earnings threshold fails to take regional wage differences into account, potentially comparing earnings of graduates in an area with lower wages and lower cost of living to higher statewide or national median figures. Examples often cited were rural geographic areas as compared to more urban or metropolitan regions or comparing median income from individuals living in the same county or city. One commenter stated that these effects are heightened by online and multi-location students. Another commenter requested that the Department allow institutions the flexibility to choose which State its students are considered to be from when the institution is from a geographically small area extending beyond one State border.

Other commenters stated that the economies in some rural areas fluctuate more than other regions, which would adversely impact programs in these areas. Several commenters mistakenly asserted that the Department entirely ignored how the regulation would impact programs in rural areas.

One commenter cautioned that unique characteristics of local labor markets could create misleading results. Some commenters suggested that the Department should account for regional economic differences in determining the earnings threshold. One commenter pointed out that whether graduates choose to live and work in higher paying urban labor markets is a graduate decision beyond the school's control. Several commenters pointed out that Tribal economies often differ substantially from surrounding regional labor markets as well.

Discussion: The Department specifically considered the impact of the proposed regulation on programs in rural areas. The Department's analysis (Table 5.10) shows that the proposed regulation would result in a slightly higher share of failing programs (3.9 percent vs. 3.4 percent) and students (1.8 percent vs. 1.3 percent) in rural areas relative to the current regulation. This is due to the statutory requirement to hold all programs accountable for their earnings, including programs at public institutions. Many programs at public colleges were previously exempt from the current accountability framework. Including these programs results in a marginal increase in the share of programs and students in rural areas that will be impacted by the regulation because many programs in rural areas are offered by public institutions.

The Department disagrees with the commenters who stated that short- term labor market fluctuation would adversely impact rural programs. Programs must fail the earnings test in two out of three consecutive years. Therefore, a one-year labor market fluctuation will not result in any program losing access to title IV, HEA programs.

The Department also clarifies that the earnings test for undergraduate-level programs compares the earnings of program graduates to the earnings of individuals with only a high school diploma in the same State (assuming the institution enrolls a majority of its

students from the state where the institution is located). Therefore, the earnings benchmark will include the earnings of rural, urban, and suburban individuals in the same State who have only a high school diploma. While this sometimes results in a rural program being compared against the earnings of individuals from different geographies, the Department notes that this requirement is predicated on the highly specific statutory requirement outlined in Section 84001, where Congress explicitly instructed the Department on how the earnings test would be conducted.

The Department further notes that Congress included regional variations and adjustments in other parts of the WFTCA, such as the provisions for Workforce Pell Grants, and chose not to include such an adjustment for the earnings test in Section 84001. Therefore, the Department concludes it was not Congress's intent to account for regional differences in the earnings accountability framework.

The Department also analyzed the impact of the regulation on Tribal Colleges and found that the regulation would not increase the impact on these institutions relative to the baseline regulation (Table 5.10). Thus, the Department disagrees with commenters who suggested the regulation would negatively impact Tribal Colleges.

Changes: None.

Comments: One commenter suggested that using State-level data by CIP code to establish an earnings threshold for working adults with no more than a high school diploma would lead to artificially inflated earnings thresholds in States where particular areas of defense manufacturing may be in high demand.

Discussion: The commenter incorrectly describes the use of State- level data broken out by CIP code to construct an earnings threshold, which is not applied to working adults with no more than a high-school diploma as the commenter states. Earnings thresholds used to evaluate undergraduate programs use median earnings for working adults aged 25- 34 with only a high school diploma either from the State in which the institution is located or nationwide, depending on the institution's enrollment makeup, but they are not disaggregated by CIP code.

The issues described by the commenter do not appear to be ones that would apply in the case of groups of adults with no more than a bachelor's degree being used to construct the earnings threshold for graduate-level programs. However, even in the case when field-of-study data comes into play for evaluating graduate-level programs, the Department still uses the lowest median earnings to construct the earnings threshold. If working adults aged 25-34 with only a bachelor's degree in a graduate program's 2-digit CIP field of study have a higher median earnings than working adults aged 25-34 with only a bachelor's degree as calculated under the other earnings benchmarks, the (lower) median earnings not targeted to a specific CIP code would be used to evaluate the program. If working adults aged 25-34 with only a bachelor's degree in a graduate program's 2-digit CIP field of study have a higher median earnings than working adults aged 25-34 with only a bachelor's degree as calculated under the other earnings benchmarks, then the (lower) median earnings benchmark would be used to evaluate the program; the scenario the commenter describes would not occur under the framework.

Changes: None.

Comments: One commenter wanted the Department to extend the field- adjusted threshold options used with graduate programs to undergraduate programs as well.

Discussion: We thank the commenter for their suggestion; however, the earnings threshold comparison groups and field-adjusted threshold options for degree programs and graduate programs are statutory and the Department is not permitted to modify the statutorily mandated threshold formula. Additionally, the Department clarifies that it is not possible to adjust the undergraduate earnings thresholds by field of study. Undergraduate programs are compared to an earnings threshold based on individuals with only a high school diploma, which by definition, do not have an applicable field of study because those individuals have not gone to college.

Change: None. Earnings Threshold--Other

Comments: One commenter suggested that rather than requiring the median earnings of a program's completers to be equivalent to those of a high school graduate to be eligible for Federal student loans, the threshold should be at least 10 percent higher to compensate for the time and money invested in higher education.

Discussion: The Department thanks the commenter for this suggestion, but notes that the requirement for a program's median earnings to equal or exceed its relevant comparison group is a statutory requirement, so we are unable to change it for degree programs or graduate certificate programs. For undergraduate certificate programs, because the Department's aim is to harmonize requirements across program types, we decline to adopt a separate standard only applicable to a single credential level. Additionally, the commenter did not provide reasoning for the 10 percent value selected, and the Department is unaware of information that would support that specific value.

Changes: None.

Comments: One commenter suggested making adjustments to the comparison threshold based on a program's target occupation or sector, possibly paired with earnings analysis distinguishing public-service professions from private-sector occupation with market-driven wages.

Discussion: The Department thanks the commenter for their suggestions, but we believe that taking this approach would not be consistent with the criteria set out in the statute that we are obligated to implement, as it adds a factor that is not clearly described in the law. We also note that many credentials in higher education prepare graduates for a variety of professions and success in both the private and public sectors, so we do not believe it would be fair to judge some programs only on the statutory earnings premium calculation, while judging other programs that prepare students for specific occupations in accordance with the outcomes for those occupations.

Changes: None.

Comments: One commenter detailed various potential interpretations of the 50 percent used to determine whether a program's earnings threshold uses a national comparison group or a State, requesting clarification on how out-of-state status is determined and at what point in time that determination is made.

Discussion: To clarify, the commenter has mistaken the old criterion in current 668.2's definition of earnings threshold assessing whether “fewer than 50 percent of the students in the program are from the State where the institution is located” with the proposed regulatory language's dividing line assessing whether “fewer than 50 percent of the students enrolled in the institution . . . are from the State where the institution is located.” This is a new statutory requirement under HEA 454(c)(3)(B) as amended by the WFTCA. The Department will determine whether to use in-State or national earnings thresholds based on an evaluation of address information provided on the FAFSA form by students who are currently enrolled at the institution at the time the evaluation is performed.

Changes: None.

Comments: One commenter requested that the Department define “uncommon field of study” in instances where the ACS may not be able to sample enough individuals to produce a formal calculation, and use that definition to either avoid a pass or fail judgment or use other methods for evaluation, such as qualitative methods. The commenter argued that failing to take one of those approaches would result in inaccurate evaluations.

Discussion: This request appears to be grounded in a misunderstanding of the terms that the Department uses for the earnings premium calculation process. The term “uncommon fields of study” is not used to enable the Department to adjust its approach to use a particular earnings threshold. By “uncommon fields of study,” the Department was referring to bachelor's degree programs where, among the group of individuals surveyed in the ACS, there are not a sufficient number of individuals that are working individuals aged 25-34 who live in a particular state and hold a bachelor's degree in a particular field of study. For example, in the ACS, there are very few working 25- 34 year-olds with a bachelor's degree in English--which the Department referred to as “an uncommon field of study.” Because there are so few individuals included in the ACS in Wyoming who have a bachelor's degree in English, the Department would not be able to calculate the “same- state, same-field bachelor's degree earnings thresholds” for graduate- level English programs in Wyoming.

In response to concerns about reasonable comparison groups used to construct the earnings threshold for graduate-level programs when too little data is available to construct a “same-state, same-field of study” threshold from ACS data, the Department has made adjustments to the procedure. When a graduate-level program has at least 50% of enrolled students come from the state of the main campus but an insufficient n-size in the ACS data for their field of study, the Department will use an earnings threshold of one dollar.

Changes: The final rule adjusts the language in Sec. 668.2's definition of earnings threshold under (3). It now specifies that for States where the Census Bureau data necessary to perform the calculations set forth in subsections (1) and (2) are not available, the earnings threshold will be one dollar. This safeguards graduate- level programs from being held to an unfairly high threshold if they are at an institution where at least 50 percent of enrolled students come from the State where the main campus is located and if the data for their field of study has an insufficient n-size in the ACS data.

As a conforming change, we also struck the language in 34 CFR 668.402(c)(3), which indicated that the Department would not calculate an earnings premium in cases where there no earnings threshold could be determined. The change to the earnings threshold definition obviates this provision.

Comments: One commenter requested that the language requiring publication of the annual earnings thresholds in the Federal Register be changed to require publication of the annual earnings thresholds on the FSA Partner Connect Knowledge Center (Knowledge Center) in a manner that is easy for financial aid professionals to locate, read, and consume, citing the importance of the Knowledge Center as a centralized resource for financial aid professionals.

Discussion: The Department thanks the commenter for their feedback and is glad to hear that the Knowledge Center is a helpful resource. While the NPRM and final rule both contain language requiring the Department to list information for institutional reporting in the Federal Register, under the regulatory language the Department is simply required to publish the earnings thresholds annually, not necessarily in the Federal Register. Keeping this part open-ended provides the Department with the flexibility to publish this information to the Knowledge Center web page the commenter mentioned relying upon, to a successor website, or to a future resource created as we learn more about what is helpful to stakeholders.

Changes: None.

Comments: One commenter recommended the Department to publish, well in advance of the first measurement year, a comprehensive data availability map--by state, by CIP at both 2-digit and 4-digit levels, by credential level, and including both n-sizes for program earnings and n-sizes for the earnings threshold (ACS)--so institutions can identify which of their programs will be subject to which comparison and which will fall into the “no threshold calculated” bucket described. The commenter also suggested that the Department commit to providing the all-students program earnings dataset to institutions at least two cohort years before any institution is subject to a loss-of- eligibility determination, so that institutions can validate the data, benchmark programs, and undertake any orderly program closures or curricular changes responsibly.

Discussion: The Department thanks the commenter for their suggestion, but declines to implement it. Data will not be available in advance, as the commenter requests, on which particular earnings threshold that each program will be compared against. This is because the Department must verify program completers lists and institutional enrollment lists to determine which earnings benchmarks (in-state or national) that a particular program will be compared against. Therefore, data for each threshold group will be made available when earnings premium data is released. Following the commenter's suggestion would require the Department to use less recent and unofficial data, which the Department believes would add significant burden for itself and create confusion among colleges. The Department further clarifies that ACS data are publicly available, and if colleges desire, they could use the data in conjunction with their own institutional enrollment records to estimate which types of programs at their institutions would fall into the “no threshold calculated” category based on the n-sizes in the ACS and enrollment at their institution.

Changes: None.

Comments: One commenter wanted to adjust the high school benchmark based on individual State issues. As an example, the commenter indicated that the State of Wyoming's earnings landscape is unique from other States. Wyoming leads the nation in energy jobs per resident. The majority of those jobs only require a high school diploma, with entry- level oil field wages often exceeding $60,000 per year. As a result, Wyoming's median high school graduate income is inflated, and the proposed earning premium measure fails to take that into account.

Discussion: The Department thanks the commenter for their feedback, but the statute requires us to compare the median earnings for completers of most undergraduate-level programs to the median earnings for working adults aged 25-34 with only a high school diploma. The Department would note, however, that institutions with fewer than 50 percent of their enrolled student population coming from the State where the institution is located would be compared to national data and therefore, programs at those schools would not be impacted by what the commenter describes.

The Department also examined how the regulation would impact programs in Wyoming. Among those with earnings data currently available (in

PPD:2026) and who are projected to be subject to the earnings test, just two programs out of 86 total are estimated to fail the earnings test. This is far below the national average, suggesting that the actual impact of the commenter's concern on programs in Wyoming at institutions where at least 50 percent of enrolled students are not from the State where the institution is located will likely be much smaller than they anticipate.

For all these reasons, the Department declines to make a change based on this commenter's concerns.

Changes: None. Completers, Cohort Period, and Cohort Expansion Cohort Expansion

Comments: Several commenters recommended changing the method by which small-program cohorts are expanded in a way that would limit a cohort strictly to completers under the 6-digit CIP code of the program being evaluated, but would pull completers from award years as far in the past as needed to reach the minimum cohort of 30. Under this proposed method, completers from award years prior to the eighth award year prior to the year with earnings data might be included in calculations, but distinct programs(as defined by 6-digit OPEID, 6- digit CIP code, and credential level) would not have completers from other programs included in the cohort used to calculate their earnings premium measure. Commenters from several fields pointed out examples of diverse fields that would be grouped together under the same 2-digit CIP codes to illustrate their belief that the 2-digit level is overbroad.

Several commenters recommended stopping the cohort expansion process after expanding to programs sharing a 4-digit CIP level, striking a balance between increasing the number of programs for which an earning premium measure may be calculated and grouping data that some commenters thought would be too broad, while complying with the expansion mandated by the statute.

We also received public comments suggesting that the cohort aggregation process used in this regulation should align with the process used in the Workforce Pell final rule (91 FR 29254). Commenters argued that this would reduce burden and complexity on the Department, as it would prevent the need to develop different systems to implement the aggregation procedure.

Several commenters expressed concern that cohort aggregation methods combining programs across broader CIP categories at the 2-digit or 4-digit level may produce metrics that do not accurately reflect the curricula, quality, or labor-market outcomes of distinct academic programs. A few commenters similarly were concerned that aggregation beyond the 6-digit level could reduce statistical validity and program- specific reliability of the median earnings by potentially combining materially different occupations, labor markets, and educational pathways into a single metric.

Another commenter discussed the range of programs covered within a 4-digit CIP code, pointing out examples of different credentials with differing earnings prospects, citing examples specific to Ph.D., master's degree, and baccalaureate degree types. This commenter requested that cohorts be limited to the 6-digit CIP level and that the CIP-SOC crosswalk be consulted in constructing benchmark fields without specifying how that should be done in this context.

Numerous other commenters more broadly requested limiting cohorts to the 6-digit CIP code, with various suggestions. Several recommended an exemption for programs with fewer than 30 completers under FVT/GE's 2-year/4-year cohort group structure, with one suggesting that wage transparency would still be covered for small programs by other Federal reporting requirements and accreditor requirements plus general knowledge of wages for the relevant profession.

Discussion: We thank the commenters for their helpful feedback. The statutory language in WFTCA requires the cohort construction to expand beyond the 6-digit CIP code if an n-size of 30 is not reached, but does not specify how many years of past data must be used before expanding to a broader CIP code. The Department is also balancing the need to use data for completers who graduated recently enough for the data to be a fair reflection of the program.

To clarify, program data aggregation does not combine programs at different credential levels, meaning some of the commentary about dissimilarities in earnings prospects between one master's program and another baccalaureate program in similar subject areas is not applicable.

The Department is persuaded by commenters who suggested that aggregating programs from the same institution and credential level up to the 2-digit CIP code is too broad for constructing the cohort used to evaluate a program. Aggregating to that level would risk that certain programs are evaluated based on the earnings outcomes of individuals from potentially highly dissimilar programs. The Department was also persuaded by commenters who recommended the cohort aggregation process should, to the extent possible, be aligned with the process used in the Workforce Pell regulation. The Department agreed that using a similar process would reduce burden, complexity, and cost. Therefore, the final rule's revised definition of cohort period has removed steps involving the use of data from other programs that only match a program's CIP code at the 2-digit level. To more closely align this process with the cohort aggregation process used in the Workforce Pell regulation, it has also removed the steps involving the use of data from completers during the eighth award year prior to the year of determination.

Changes: We have revised the definition of cohort period in Sec. 668.2(b) to simplify the procedure, to reduce the number of steps, to remove the addition of data from the eighth award year prior to the calendar year corresponding to earnings, and to remove steps that involve expanding the cohort to include programs at the 2-digit CIP level. Under the revised approach, if an institution's program (grouping of any institutional programs sharing the same 6-digit OPEID, 6-digit CIP code, and credential level) does not have a sufficient number of completers in the award year four years prior to the calendar year used for earnings, we will add data for completers from the fifth award year prior to the calendar year used for earnings. If additional data is still needed, the next step would include adding data for completers from the sixth and seventh award year prior to the calendar year used for earnings together as one group. If that additional data still does not yield a sufficient number of completers, data for completers from programs sharing the same 4-digit CIP code and credential level from the fourth, fifth, sixth, and seventh award years prior to the calendar year used for earnings will be added in one batch. If the n-size is still too small following those additions, metrics will not be calculated.

Comments: Several commenters requested data be broken down to a more granular level than the 6-digit CIP code, including by occupation, institutional program name, or program modality. One commenter stated that the proposed expansion methodology is a reasonable solution to sample size constraints, but fails to represent the diverse array of occupations that may be occupied by graduates from a single program. Another commenter requested

additional data such as the reporting of earnings distributions by occupational sector or graduate pathway to help students and the public make genuinely informed choices.

Discussion: Splitting a program's data into sub-groupings by occupation or other distinctions would run up against many of the sample size issues some commenters acknowledged. Compiling broad occupational sector data not specific to an educational program is outside of the scope of this program-based accountability framework and would likely be duplicative of information already published by other Federal agencies. Furthermore, consistent data are not available that would allow the Department to break down programs into categories that are more granular than six-digit CIP codes, as the commenters requested. The commenters provided no recommendation on what data could be used to accomplish this request.

Changes: None.

Comments: One commenter expressed concern that small cohort sizes might heighten the risk of false-negative outcomes unrelated to educational quality.

Discussion: The cohort expansion is designed to address the concern of statistical reliability with overly small n-sizes, expanding the cohort in accordance with the WFTCA's requirements until a critical number can be reached.

Changes: None.

Comments: One commenter suggested using multi-year averaging would better reflect true program value instead of sampling variation.

Discussion: While programs meeting the minimum n-size will be measured according to the single year prescribed by Congress in the WFTCA, when smaller programs require additional years of program data, each of those will be measured the same number of years after graduation, resulting in earnings sourced from multiple calendar years being factored into the program's median earnings.

Changes: None.

Comments: A few commenters requested additional transparency into aggregation methodologies, institutional review prior to publication, and safeguards for small-sample statistical reliability.

Discussion: The Department is fully transparent about its aggregation methodology--every initially proposed procedural step in the aggregation process was listed in the NPRM. Every procedural step in the process we will ultimately use following changes in response to public comment is now listed in the final rule. Institutions will have the opportunity to review the program completers lists prior to the earnings calculation, allowing institutions an opportunity to correct any inaccuracies in the data they previously submitted to the Department. This review process enhances transparency and reduces the possibility of error. Furthermore, the cohort expansion process was included in the WFTCA by Congress as a safeguard for small-sample statistical reliability.

Changes: None.

Comments: One commenter said that cohort expansion would not solve a problem with the time it takes to receive a security clearance, leading to some calendar years in which a graduate's permanent job's earnings only are reflected in some of the months out of the year.

Discussion: The commenter misunderstands the lapse between graduation and the year in which earnings are measured. The commenter's example states that a 2025-2026 graduate might receive a conditional offer in May 2026 and begin cleared employment in February 2027, leading to incomplete earnings for calendar years 2026 and 2027, but a 2025-2026 graduate's earnings would not be examined in either of those years under the earnings accountability framework. Under the framework, in 2027 we would begin examining earnings from calendar year 2025 for graduates from four award years prior, or 2020-2021. Smaller programs requiring data from additional years would go further into the past, such as adding earnings from calendar year 2024 earnings for 2019-2020 program graduates. A program graduate from 2025-2026 would have their earnings from calendar year 2030 first come into view in early 2032. A May 2026 graduate's security clearance taking until some point in 2027, as the commenter described, would not lead to a partial year of earnings in 2030, and therefore the commenter's further discussion based on this foundational misunderstanding is moot.

Changes: None.

Comments: One commenter expressed concern with the proposed rule giving the Secretary discretion to raise the n-size requirement above 30, requiring additional years of data when the commenter already was concerned that data from certain years would not be representative of program quality.

Discussion: The Department thanks the commenter for their feedback. To clarify, the Department is only maintaining this discretion for scenarios where the n-size of 30 is met but there are too few matches to earnings data for the Federal agency with earnings data to meet their own threshold to release what they consider to be statistically reliable median earnings to the Department. In this case, it is possible that further cohort expansion to additional steps in the sequence would be required to obtain statistically reliable data.

Changes: None.

Comments: One commenter requested that when a program has ceased admitting new students and a successor program using the same CIP code has been established, the predecessor program's completers be excluded from the successor program's earnings cohort effective as of the date new admissions ceased. The commenter suggested that this treatment could apply to any institution that could document the transition through State educational system records. The commenter argued that this would avoid concerns about new programs or programs transitioning into new fields from being judged on the basis of other programs at the same institution that may have poorer outcomes.

Discussion: The Department thanks the commenter for their suggestion, but we are unable to implement this idea under the statute's requirements. Exempting such subdivisions for a program (defined for the framework as covering all institutional programs sharing the same 6-digit CIP code, credential level, and 6-digit OPEID) would result in fewer programs receiving metrics and such a loophole would run the risk of being exploited to evade accountability and potential consequences.

Changes: None.

Comments: One commenter saw problems with the aggregation methodology, pointing out that programs sharing only a 2-digit CIP code in their vocation field vary significantly in length, content, and labor market outcomes. They stated that they do not believe that these are “of equivalent length” by reasonable construction.

Discussion: The Department interpreted the statutory specification of “of equivalent length” to apply to programs at the same credential level in similar subject areas. In response to commenters' concerns about the aggregated cohorts in the NPRM, as described in section “Completers, Cohort Period, and Cohort Expansion Cohort Expansion,” we have simplified the cohort expansion process to involve fewer steps and to limit expansion to the 4-digit CIP level. This revised process more closely aligns with the process for aggregating Workforce Pell

programs, reducing burden and complexity for the Department.

Changes: None.

Comments: One commenter stated that when the statute instructs the Department to look to “additional years” of programmatic data when an initial cohort does not have sufficient completers, it does not require looking backward for these additional years. They request that the Department hold off on calculating an earnings premium in the first year of calculations for programs without an n-size of 30, waiting until further data in future years builds up for programs at the same 6-digit CIP level, and only expanding to broader pooling of similar programs later if necessary at some unspecified time in the future.

Discussion: The statute specifies that the Department must measure earnings for individuals who completed a program four years prior to the year of determination (the year from which earnings are sourced). Since we are beginning with the most recently available earnings and graduates from the corresponding award year, it is implied that the instruction to aggregate additional years of programmatic data must involve reaching to completers from years further in the past.

Changes: None.

Comments: Some commenters expressed concern about the cohort aggregation process for small programs because of the possibility that some programs may get combined with other programs that are loosely- related or unrelated to the original program. Such an outcome could occur if a small program was aggregated with other programs sharing the same 2-digit CIP code. Commenters stated that aggregating dissimilar programs together could skew the earnings outcomes of small programs. Some commenters requested a process to allow institutions to provide additional information to develop more nuanced and appropriate related program lists.

Discussion: The Department agrees with the commenters' concerns. Aggregating programs to the 2-digit CIP code level introduces the possibility that certain programs are aggregated with other programs that are highly unlike the initial program, and these different types of programs may have different earnings outcomes that may skew the earnings of small programs. Given this concern, the Department proposes in Section 668.2(b) to aggregate small programs up to the 4-digit CIP level. This greatly reduces the possibility that dissimilar programs are aggregated together in ways that skew the program earnings metric.

The Department disagrees with the commenters' suggestion to allow for institutions to submit more nuanced program completers lists. This would greatly increase burden on both the Department and institutions and would likely result in arbitrary procedures for determining which students are ultimately included or excluded from such lists. We believe the proposed process to aggregate programs up to the 4-digit CIP code level produces a consistent and fair cohort aggregation process while also mitigating the commenters' concerns.

Changes: Cohort expansion to programs sharing a 2-digit CIP has been removed. For further improvements to cohort expansion, see the more comprehensive description above or the final definition for Cohort period.

Comments: Many commenters requested that when further years of data are aggregated into the cohort group, the Department adjusts prior earnings years for inflation so that earnings data from different calendar years will be comparable. One commenter requested that the Department include the final cohort size used for a program's earnings premium measure, the number of completers with earnings used in the calculation (in ranges if necessary for privacy), the aggregation path taken and how many award years were pulled to reach the minimum, the inflation index used, and a clear indication of whether the program would have been exempt absent a particular aggregation step. The commenter also requested a short-structured pre-publication review period for institutions to validate cohort construction inputs (not to negotiate outcomes) to ensure accurate, reliable determinations and transparency.

Discussion: The Department will adjust all earnings data used in calculation of the program's median earnings in accordance with the CPI-U to be consistent across years. This will correspond to the calendar year before the base calendar year used to source program earnings so that data is comparable to the most recent ACS data available to construct the earnings threshold. For example, in 2027 when we source earnings data for calendar year 2025, the most recently available ACS data corresponds to calendar year 2024. As a result, we will source 2025 earnings data for 2020-2021 graduates (and 2024 earnings data for 2019-2020 graduates, 2023 earnings data for 2018-2019 graduates, and 2022 earnings data for 2017-2018 graduates, if needed) and adjust to 2024 dollars using the CPI-U.

The Department will make several pieces of information available to institutions, including program n-sizes, the number of aggregation steps used in the cohort expansion process, and information on which individuals are included in program completer lists and when determining the institutions in-state or out-of-state enrollment status (for the purpose of determining which earnings threshold is utilized).

Changes: None.

Comments: One commenter requested that when cohort expansion added completers from additional award years to the cohort, the Department source earnings from the same calendar year for all completers used in the calculation. For example, if a program does not have enough 2020- 2021 completers and the Department must next aggregate data from the program's 2019-2020 completers, instead of using the most recently available calendar year earnings from 2025 for the 2020-2021 completers and shift back a year to calendar year earnings from 2024 for the 2019- 2020 completers, the commenter believes it would be better to use the most recently available earnings for all completers.

Discussion: The Department chooses to measure each completer's earnings in the fourth tax year following program completion (for example, 2025 for 2020-2021 completers, 2024 for 2019-2020 completers, etc.) so that each completer is assessed at roughly the same amount of time after graduation. We believe that this approach of standardizing the span between graduation and measured earnings leads to more comparable data and fairness in calculation for programs of varying sizes.

Changes: None. Similar Programs of Study

Comments: One commenter expressed concern with when the Department would be using various levels of CIP specificity, voicing opposition to a use that they believed would potentially lead to novice studio art majors with two-year degrees being compared to visual arts professionals who are well-established in their fields.

Discussion: The commenter is misunderstanding the use of similar CIP codes in the earnings premium calculation. The earnings premium for a two-year undergraduate degree would still compare the earnings of program graduates to the earnings of working adults aged 25-34 (not specific to a field of study) with only a high school diploma. If a program had few enough graduates to necessitate adding completers from similar programs of study to have sufficient data, those graduates would be added to the measurement pool for the program being

evaluated; they would not adjust the earnings threshold (benchmark).

For additional clarity, we would add that what the commenter is describing as 2-digit and 4-digit CIP codes are actually considered 4- digit and 6-digit CIP codes, respectively. These categorizations count all of the digits of a CIP code, not just those following the decimal point.

Changes: None.

Comments: A few commenters requested confirmation that the Department would not apply cohort aggregation procedures to a new program before the program has a single completer, pointing out how a strict reading of the statute could lead to this presumably unintended outcome.

One commenter also urged the Department to exempt programs from earnings premium determinations until they have produced at least one title IV completer with earnings data in the determination year cohort. The commenter asserted that if the Department does not make this change, the likely consequence is that a new program could lose Direct Loan eligibility based solely on the performance of students in other programs at the 4-digit or 6-digit CIP code levels. The commenter argued this would be inconsistent with the purpose of these requirements, which is to evaluate how a particular program's completers fare in the labor market.

Discussion: The Department disagrees with the commenters for several reasons. First, the Department is concerned about the quality of all postsecondary programs, including new programs. If an institution has a failing program in a closely related CIP (i.e., a program in a different 6-digit CIP but the same 4-digit CIP), we are concerned about the college starting a new 6-digit CIP in that same field. Second, the Department anticipates the scope of this problem to be very small. Approximately 83 percent of 4-digit CIPs only have a single 6-digit CIP within it.\19\ Therefore, at most, this concern would only apply to the roughly 17 percent of 4-digit CIPs that have two or more 6-digit CIPs. Then, the college would also need to have a preexisting 6-digit CIP sharing the same 4-digit CIP and credential level. And finally, only a smaller subset of those programs will be impacted, since only approximately 5 percent of programs are estimated to fail overall (Table 5.12). Therefore, the Department believes the odds that a new program gets aggregated with another failing 4-digit CIP and therefore also fails the earnings test is very low.

\19\ Blagg, K., (2026). Measuring Program-Level Outcomes in Higher Education. Washington, DC: The Urban Institute.

Third, the Department believes that rolling up programs in these situations is, for degree programs and graduate non-degree programs, the only solution meeting statutory criteria. And, by extension, we also believe that treating programs across postsecondary education equitably requires the Department to take the same approach for undergraduate non-degree programs.

Finally, even if the Department believed that treating undergraduate certificate programs differently was warranted and that, as a policy matter, new programs should be treated differently, the logistical obstacles to doing so would be costly and resource intensive. The Department would need to identify and track each student who first enrolls in a new program through the point that they complete programs, which could be years apart, particularly if a student withdraws and returns to enroll in the same program. This would result in significant burden for a very small number of affected programs.

Given these factors, the Department believes that providing new programs with an exemption, as the commenter requested, would be frivolous, costly to the taxpayer, and unnecessary, as it would only infrequently change the result of the earnings premium calculation.

Changes: None. Minimum Number of Completers, Privacy, and Statistical Reliability

Comments: Many commenters want the program cohort to include all completers, not just those that receive federal financial aid, when determining the median earnings calculation. This will help small programs meet the 30 completer threshold without having to dilute program data with prior year or similar program information and will also help obtain a true program median earnings measurement by factoring in all program completers income.

Discussion: The Department thanks the commenters for their suggestion, but the statute requires that a low-earning outcome program is to be determined based on the programmatic cohort of students who received title IV, HEA funds for enrollment in the program.

Changes: None.

Comments: Many commenters raised concerns about statistical reliability with small n-sizes, requesting that eligibility determinations be limited to programs with an aggregated n-size of at least 50 or 100 completers and earnings premium measures for programs with aggregated n-sizes such as cohorts of 30-49 or 30-99 completers be informational only.

Discussion: The Department thanks the commenter for their feedback. The statutory framework established by Congress considered the n-size of 30 to be sufficient and we support that determination. Furthermore, this request would substantially reduce the number of programs covered under the accountability framework. For example, if programs were aggregated until they achieved 100 completers, as one commenter requested, the Department estimates that fewer than half as many programs would be subject to the earnings premium metric relative to the share that are covered in this final rule. The Department is concerned that this approach would allow many moderately small programs, some of which may have low earnings outcomes, to skirt the accountability framework in this regulation.

Changes: None. Other Definitions Institutional Grants and Scholarships

Comments: One commenter voiced support for the proposed expanded definition for institutional grants and scholarships, stating that they believed the proposed clarification on what constitutes an institutional grant or scholarship would help reduce ambiguity and improve consistency in reporting across institutions, leading to lower administrative burden, more accurate data collection, and better comparability of program-level information available to students, institutions, and policymakers.

Discussion: The Department thanks the commenter for their support.

Changes: None.

Comments: One commenter wanted to remove the reference to the institutional share of Federal Campus-based programs in the definition of institutional grants and scholarships due to a concern of increased complexity and institutional burden associated with additional reporting requirements.

Discussion: The Department added the language to provide further clarification and resolve confusion among stakeholders when reporting institutional grants and scholarships. Based upon the commenter's concerns, it appears our goals are actually in alignment, as the new definition further specifies that the Department does not consider the institutional share of Federal Campus-based programs to be institutional grants or scholarships; therefore, the institution would not be required to report the non-Federal share

of Federal Campus-based programs under the Transparency reporting requirements.

Changes: None. Other Definitions

Comments: One commenter requested that we clarify whether eligible non-GE programs include programs that do not participate in the Direct Loan Program.

Discussion: Eligible non-GE programs include programs participating in at least one title IV, HEA program even if those programs do not participate specifically in the Direct Loan program.

Changes: None.

Comments: One commenter suggested adopting a functional definition of “worker” for purposes of the earnings premium calculation that limits calculations to graduates who work at least 30 hours per week, are employed within their field of study, are employed in a position with employer-sponsored health and/or retirement benefits, or are self- employed. This definition would exclude individuals in unpaid positions, on medical disability or leave, on family-based leave within 12 months of credential conferral, or serving on active duty in the United States Armed Forces or National Guard.

Discussion: There is not a viable way to disaggregate individuals based on their work intensity, a field of employment that matches their coursework, or work-based compensatory benefits received. Moreover, if a program's graduates are underemployed and/or unable to find work in their field in large numbers, allowing institutions to exclude program outcomes for those graduates would evade the point of having an accountability metric.

The final rule excludes completers with Direct Loan program loans discharged or under consideration for discharge on the grounds of Total and Permanent Disability or death. The framework already limits working adults to those who have worked for pay, and the Department does not believe it appropriate to exclude individuals based on additional unpaid activity or based on family plans occurring roughly three years prior to the year in which earnings are measured.

The Department made a considered choice in the 2023 Financial Value Transparency/Gainful Employment final rule to include graduates engaged in military service in program outcome metrics, citing educational attainment as a key factor to successful advancement within the miliary. The Department also pointed to the military's stated intent to pay service members at the equivalent of the 70th percentile of comparably educated and experienced civilians, indicating the high likelihood that a program graduate in the armed services would raise the median earnings for their program. We continue to believe that this is the correct approach.

Changes: None.

Comments: Several commenters suggested defining “working” to include only individuals who meet a certain income threshold, such as $15,000 in income or the $19,000 gift exclusion amount in the relevant year, to eliminate individuals with only sporadic, seasonal, or de minimis attachment to the labor market. A few other commenters requested that the Secretary define a “working” adult as a person working a minimum period of time in the labor market over a year or by month.

Discussion: The Department declines to adopt this suggestion. The ACS data includes individuals meeting the same criteria the commenters would like to exclude, so excluding those individuals from one grouping but not the other would decrease the validity of the comparison. We would also note that the $15,000 that some commenters selected could potentially exclude some individuals working full-time or nearly full- time at low wages. For example, at the federal minimum wage of $7.25 per hour, an individual working 40 hours per week and 50 weeks out of the year would only earn $14,500 in income.

Changes: None. STATS--Transparency Framework and Metric STATS Scope and Purpose Requests for Exemption

Comments: Numerous commenters asked that specific programs be exempt from the new earnings premium measure. As described above under the “General Opposition” section, many institutions with religious missions sought an exclusion on legal grounds, because their students do not borrow Direct Loans, or are foregoing higher earnings in favor of a life of religious service. Many suggested that cosmetology, esthetics, and massage programs should be excluded. Several commenters requested an exemption for programs preparing individuals for high- skill, high-need professions. One commenter urged the Department to exclude non-degree, licensure-based programs from this provision, and another similarly recommended removing undergraduate certificate programs from consideration. One asked that private career schools be removed from this regulation. One commenter recommended either an exemption to the accountability measure or adjusted benchmarks for licensed healthcare professions with mandated clinical training. One commenter suggested that the Department exclude all vocational, technical, and community colleges from the rule.

Many commenters argued that early childhood education programs should be exempt from the STATS framework and the earnings premium calculation. One commenter offered that early childhood educators should be exempt because they are an essential part of the workforce. Another commenter agreed, requesting exemption from the earnings premium measure for high-skill, high-need, low-wage positions in education including school paraprofessionals, public school teachers, and private school teachers. One commenter recommended excluding from earnings calculations students who gave birth after graduation, as childbirth and early childcare responsibilities can directly and temporarily affect earning capacity.

Another requested the Department restore and extend the profession- specific evaluation accommodations that were incorporated in prior Federal frameworks, ensuring that professions with non-linear income trajectories, practice-based models, and community-based delivery roles are evaluated on terms the commenter considered more appropriate.

Another commenter proposed that the Department exempt students at high-quality religious private institutions from the earnings premium measurement, as they are not Direct Loan participants and they continue to have access to the education they deserve.

Discussion: The Department declines to adopt these suggestions for several reasons. First, aside from undergraduate certificate programs, the Department lacks the statutory authority to exempt any class of institutions or programs from the earnings premium measure. As described in the Department Authority (Including GE and Quality Assurance Authority) section, the Department is exempting institutions and programs in several very specific scenarios where other laws or the Department's limited authority required such changes, but in general we do not have the ability to establish exemptions based on commenters' arguments about the merits of certain occupations or types of institutions.

Additionally, none of the commenters offered a persuasive rationale for why their particular programs or occupations should merit a unique approach compared with other valuable programs.

The Department has taken a careful approach in these regulations to support the equitable treatment of all programs and students, and implementing any of the exemptions described by commenters would necessarily preference some programs above others. Doing so would arbitrarily benefit whole groups of students, programs, institutions, or occupations, which would undermine the Department's strong desire for a fair, equitable, and consistent evaluation of all postsecondary programs.

Changes: None.

Comments: Some commenters suggested that programs at accredited institutions should be exempt from the earnings test. The commenters argued that accrediting agencies already ensure that programs are high quality, making the earnings test unnecessary for these programs.

Discussion: The Department disagrees with the commenters' suggestions. First, all programs qualifying for title IV, HEA program funds are at accredited institutions. Therefore, the commenters' request would exempt all programs from the accountability framework. Second, Congress directed the Department to evaluate programs based using graduates' earnings, which accrediting agencies do not often evaluate. Third, Congress did not provide an exemption for programs at accredited institutions. Therefore, the Department does not believe exempting such programs would align with the statutory requirements of the WFTCA.

Changes: None.

Comments: One commenter requested the Department add to the list of students in the exclusion list those who are employed less than full time. They also encouraged us to expand the completers list to include both title IV and non-title IV students. According to the commenter, by focusing only on title IV, HEA recipients, program earnings data will be skewed by not reflecting the full earnings premium gained for program completers who are eligible for title IV, HEA program funds. The commenter noted that this would be especially true for degree programs where there is a high concentration of non-Pell-eligible students who choose not to take out Direct Loans. This could create a potential earnings penalty for institutions and programs that keep costs low to minimize student loan borrowing.

Discussion: We decline to add less than full-time students to the list of exclusions for the reasons we have discussed elsewhere in this rule. As for expanding the completers lists to include title IV- eligible students who are eligible for title IV, HEA program funds, but who don't receive such funds, we decline to do that as well. First, this suggestion directly contradicts the statute, which requires the program earnings measure be based on recipients of title IV, HEA program funds. Additionally, this request would also be extremely difficult, if not impossible, to implement operationally, because the Department cannot know with certainty whether a student was “eligible” for title IV, HEA program funds without information directly from the institution. This information would not be provided under normal circumstances for students who do not ultimately receive aid. The Department believes that the best course of action is to track students who receive title IV, HEA program funds rather than to add those who applied for aid but did not receive it to that group. This would add complexity and burden to both the Department and schools. Moreover, the purpose of the accountability program is to limit students' access to potentially dangerous borrowing or overborrowing to programs that do not provide a sufficient return on investment. The Department believes that including students who did not receive title IV, HEA funds, despite their eligibility, would run counter to the intent to limit borrowing.

Changes: None.

Comments: One commenter suggested that the Department should apply this accountability framework on a forward-looking basis, exempting all student cohorts admitted prior to the final publication of this rule. The commenter argued that this would provide a reasonable transition and phase in period during which earnings metrics are released for informational and evaluative purposes only, without triggering immediate eligibility consequences or institutional sanctions particularly for cohorts that enrolled or graduated prior to implementation of the final rule.

Discussion: The Department disagrees with the commenter. The Department is concerned that, if this regulation was applied only on a forward-looking basis, it would allow many low-earning outcome programs to continue receiving Federal student loans for at least four additional years. As a consequence, it would fail to protect students from programs that routinely leave students worse-off financially after attending until at least 2031.

Additionally, the statute clearly requires the Department to evaluate programs based on the earnings of individuals who completed the program in the past. The Department also does not believe that such treatment is appropriate for undergraduate certificate programs, which were already subject to the existing FVT/GE regulations.

However, as described in under the section entitled “Earnings of Program Completers--Use of IRS Data,” the Department is making a limited exception for programs associated with professions that have substantial amounts of tipped income, and will not treat such a program as passing or failing if earnings for graduates of the program are from tax year 2025 or prior.

Changes: None. Elimination of the D/E Rate

Comments: Several commenters supported the removal of the debt-to- earnings rate.

Discussion: The Department thanks the commenters for their support. The Department acknowledges that this is a change from the previous regulations. However, we believe the elimination of the D/E metric will reduce the complexity, cost, and burden necessary to implement and comply with the regulations; result in greater consistency in the regulations across all program types and sectors of postsecondary education; and provide useful and comparable information to students and the public. These benefits outweigh any potential reliance any party could have had on the current rule, which the Department notes, it has never applied to any program or institution.\20\

\20\ Because the Department has not applied the D/E metric to a program or institution or determined that a program is ineligible for title IV benefits because of the metric, we do not believe any party has a reliance interest, let alone a significant reliance interest, on the use of the metric.

Changes: None.

Comments: Several commenters opposed the elimination of the D/E rate metric for GE programs. One commenter specifically requested that the Department not to impose the proposed earnings premium measure on GE programs. They claimed the D/E framework, when coupled with cohort default rate oversight, is more appropriate, more informative, and more consistent with congressional intent.

Some of the commenters opposing the elimination of the D/E rate metric suggested that a debt-to-earnings test or a loan-based metric, such as a repayment or default rate, would be superior to the proposed earnings test because it would better reflect whether students were able to repay their loans. They suggested the Department replace the earnings test with a debt-based test. Other commenters suggested that the Department add a D/E rate metric to the

earnings test and require that programs pass both to remain eligible for title IV, HEA program funds.

Discussion: The Department does not have the statutory authority to replace the earnings test enacted in the WFTCA with a loan-based test for degree programs and graduate certificate programs. For programs subject to gainful employment requirements, the Department believes the earnings test in the final rule is more advantageous than a loan-based alternative test. Earnings are a more direct measure of whether a loan is affordable, or a whether program of study pays off, whereas loan repayment measures can be influenced by many factors, including repayment terms and policies.

The Department did not include a separate debt-to-earnings test, similar to the current regulations, for programs subject to the gainful employment requirements as the Department believes that such a test does little to increase taxpayer and consumer protection but adds significant complexity, cost, and administrative burden for the Department.

As described in the NPRM, the Department's analysis of data obtained for the College Scorecard revealed that it is likely that including a D/E test for GE programs would not result in a substantial number of additional programs failing the metric. The Department estimates that, after accounting for the programs that fail the earnings premium measure, maintaining the D/E metric would result in a 0.1 to 0.3 percentage point increase in the share of programs and students, respectively, that would fail (Table 8.1). The Department believes those shares are likely be even smaller once pending changes to loan limits under the WFTCA are implemented. In the Department's view, this amounts to a de minimis number of impacted programs. The Department notes that the estimated net budget impact for the proposed regulation reflects a larger effect by removing the D/E metric than the Department's separate analysis that identifies additional failing programs used for research purposes.

Changes: None.

Comments: A few commenters disagreed with the Department's proposal to eliminate the D/E metric from the accountability framework and STATS transparency reporting requirements and indicated their belief this action would be a step backwards in oversight, leaving students at risk of predatory programs. They opined that an earnings premium metric alone does not go far enough to ensure that programs lead to financial stability. Some commenters further stated that evaluating a program strictly on earnings, without providing any context for the debt required to achieve those earnings, provides an incomplete picture of the financial realities for students. These commenters argued that removing the D/E metric enables institutions to continue charging high tuition for graduate education programs or certificates without facing any consequences. A few commenters urged the Secretary to reinstate the D/E metric for all programs, create fair alternative benchmarks, and immediately cut off all title IV, HEA funding, including Pell Grants, to predatory and failing programs.

Discussion: The Department will not apply a D/E test to GE programs for the reasons discussed during negotiated rulemaking and in the NPRM to harmonize the accountability requirements for all programs and reduce unnecessary complexity while preserving meaningful accountability. Additionally, as we have explained previously, the D/E rate metric would only impact a very small percentage of programs that the earnings premium measure does not already address, and the added technical complexity, cost, and burden to the Department is not worth maintaining the framework. As discussed during negotiated rulemaking, in the NRPM, and in the RIA in this final rule (Table 8.1), the Department believes that including the D/E metric would result in a 0.1 to 0.3 percentage point increase in the share of failing programs and students, respectively, which the Department does not believe justifies the burden, complexity, and cost to maintain this metric.

Changes: None. Earnings Premium Calculation (Earnings Measurement Period)

Comments: One commenter applauded the Department's commitment to applying accountability standards to non-degree programs. They reiterated that maintaining an earnings test for these programs will protect both students and public investment in higher education.

Discussion: The Department agrees that revising the existing FVT and GE regulations to align with the WFTCA requirements and applying both frameworks across title IV eligible GE and non-GE programs regardless of institutional sector or program type is beneficial for students and the public's investment in higher education.

Changes: None.

Comment: Many commenters expressed their belief that there is a mismatch between the age of program completers and individuals in the earnings test benchmark. The earnings threshold includes individuals who are 25-34 years old, and commenters argued the earnings test makes a flawed comparison by measuring graduates' earnings just four years after completion against a benchmark derived from individuals with significantly more years in the workforce.

These commenters suggested that the Department should use different age ranges to determine the earnings thresholds, such as individuals aged 21 to 25, which they believed would better reflect the age program graduates.

Other commenters suggested that a larger age range be utilized to determine the earnings thresholds, such as individuals aged 19-60 or 19-65. These commenters believed that a larger age range more appropriately reflected the age of workers in particular industries, such as massage therapy.

Discussion: The Department believes the typical graduate across the credential categories (certificate, associates, bachelor's degree) is within the identified comparison age range. According to the National Postsecondary Student Aid Study (2019-20), the median age for a student who completes an undergraduate certificate is 26.

Under the earnings test, earnings would therefore be measured when completers are 30 years old (4 years post completion), placing them squarely within the 25-34 age range for the comparison group. Median ages for completers in associate and bachelor's degree programs are 24 and 22, respectively, also placing them within the age range for the earnings comparison group when earnings are measured four years after completion (i.e., 28 and 26, respectively).

Furthermore, the Department does not have the statutory authority to use different age ranges to determine the earnings thresholds used in the earnings test for degree programs and graduate non-degree programs. Section 84001 of the WFTCA specifically states that the earnings benchmarks will be based on the median earnings of individuals aged 25-34. For these reasons, the Department cannot accept the commenters' suggestions to use alternative age ranges.

Changes: None.

Comments: Many commenters expressed concern with using the 4-year earnings of program graduates to judge program quality. Commenters stated that measuring earnings after only four years is too soon to accurately measure the true value of the program. Other commenters noted that in many fields it

takes longer than four years for individuals to realize the true outcomes from their program.

Many commenters explicitly called out the future earnings growth in cosmetology professions. These commenters stated that it takes cosmetologists many years to build a client base, invest in necessary tools, and establish themselves in the field. Other commenters stated that the rule does not account for the additional time it takes cosmetologists to become licensed in their states. For these reasons, commenters argued that measuring the earnings of cosmetologists during these early earnings years does not accurately reflect the earnings of individuals in this profession.

Several commenters explained that graduates of Chinese Medicine programs must complete 4 or 5 national board exams and then apply for state licensure, a process that can take several months or more. Also, acupuncture and East Asian medicine programs require extensive supervised clinical hours mandated by state licensure boards and national accreditors. Early earnings in such models are not comparable to those of graduates entering salaried employment immediately after graduation. Applying a uniform earnings-based standard across different career pathways risks mischaracterizing program effectiveness.

Several commenters recommended pushing the program earnings measurement year out to five to ten years after students graduate, suggesting that this would provide a more realistic measure of earnings.

Discussion: The Department is aware that earnings tend to grow over time, including for individuals with cosmetology credentials, as they gain experience and establish themselves in the labor market. The Department notes that the proposed rule measures earnings a year later (4 years after completion) than under the current Gainful Employment regulations, which better accounts for these earnings gains.

The Department is concerned that there is a policy tradeoff, however, in pushing the measurement year out further. Graduates are responsible for repaying their loans starting in the first year after they complete their credential. A credential that does not produce earnings above the test threshold for many years will make it difficult for borrowers to afford their loans during those years, leading to financial distress or costs for the federal government which must subsidize low earnings through loan repayment benefits, such as interest waivers and loan forgiveness. The Department believes that the 4-year measurement strikes an appropriate balance between capturing earnings gains after graduation and ensuring that loan borrowers earn enough to support their debts.

The Department has also reviewed research showing that certificates and associate degrees in cosmetology and massage therapy tend to show lower earnings growth than other credentials between the first and fifth year (about $5,000 after inflation) after students complete. Earnings growth between the fourth and fifth year after completion for these credentials accounts for only approximately $1,000 after inflation, which does not support the claim that these fields tend to see a large spike in income around the 5th year after completion.\21\

\21\ Jason Delisle and Jason Cohn, “Measuring Earnings Growth by Field of Study to Inform Higher Education Policy, New College Scorecard Data Report Earnings up to Five Years after Completion.” Urban Institute, December 2024. https://www.urban.org/sites/default/ files/2024-12/ Measuring_Earnings_Growth_by_Field_of_Study_to_Inform_Higher_Educatio n_Policy.pdf.

The Department also notes that measuring earnings as late as 10 years after completion, as some commenters suggest, may not accurately reflect the current program the institution offers because so much time has passed from the point that students enrolled and the point at which earnings are measured. Under a 10-year earnings test, the Department would effectively take action against a program that may no longer resemble the one for which it is measuring earnings.

Lastly, the Department does not have the authority to extend the period between the student's graduation and the year in which earnings are measured for degree programs, as some commenters requested. Section 84001 of the WFTCA specifies that program earnings are to be measured in the fourth year following the year students graduate from their program. For this reason, the Department does not believe it has the authority to measure the earnings of program graduates in later years, as some commenters requested.

Changes: None. Alternate or Additional Metrics

Comments: One commenter requested that, when calculating the program earning premium measure, the Department should distinguish between graduates who plan to pursue a career related to their major and those who do not. The commenter noted that many students enroll in online courses for a bachelor's degree program with no intention of pursuing a career in that particular field, but these students would continue to be included in the program's median earnings measure.

Discussion: The Department believes that in such situations, programs should still be held to the same standard regardless of which occupation students intend to pursue. Students who receive Direct Loans to pay for an undergraduate degree they are interested in for nonpecuniary reasons should expect as much, not only for themselves, but also on behalf of the taxpayers who provide the loan funds. Importantly, the law does not distinguish between student motivations. Also, as we note in the RIA section below, the regulations accommodate programs that serve as a precursor to graduate school both by excluding from the earnings premium calculation students who have completed a higher-credentialed program and, pertinent to this comment, by excluding students who are enrolled during the year earnings would be measured for the student.

Changes: None.

Comments: One commenter asserted that the Secretary has the ability to adjust the proposed ACS-based median earnings thresholds, such as increasing the margin of error (MOE) confidence level for the results of the ACS from 50 percent to 99 percent, which would have the result of lowering the thresholds a marginal amount. In addition, the commenter proposed adding a “Zone” result to the earnings premium test if a program's earnings miss the threshold by less than a given percentage, such as 5 percent. Finally, the commenter believed the Secretary should consider testing based on combining the program graduates' earning results over a rolling two-year period, as it has done with some prior GE accountability measures. These recommendations would directly apply only to the measurement of undergraduate degree programs.

Discussion: The Department disagrees with the commenter and declines to accept these recommendations. First, the Department does not use a confidence interval or margin of error when calculating the median earnings value in the earnings thresholds. The Department uses the median without regard for a confidence interval because of the statutory requirements to use median earnings. Second, there is no legal justification for the Department to establish a “zone” category for degree programs because the statute does not describe such a category nor a unique treatment for programs that might fall into it. Third, the commenter requests that the Department average several

years of data together, and the Department clarifies that some programs, particularly small programs, will include completers from two or more years due to the cohort expansion process described in this regulation. Furthermore, the Department reminds commenters that a program must fail the earnings premium metric in two out of three consecutive award years before Direct Loan program participation is impacted, which further reduces the influence that one anomalous earnings year may have on program earnings outcomes.

Changes: None.

Comments: Several commenters proposed the Department incorporate repayment-based safe harbor protections for programs with strong borrower repayment outcomes and low default rates. They stated this method would provide a more accurate and equitable measure of program value than a narrow earnings-based calculation alone.

Discussion: The Department declines to adopt the commenters' proposed “safe harbor” because establishing a categorical exemption from earnings-based standards for programs with low cohort default rates would undermine the purpose of a uniform accountability framework, violate the statute in the case of degree programs and graduate non-degree programs, and could inadvertently shield programs whose graduates earn low wages but avoid default through income-driven repayment mechanisms. The Department recognizes that repayment and default rates can provide important information about students' ability to manage their debt after leaving a program. However, the Department believes that the earnings premium measure remains a critical component of accountability, as it provides a direct measure of the economic value of educational programs and helps ensure that Federal student financial assistance supports pathways that lead to positive financial outcomes for students. While low default rates may indicate students avoiding default, they do not demonstrate whether a program leads to labor market outcomes that justify the investment of Federal resources.

Changes: None.

Comments: A commenter from an acupuncture program stated that the entry level degree for that program is a doctorate. They requested that the accountability framework for doctoral programs be modified to use a 35 percent repayment rate and a licensure pass rate as an alternative to the debt ratios.

Discussion: As the Department has already described above, we decline the suggestion to use alternative metrics like licensure pass rates and loan repayment rates. For the specific program the commenter mentions, the Department clarifies that we are statutorily required to implement the earnings test for the doctoral degree program in acupuncture. The Department does not have the statutory authority to exempt or modify the accountability framework for particular types of graduate programs, as the commenter requests.

Changes: None.

Comments: One commenter encouraged the Department to build upon the STATS framework by publishing program-linked loan performance datasets across all title IV programs. The datasets could include repayment outcomes, delinquency, and default status. Post-completion earnings distributions, borrower characteristics, program and institution identifiers, and loan product and repayment plan information. The commenter contended that these datasets would allow researchers, policymakers, students, parents, and other market participants to assess program value and identify areas for improvement.

Discussion: The Department appreciates the commenter's request to publish program-level outcomes. While the Department does not commit to publishing the specific data elements the commenter requests, we clarify that this regulation includes a provision that requires the Department to publish program-level outcomes information, including: the published length of the program; the median length of calendar time it takes for students to complete the program's academic requirements; the total number of individuals enrolled in the program; the total cost of tuition and fees; the total cost of books, supplies, and equipment; the percentage who received a Direct Loan program loan, a private loan, or both for enrollment in the program; the median loan debt of students who completed the program during the most recently completed award year; the median earnings of students who completed the program; whether the program is programmatically accredited and the name of the accrediting agency, as reported to the Secretary.

The Department believes this information will be informative to students and families, as well as researchers, who would like to assess program value. The Department also clarifies that it has the ability to publish additional metrics beyond this list, should it determine to do so at a future point.

Changes: None.

Comments: One commenter recommended that the Department adopt a multi-year averaging of earnings (i.e. 3-5 years) or an adjustment for self-employment dynamics, mirroring the methodology used for Social Security benefit calculations to remedy the limitations in the administrative data.

Discussion: The Department declines the commenter's request. As discussed above in this regulation, self-employment income is accounted for in the earnings data maintained by the IRS. The Department believes that averaging multiple years of self-employment data together to smooth over year-to-year variation would contradict the statutory intent of the earnings test, which is to measure earnings in the fourth year after graduates finish their program. Combining earnings across multiple years would extend the time horizon in which earnings are measured in a way that the Department does not have the authority to do.

Changes: None.

Comments: Several commenters urged the Department to replace or supplement the earnings premium test by comparing the earnings of a program's graduates before and after completing a program of study instead of an earnings threshold of working adults. These commenters argued that this methodology would better account for factors such as regional cost and wage differences and age group comparisons between graduate and working adult cohorts.

Discussion: The Department disagrees with this suggestion. First, Congress specified the working adults benchmark population in the WFTCA, and the Department does not believe it would be appropriate to contradict Congressional intent by imposing an alternate comparison group. Moreover, comparing the pre- and post-enrollment earnings of graduates would violate the statutory prohibition against a student unit-record system under section 134 of the HEA.

Changes: None. Covered Institutions and Programs

Comments: One commenter suggested that the Department maintain the exemption of institutions located in U.S. Territories and the Freely Associated States from the earnings premium test. The commenter was concerned that data used for the earnings benchmark thresholds for the territories do not reflect actual earnings in those territories in the same field.

Discussion: The Department disagrees with the commenter for several reasons.

First, in the 2023 FVT/GE final regulations, the Department supported

its decision to exempt institutions in these regions by arguing that there are limited sources of earnings information for these areas and that the coverage rate of the Puerto Rico Community Survey (PRCS) is significantly lower than that of the ACS. However, after conducting additional research and analysis, we do not believe that the exemption in the previous regulations was appropriate and, may in fact, have reduced the integrity of the title IV, HEA programs with respect to the FVT/GE framework.

Second, most generally, in the NPRM the Department indicated that eliminating the exemption for institutions in the U.S. Territories and the Freely Associated States would result in a regulation that included a greater number of eligible institutions and a wider range of programs, which would benefit students and the public by providing useful and comparable information across institutions and programs. We continue to believe that holding a greater number of programs accountable for the earnings of their graduates is appropriate and beneficial to both students and taxpayers.

Third, since the 2023 regulations were published, the WFTCA was passed, and that law requires the Department to implement an earnings premium test for all undergraduate degree programs and all graduate programs, including programs at colleges in U.S. Territories and the Freely Associated States. We do not have the statutory authority to fully exempt institutions in these areas. Congress specifically called on the Department to use data from the Census Bureau, and the only such data that could accomplish this is the ACS and PRCS. The Department believes the WFTCA's requirement to apply an earnings test to undergraduate degree programs, and all graduate programs supersede the Department's prior decision to give certain programs in U.S. Territories and Freely Associated States an exemption.

Fourth, the Department believes the ACS and PRCS are reliable as long as there are a sufficient number of survey respondents to determine an earnings threshold. The threshold the Department considers sufficient is 16 or more, which aligns with the thresholds used in the privacy protocols of this Department and in other Federal agencies. Thus, the Department believes that the PRCS can be utilized in certain cases as long as a sufficient number of survey respondents are available to calculate an earnings threshold.

Fifth, certain programs in certain U.S. Territories will continue to receive an exemption. This exemption would not apply simply because the programs are located in a U.S. Territory or a Freely Associated State, but because Census data are not available to calculate the earnings threshold. For example, bachelor's degree programs at in-state serving institutions in Guam will be exempt from the earnings premium metric because U.S. Census data are not available to calculate the in- state (i.e., in-territory) earnings threshold in which this program would be judged against. The Department estimates that approximately 300 programs will qualify for an exemption for this reason.

Finally, the Department believes that this change closes a potential loophole in the prior regulations that would have allowed an institution, particularly an institution offering distance education programs, to relocate to one of the U.S. Territories or Freely Associated States in an effort to avoid the consequences of the regulations. Especially in cases where institutions offer only distance education programs from a main location that is only an administrative location, such a move would not change the students they are able to recruit for online enrollment, but would still result in an exemption from the consequences of the earnings premium measure. We believe that eliminating this blanket exemption will limit the opportunities for avoiding the consequences of the earnings premium measure by relocating to a U.S. Territory or a Freely Associated State.

Changes: None.

Comments: One commenter recommended that a distinction between career tech/vocational, corporate, and independent schools be identified in the earnings premium measure.

Discussion: The new earnings test compares the earnings of program graduates to an earnings benchmark. There are six earnings benchmarks. The benchmark earnings data come from the U.S. Census Bureau. The data includes the median earnings of working 25-34-year-olds, with the relevant credential level, the relevant geographic area, in the relevant field of study.

Changes: None. Earnings Accountability Scope of Accountability

Comments: Many commenters supported the expansion of the accountability framework to include all sectors and credential levels, including undergraduate nondegree programs. One commenter praised the Department's effort to consolidate previously fragmented accountability and disclosure frameworks including FVT, GT, and the WFTCA accountability framework into a single, more coherent earnings-based standard. Another commenter concurred and stated that by including undergraduate certificate programs within a single unified framework, the Department has created a more consistent and equitable system in which all students, regardless of the credential they pursue, benefit from the same transparency and protections. A few commenters pointed out that Congress did not prohibit the Department from continuing to regulate GE programs under longstanding GE authority, but instead explicitly left the Department GE authority intact. One commenter reasoned that the Department should not exempt certificate programs from accountability because even if they were not included directly in the WFTCA legislation, it was Congress's documented intent that certificate programs be held accountable, with the understanding that they were already subject to a similar earnings threshold under the Department's existing GE rule. One commenter pointed out that no version of the WFTCA would have removed accountability requirements for undergraduate certificate programs, noting that an earlier House-led version would have removed GE authority but applied an accountability framework directly to these programs, while the subsequent Senate-led version instead maintained GE authority, which applies to undergraduate certificate programs. One commenter noted that the concept of an earnings accountability framework falls within the boundaries of Section 454 of the HEA; that the Direct Loan program exists to provide students with access to capital for higher education on terms that assume repayment is realistic; and that programs that repeatedly leave students with earnings outcomes below appropriate benchmarks do not provide assurances that the institution is serving students, that borrowers are left in a position to repay their loans, that institutions are meeting the objectives of Federal programs, and that Federal resources are being used consistently for their intended purposes.

One commenter estimated that, while undergraduate certificate programs make up only 8 percent of overall “Federally aided enrollment,” they enroll 52 percent of Federally aided students enrolled in low-earning programs that would fail the earnings threshold. A few commenters remarked that students in every sector deserve protection from low-earning outcomes, and that protecting students from spending their limited title IV, HEA

eligibility on programs that fail to deliver economic value, including undergraduate certificate programs, is an essential issue of equity. One commenter noted that the title IV, HEA programs are funded by U.S. taxpayers, and that taxpayers want an appropriate return on this investment. One commenter observed that, regardless of credential level or sector, students should not be left worse off than if they had never attended a postsecondary program and that institutions receiving taxpayer dollars have a responsibility to provide sufficient economic value to continue to access title IV, HEA funds. One commenter characterized the earnings premium standard as a low bar, and observed that certificate programs would only fail the metric if they leave graduates worse off than the median high school graduate.

One commenter expressed support for the Department's approach to harmonize the way different programs are treated for accountability purposes, maintaining that it is critical to hold all institutions and all programs accountable when they lead to unacceptably poor earnings outcomes. This commenter urged the Department to maintain the proposed rule as written.

One commenter commended the Department for expanding the accountability framework to include programs in U.S. Territories and Freely Associated States, noting that the expanded scope of accountability will promote greater transparency and comparability for students when evaluating program options.

Discussion: We thank the commenters for their support.

Changes: None.

Comments: Numerous commenters objected to the inclusion of undergraduate certificate programs in the earnings accountability framework. Many commenters argued that because the WFTCA did not specifically include undergraduate certificate programs, including these programs in the accountability framework would circumvent Congressional intent. Many commenters speculated that Congress intentionally chose not to include undergraduate certificate programs in the WFTCA accountability framework because the earnings test was designed for degree-granting programs, not shorter-term skills-based programs that lead directly to licensure and employment. One commenter further speculated that including undergraduate certificate programs in the accountability framework contradicts the Trump administration's regulatory priorities and its goals for career education. One commenter further claimed the Department did not sufficiently explain in the NPRM the decision to apply the earnings accountability framework to undergraduate certificate programs.

Several commenters opined that the accountability framework does not adequately consider different functions and outcomes of nondegree certificate programs as compared to degree programs, and observed that career and technical certificate programs are designed to deliver an immediate licensable skill set in a shorter timeframe to enter a fundamentally different labor market than degree holders.

Numerous commenters demanded that the Department exempt undergraduate certificate programs from the accountability framework entirely. Many commenters suggested that the Department exempt such programs from sanctions under the accountability framework but retain the earnings premium measure, reporting, and informational disclosure requirements for such programs for transparency and disclosure purposes. A few commenters proposed that the Department provide undergraduate certificate programs a “safe harbor” alternative compliance pathway if the program's median cumulative Federal student loan debt for the most recently calculated cohort period falls below a specific threshold, with a few commenters suggesting exempting a program with median debt less than $10,000 (adjusted annually for inflation).

One commenter suggested that if the Department retains an accountability framework for undergraduate certificate programs, it should restore the more flexible standards of the 2019 GE Rule rather than the earnings premium measure.

One commenter predicted that many short-term credential programs would fail the same earnings test applied to degree programs and noted that exempting them from the accountability framework while restricting degree programs in humanities, education, and social services would channel students into a narrow band of government-sanctioned occupations and away from occupations that produce higher long-term earnings and mobility.

Another commenter opined that the accountability framework may create a troubling precedent wherein the Federal government indirectly pressures institutions to steer students toward only fields and career pathways that produce the highest immediate earnings, regardless of public value, cultural importance, or student autonomy, thereby working against the principles of a free and open labor market.

Discussion: As stated in the “Authority for This Regulatory Action” section of this document, the Department maintains that the WFTCA, Section 410 of the GEPA, title IV of the HEA, and the Secretary's unambiguous authority to establish procedures and requirements relating to the administration of title IV, HEA programs, provide the Secretary authority to amend the regulations governing institutional eligibility, general provisions regulations, and the Direct Loan Program. We believe that the inclusion of undergraduate certificates in the earnings accountability framework is needed to harmonize the implementation of the WFTCA with the existing FVT/GE regulatory framework. The Department's resolute goal is to provide students, families, institutions, and the public with meaningful and comparable program information and to promote consistency in the treatment of programs across all credential levels and institutional sectors. This goal is best advanced through the establishment of a single metric that would be calculated for nearly all programs eligible for title IV, HEA funds and that has the same program eligibility consequences for failure of GE and eligible non-GE programs alike. It will also result in consistent and comparable program information disclosures for students.

The Department seeks to reduce unnecessary regulatory burden on institutions as part of our broader effort to implement Executive Order 14192, entitled “Unleashing Prosperity Through Deregulation.” We reiterate that applying the value-added earnings premium test to all programs will effectively ease institutional burden and advance the Executive Branch's policy to deregulate under Executive Order 14192. As discussed more fully below in the RIA, applying the WFTCA earnings test to undergraduate certificate programs will result in fewer of those programs failing the metric and facing eligibility consequences compared to under the outgoing FVT/GE regulations.

The Department acknowledges the different functions and outcomes of nondegree certificate programs as compared to degreed postsecondary education programs, but central to this regulatory action and to the statute that prompted it is the notion that all title IV, HEA-eligible programs must lead to improved earnings outcomes for graduates. We believe that comprehensive disclosures on program outcomes are necessary so that any

student, regardless of chosen academic program or future occupation, will be more fully informed about costs and potential returns on their investment.

The Department believes a “safe harbor” exemption based on relatively low cumulative Federal student loan debt would be contrary to the intent of a uniform accountability framework and declines this suggestion. In addition, Congress did not provide any such exemption in the WFTCA, and such an exemption based on loan debt would be completely unrelated to the earnings outcomes Congress emphasized in the WFTCA.

The Department reiterates that this accountability framework is not intended to pressure institutions to steer students to any particular career pathway but--to the extent that a program participates in title IV, HEA--to incentivize institutions in every sector of higher education to offer programs at all levels that deliver economic value, to enhance data accessibility for students, and to protect taxpayers and students through stronger oversight and comprehensive disclosures on program outcomes. Most importantly, the Department seeks to establish a commonsense, functional, implementable accountability framework that will withstand legal scrutiny, endure future changes in political winds, and--above all--yield actual results after the Department's four previous attempts at GE regulations, which spanned well over a decade and did not hold a single program accountable. An accountability framework that exempts undergraduate certificate programs, or that treats such programs preferentially, simply would not accomplish those goals.

Changes: None.

Comments: One commenter suggested that the Department exempt programs from eligibility consequences in disciplines where many students pursue a higher-level credential during the earnings measurement window and where documented enrollment in graduate programs accounts for a cohort shortfall in years three through five.

Discussion: We believe the regulations already accomplish these suggestions. Under Sec. 668.403(c)(2), a student is excluded from the earnings premium calculation if the student was enrolled in any other educational program at the institution or at another eligible institution during the calendar year for which the Department obtains earnings information under. In addition, for undergraduate programs, Sec. 668.403(c)(3) excludes a student from the earnings premium calculation if the student completed a higher credentialed undergraduate program at the institution after completing the program. Similarly, for graduate programs, Sec. 668.403(c)(4) excludes a student from the earnings premium calculation if the student completed a higher credentialed graduate program at the institution after completing the program. The definition of Cohort period under Sec. 668.2(b) expands the completer cohort until it includes at least 30 graduates who are not excluded for reasons such as those described above, and if the fully expanded cohort still does not reach a minimum of 30 graduates, the Department does not perform the earnings premium calculation for that award year. In sum, we believe these provisions address the circumstances to which the commenter refers.

Changes: None.

Comments: One commenter argued that, because the general consequence for a low-earning outcome program is a loss of that program's Direct Loan eligibility, the Department should exempt from the accountability framework institutions that have not participated in the Direct Loan program since before July 1, 2026, as their educational programs are not at risk of losing Direct Loan eligibility.

Discussion: We acknowledge the commenter's concerns, and upon consideration, have made changes to the rule in response, though we have adopted a slightly more targeted approach. As explained above in the “Department Authority (Including GE and Quality Assurance Authority)” section, the Department will exempt institutions from the consequences of the earnings premium measure if they have not participated in the Direct Loan program for the five most recently completed award years prior to the year during which the earnings premium measure is calculated. The metric will still be calculated for such programs, but the programs will not be subject to a loss of eligibility for title IV, HEA programs due to the new administrative capability test in 34 CFR 668.16(t). Also, we provide a similar exception if the institution agrees not to permit students to borrow Direct Loan funds in that program under the provisions in 34 CFR 685.203(m)(2) for at least five award years.

Changes: None. Certification Requirements

Comments: A few commenters characterized the use of four-digit CIP codes linked to any matching SOC code for purposes of precluding institutions from seeking Direct Loan eligibility for new programs that are substantially similar to programs that lost Direct Loan eligibility under the earnings accountability framework as an overly restrictive approach that risks negatively affecting an institution's ability to offer distinct and unrelated academic programs. Commenters noted that for some CIP-SOC crosswalk combinations, despite shared secondary linkage, programs can have distinct curricula, competencies, labor market outcomes, and, in some cases, separate programmatic accrediting bodies, so poor performance in one program should not limit an institution's ability to begin another program within the broader four- digit CIP category. Several commenters suggested that the Department adopt a more granular methodology, such as the use of six-digit CIP codes or limiting to primary SOC mappings only.

A few commenters argued that prohibiting an institution from adding programs that share the same four-digit CIP code and overlapping SOC codes as a program subjected to a two-year loss of eligibility determination may, especially for small, specialized institutions, limit thoughtful program development, curriculum refinement, and educational innovation. They noted this may happen even where revised or newly developed programs differ meaningfully in educational structure, emphasis, delivery model, or professional focus, because broad CIP and SOC classification categories may not adequately distinguish between materially different educational models. A few commenters urged the Department to narrow the restriction to programs sharing the same six-digit CIP code and credential level, rather than relying solely on broader four-digit CIP classifications. One commenter suggested tailoring the restriction to programs sharing the same six- digit CIP code, credential level, and a substantially similar educational and professional focus. Another commenter recommended that the Department also consider providing an exception or review pathway for programs that have been evaluated and approved by a specialized accrediting agency with demonstrated expertise in the profession, particularly where those programs reflect material differences in curriculum, clinical training, educational model, or professional emphasis.

One commenter contended that the classification systems do not keep pace with workforce needs, given that the latest updates to CIP and SOC codes occurred in 2020 and 2018, respectively, and argued that tying program eligibility to outdated codes limits higher

education's ability to launch programs that meet current employer demand.

Discussion: We disagree with the commenters who argued that prohibiting an institution from adding programs that share the same four-digit CIP code and overlapping SOC codes as a program subjected to a two-year loss of eligibility determination is too restrictive. This provision is designed to prevent institutions from evading consequences for programs producing inadequate earnings outcomes by voluntarily discontinuing a program before Direct Loan consequences apply based on the earnings premium, and from bringing back a program that is failing or at risk of failing under a similar CIP code with few changes. While six-digit CIP codes within some four-digit CIP categories may have some more variation than others, there are still sufficient common elements to programs within a four-digit CIP category to raise concerns that an institution with one failing program within the category should wait and reassess elements such as program design and market demand before establishing a new eligible program within the same category. We also note that the protections against adding similar programs are less restrictive than those under the outgoing FVT/GE rule in that (1) unlike under FVT/GE, we consider whether the programs have overlapping SOC codes; and (2) the earnings accountability framework uses a less stringent two-year minimum period of ineligibility, as compared to three years under FVT/GE.

The Department does not believe that an exception or review pathway for programs that have been evaluated and approved by a specialized accrediting agency would be supported under the WFTCA. Even were this not the case, such an exception or review process would likely be costly and burdensome for the Department, institutions, and accrediting agencies.

With regard to the updating of SOC codes, we note that the Department of Labor maintains and updates the listing of SOC codes, and we cannot regulate another Federal agency. The Department of Education updates the list of CIP codes every 10 years, and we believe this regular review is sufficient to track developments in academic fields. We disagree that tying program eligibility to CIP and SOC codes stifles an institution's ability to respond to workforce demand.

Changes: None.

Comments: A few commenters expressed concern that prohibiting an institution from adding programs that share the same four-digit CIP code and overlapping SOC codes as a program subject to a two-year loss of eligibility determination is an overly lenient approach, which an institution could game by simply making minor alterations to its program. The commenters were concerned that the institution would be able to continue to market, offer, and receive financial aid for a low- earning program, that, in substance, would be a reiteration of a previously failed program, and requested that the Department strike the SOC overlap provision. One commenter further suggested that the Department additionally provide, in sub-regulatory guidance, that an institution may petition for an exception where it can demonstrate with clear and convincing evidence that the new program is meaningfully distinct from the failed program in academic content, length, and delivery--placing the burden of proof on the institution rather than on the Department.

One commenter cited as examples that a medical insurance coding program (51.0713), which leads to medical records specialists (29-2072) or health IT and medical registrars (29-9021) occupations, could instead reopen as a medical insurance specialist/medical biller (51.0714), which leads to a different set of occupations (healthcare support workers [31-9099] and medical secretaries and administrative assistants [43-6013]); and that a cosmetology program (CIP code of 12.0401) could instead begin a barbering program (12.0402), as both have distinct listed occupations. The commenter claimed that the Department has not adequately explained the shift away from the definition of a substantially similar program under the FVT/GE regulations.

Discussion: We disagree that prohibiting an institution from adding programs that share the same four-digit CIP code and overlapping SOC codes as a program subjected to a two-year loss of eligibility determination is an overly lenient approach. As discussed above, other commenters argued that it is too restrictive an approach that stifles an institution's ability to develop programs to meet market demand and advocated for restricting programs sharing the same six-digit CIP code only.

We believe the fairest and most reasonable approach is a middle ground between restricting at the six-digit CIP level only, which we see as too permissive and susceptible to the types of gaming the commenters described, and restricting at the four-digit CIP more broadly, which we perceive as too strict. Although we appreciate the suggestion to allow an institution to petition for an exception where it can demonstrate with evidence that the new program is meaningfully distinct from the failed program, such a reconsideration process could not be conducted based on administrative data and would be costly and burdensome both for the institution and the Department.

We disagree that the NPRM did not sufficiently explain the shift away from the substantially similar program definition under the outgoing FVT/GE rule. As we noted in the NPRM, the concept of substantially similar programs as described in the FVT/GE regulations does not comport with the Department's earnings accountability framework. The outgoing definition used a different restriction on establishing new programs with subject matter overlapping programs that were voluntarily discontinued or lost eligibility following failing metrics. The exemption from reporting for substantially similar program groupings under FVT/GE did not have an equivalent provision in the WFTCA statute, nor was a similar provision added in negotiated rulemaking. Therefore, due to changes in statute and proposed regulatory changes related to the new accountability metric, the Department determined, and the AHEAD Committee agreed, that the previous substantially similar program definition was no longer necessary.

Changes: None.

Comments: One commenter suggested that the Department consider requiring institutions seeking to reestablish eligibility for a previously failed program to provide evidence of material changes to the program, such as a revised curriculum, strengthened employer partnerships, improved support structures for program completion, or a demonstrated increase in labor market demand.

Discussion: The Department declines this suggestion. A process requiring evidence of material changes to the program could not be based on administrative data sources and would require costly and burdensome manual review by the Department. In addition, we are concerned that such a process would overstep the Department's role in the regulatory triad, and we believe that matters concerning academic program design and administration are best overseen by an institution's accrediting agency.

Changes: None.

Comments: One commenter suggested that the Department implement provisional certification requirements for programs that regain eligibility after losing eligibility, noting that students enrolling in restored programs may continue to face elevated risk

necessitating additional oversight in the initial years following reestablishment of eligibility.

Discussion: The Department declines this suggestion. The outgoing GE regulations did not include a mandatory provisional certification requirement for programs that regain eligibility after losing eligibility, and we believe it is appropriate to maintain a consistent approach under the earnings accountability framework. We further note that the existing regulations at Sec. 668.13(c)(1)(i)(D) provide that the Department may provisionally certify an institution if the institution seeks to be reinstated in a title IV, HEA program after a prior period of participation in that program has ended.

Changes: None.

Comments: One commenter claimed that the requirement to provide the certification described in Sec. 668.604(c) would place a substantial and unnecessary administrative burden on institutions but did not further elaborate upon the supposed burden. The commenter asked the Department to reconsider this requirement, particularly for nondegree and new programs.

Discussion: We disagree that providing the certification in Sec. 668.604(c) unduly burdensome. The certification requirement is generally consistent with the one institutions provided for GE programs under the outgoing FVT/GE framework, and only requires the institution to provide through the Partner Connect system a certification, signed by its most senior executive officer, that each of its currently eligible GE and non-GE programs are approved by a recognized accrediting agency or is otherwise included in the institution's accreditation by its recognized accrediting agency, and that the institution agrees to comply with the requirements of the STATS framework in part 668, subpart Q, and the earnings accountability framework in part 668, subpart S. An institution's signed Program Participation Agreement (PPA) satisfies the requirement except in circumstances where the Department has reason to believe that a program is not accredited by a recognized agency or, if the institution is a public postsecondary vocational institution, the program is not approved by a recognized State agency for the approval of public postsecondary vocational education.

Changes: None. Low-Earning Outcome Programs and Direct Loan Ineligibility

Comments: One commenter expressed support for program eligibility consequences for low-earning outcome programs. One commenter recognized that the tuition charged by some institutions is disproportionate to the actual earnings in the field, and that by implementing an earnings accountability framework with program eligibility consequences the Department will prompt institutions to improve by requiring these institutions to align costs with market realities and to invest in instructional expenses rather than predatory marketing and recruitment.

Discussion: We thank the commenter for their support.

Changes: None.

Comments: One commenter noted that numerous State and Federal programs rely on the Department's statistical benchmarks to determine funding allocations, eligibility criteria, and program survival, and expressed concern that if the earnings accountability rule causes shifts in key metrics there is a danger that important programs may be cut or eliminated. This commenter requested that methodological updates should not trigger a loss of program eligibility unless there is a documented, real-world improvement in the underlying community conditions.

Discussion: The earnings accountability framework is a set of statutory and regulatory requirements that determine whether a program will be permitted to continue participation in the Direct Loan program based on performance on an earnings premium measure. The Department believes that the application of this metric to all programs eligible for Direct Loan program funds will improve accountability in postsecondary education while also expanding the data available to State and Federal policymakers. We believe this is a positive impact of the changes to the law and regulations, and in any event cannot control the reaction of other government bodies to the introduction of this new earnings accountability framework.

Changes: None.

Comments: Several commenters opined that institutions should not be held accountable or lose funding based on what graduates do following program completion. These commenters argued that institutions should not be penalized for factors the institution cannot directly control, such as which fields graduates choose to enter, how much graduates earn, how many hours graduates choose to work, whether graduates choose to take time away from work to raise children, what information graduates choose to report to the IRS, or how graduates manage their finances including debt repayment. One commenter further claimed that the tax information graduates report to the IRS is the responsibility of the IRS, not institutions.

Discussion: The Department disagrees with commenters who assert that institutions should not be held accountable based on the earnings of their graduates. One of the functions of postsecondary education is to prepare students to enter the larger world, and to the extent that many or most of a program's graduates earn less than individuals with only a lower-level credential, the Department believes that the program has not been successful. Congress also indicated a similar belief when it established the earnings accountability framework in the WFTCA.

Additionally, in order to carry out the wishes of Congress and to improve the accountability of institutions with respect to the economic success of their graduates, the Department must use the best possible source of data on earnings. We believe that only Federal agencies maintain valid, reliable, and consistent earnings data for individuals across the country, and plan to rely on those agencies to provide the earnings information needed to perform the earnings premium calculation.

Changes: None.

Comments: Several commenters objected to limiting the general consequences for low-earning outcome GE programs only to a loss of Direct Loan Program eligibility. These commenters argued that the sanctions will be too weak to drive institutional reform or student choice, that allowing programs with recorded poor earnings outcomes to retain access to Pell Grants leaves vulnerable and low-income students exposed to the risk of inadvertently exhausting their limited lifetime Pell Grant eligibility on worthless credentials, and that for many programs, specifically at proprietary institutions, the loss of Direct Loan eligibility is an insufficient penalty because Department data shows that approximately 40 percent of students in failing GE programs rely solely on Pell Grants to attend.

Several commenters argued that allowing a low-earning outcome GE program to retain Pell eligibility appears inconsistent with the HEA requirement in Sec. 101(b) for such programs to lead to gainful employment in a recognized occupation, as the statutory language does not suggest that the Department has the discretion to pick and choose which of the title IV, HEA programs the requirements apply to and, rather, applies broadly to any of the programs

under title IV, HEA. The commenters further contended that the Department has historically interpreted the HEA GE requirement in that manner. Commenters also claimed that the use of HEA Section 454 to create a loan-only accountability regime improperly rewrites the statute because it does not authorize the Department to redefine the consequences Congress attached to failure to satisfy statutory GE requirements elsewhere in the HEA.

A few commenters argued that the broader eligibility consequences under Sec. 668.14(h) are insufficient to protect students because poor performers may be able to game the 50 percent threshold and, even in cases where they do not, an institution's low-earning outcome programs would only lose Pell Grant eligibility a full year after the programs lost Direct Loan eligibility.

One commenter postulated that because other provisions under the WFTCA allow institutions to reduce or zero out the loan limits of students in a given program, institutions will be able to evade all Earnings Accountability sanctions if sanctions are limited to Direct Loan eligibility only.

One commenter opined that with Workforce Pell expanding the universe of programs eligible for Pell Grant funds, the Department must ensure that failing programs do not consume grant aid that should support high-quality short-term credentials. One commenter argued that providing Pell Grant access to low-performing undergraduate certificate programs is inconsistent with the value-added earnings framework for Workforce Pell programs.

Discussion: The Department disagrees with these commenters. We believe the sanctions will be sufficient to drive institutional reform and to preserve student choice, and that it would present a fundamental issue of fairness if the Department imposed stricter consequences on undergraduate certificate programs than on every other category of program.

Although commenters are rightly concerned that allowing programs with recorded poor earnings outcomes to retain access to Pell Grants could leave vulnerable and low-income students exposed to the risk of inadvertently exhausting their limited lifetime Pell Grant eligibility on credentials that do not lead to strong earnings outcomes, this rule -- as thousands of other commenters have complained -- does not stop at limiting the consequences for poor earnings performance to cessation of Direct Loan participation only. An institution that fails the administrative capability requirement at Sec. 668.16(t) by deriving more than 50 percent of its title IV, HEA funding or recipients from low-earning outcome programs will lose all title IV, HEA eligibility for all such programs--including the loss of Pell Grant eligibility sought by these commenters. It makes no difference if a substantial portion of students in failing GE programs rely solely on Pell Grants to attend, as the Department will conduct the earnings test for each GE program and eligible non-GE regardless of which title IV, HEA programs the institution offers for the program, disclosures about earnings outcomes will be available to students in every such program, and the administrative capability test will identify and remedy the poorest performing programs and institutions while incentivizing institutions to rethink their program offerings to promote better earnings outcomes.

For the reasons above we disagree with the commenter who contended that because other provisions under the WFTCA allow an institution to reduce or eliminate the borrowing limits of students in a given program, an institution could evade all Earnings Accountability sanctions. Such a program would nonetheless be subject to the earnings premium calculation and disclosure, and through the administrative capability requirement the institution's low-earning outcome programs are ultimately subject to consequences that impact the other title IV, HEA programs as well.

We firmly disagree with claims that applying sanctions for GE programs consistent with those for eligible non-GE programs is unsupported by or improperly rewrites statute. As we explain more fully in the “Authority for This Regulatory Action” section, we believe that the Department has authority under Section 454 of the HEA, as well as the GE provisions in Section 102, to require GE programs to comply with the earnings premium standard, and that the appropriate remedy for programmatic noncompliance is the loss of eligibility for Direct Loans for such programs that fail the earnings premium measure except when a large number of an institution's programs fail. Section 454 provides significant flexibility in designing the quality assurance system, and that includes the option to tailor the remedy for noncompliance to a program-by-program basis to protect the interests of the United States. We believe it would not be in the interest of the United States to disqualify all programs at an institution from access to Pell Grants if only a small portion of the institution's programs are not performing, because students in high performing programs would also lose access to programs that are adding value.

We believe that the administrative capability threshold will be resistant to the sort of gaming anticipated by commenters, in part because an institution must meet more than one threshold (i.e., 50 percent of title IV, HEA revenue and 50 percent of title IV, HEA recipients). In addition, as we further discuss below in the “Consequences for Failure to Demonstrate Administrative Capability” section, we believe that imposing a full loss of title IV, HEA eligibility after a single-year failure of the administrative capability requirement would be inappropriate, and that a two-of-three standard is appropriate not only to reduce the possibility of adverse consequences attaching in borderline cases where an institution may actually have passed the 50 percent threshold, but also to protect both institutions and students from sudden disruptions in the availability of other title IV, HEA programs such as Pell Grants and to provide institutions one additional opportunity to improve their program offerings.

We concur that with Workforce Pell expanding the number of programs eligible for Pell Grant funds, the Department must see to it that failing programs do not consume grant aid that should support high- quality short-term credentials. We note, however, that eligible workforce programs are subject to even more oversight than most other programs, in that not only are such programs subject to the earnings premium calculation and administrative capability requirements and consequences that pertain to other GE programs and eligible non-GE programs, but also the value-added earnings calculation under Sec. 690.95. We believe that these frameworks, together, meet statutory requirements and sufficiently safeguard Pell Grant funds from low- quality short-term credentials.

Changes: None.

Comments: Many commenters speculated that a loss of Direct Loan eligibility would cause institutions to close and would reduce choices available to students as well as the number of licensed or credentialed professionals entering the workforce. Many commenters argued that the accountability framework would remove health and safety standards from licensed professions such as cosmetology. One commenter speculated that loss of eligibility for two failures in three years is not a meaningfully more flexible standard than loss of eligibility with one failure but the institution can choose to teach

out, because when faced with a need to pass the earnings premium calculation in the next two years alongside issuing warnings to students, almost all institutions would choose to teach out the program after the first failure.

Many commenters postulated that accountability measures may pressure institutions to transition to degree-only models or restrict enrollment to mitigate risk in programs that serve students who benefit most from career education, including women, parents, caregivers, minorities, immigrants, low-income students, first-generation students, students with prior convictions, students with disabilities, and other historically underserved students. A few commenters warned of a chilling effect that could cause institutional leaders to make curricular decisions not on the basis of educational value or community need, but instead on the basis of whether a program's graduates can be expected to out-earn a benchmark group.

Several commenters predicted that loss of eligibility under the accountability framework would force institutions to lower tuition to accommodate students' financial limitations.

Many commenters presumed that a program's loss of eligibility for one or more title IV, HEA programs would inevitably lead to reduced choice and opportunities for students.

Discussion: As a different commenter noted, low-earning outcome programs need not shut down entirely. The rule allows these programs to continue to operate; they simply cannot enroll students using Direct Loans. There are many institutions, particularly in the nondegree space, which do not rely on title IV, HEA assistance and often charge lower tuition. Failing programs can lower their prices so their students do not need to take on Federal debt. Institutions could also allow their students to work for pay while enrolled to help cover their tuition, which many cosmetology schools effectively prevent their students from doing today. An important feature of applying accountability at the program level is that students can choose different programs at the same institution or at a nearby institution that might provide a better return on investment.

Changes: None.

Comments: One commenter appeared to take issue with the terminology used in the accountability framework, objecting to labeling programs as “low-earning degree” programs when some such programs may lead instead to a certificate or other nondegree credential.

Discussion: This commenter appears to have misunderstood the terminology used in Sec. 668.603, which in both the NPRM and in this final rule categorize programs that fail the earnings premium measure in two out of three award years as “low-earning outcome programs,” not “low-earning outcome degrees.” The “low-earning outcome program” language directly reflects the wording Congress provided in Section 454(c)(2) of the HEA as revised by the WFTCA, and the Department believes it is appropriate to retain this language given the application of the accountability framework to programs across credential levels.

Changes: None.

Comments: Several commenters suggested phased implementation timeline or a longer period of time before a program loses eligibility, arguing that institutions should have an opportunity to review and validate data and to implement program improvements before sanctions take effect because program improvements cannot affect measured earnings outcomes for several years due to cohort timing and the four- year earnings measurement period. A few commenters suggested a two-year phase-in during which EP measure results would be published for transparency but would not trigger ineligibility or institutional status changes.

One commenter argued that loss of eligibility after failing the earnings metric in two out of three award years may provide insufficient protection against systemic misclassification for professions characterized by delayed workforce entry, graduate practice development, and self-employment.

A few commenters argued that sanctions punish programs by measuring income during predictable periods of practice building, and suggested delaying sanctions until a program fails the earnings premium measure in three out of five years.

One commenter suggested that the Department first place a program on a probational status with technical assistance before imposing sanctions.

A few commenters requested that institutions be evaluated only using prospective data created following the effective date of the regulations, rather than relying on historical data. One commenter postulated that making program eligibility determinations based on metrics calculated using data from years that precede the effective date of the rule would constitute impermissible retroactive rulemaking, arguing that it is unfair to sanction institutions based on program decisions that were made prior to the effective date of the new regulations and that cannot be reversed or impacted in any way in an effort to comply with the new regulations.

Discussion: For the majority of programs covered by the earnings accountability framework, the Department does not have the authority to alter the timeline for earnings measurement established by Congress. Additionally, the Department continues to strongly believe that it is appropriate to apply the same statutory methodology to undergraduate certificate programs, resulting in a fairer and more consistent approach to accountability throughout postsecondary education in the United States.

The Department does not believe it is appropriate to delay the implementation of the regulations, in part because of statutory requirements that cannot be waived by the Department, but also because the Department believes it is important to implement these accountability requirements as soon as possible to ensure that students and taxpayers receive the maximum possible benefit from the changes.

Changes: None.

Comments: One commenter encouraged the Department to resist requests for an extended transition period in which EP determinations are reported on an informational-only basis without eligibility consequences, noting that the original GE rule has been promulgated four times since 2011 and no program has ever lost eligibility under any version of it, and that extended informational-only periods undermine the goal of accountability.

Discussion: We agree with the commenter and thank them for their support.

Changes: None.

Comments: A few commenters opined that the Department did not adequately explain the change from a three-year period of ineligibility under the FVT/GE rule to a two-year period of ineligibility under the earnings accountability framework, because the Department had previously justified the three-year ineligibility period as one that most closely aligns with the ineligibility period for failing the cohort default rate, and recommended that the Department extend the limitation from the proposed two years after losing eligibility to three years for all low-earning outcome programs.

Discussion: The Department is shifting to a two-year period of ineligibility for degree programs and graduate certificate programs because the statute requires us to do so. For undergraduate certificate programs, the Department believes that the

ineligibility period described in statute for the earnings accountability framework is significantly more appropriate than the period of ineligibility for the cohort default rate, particularly since the latter rate measures different outcomes for a different population of students.

Changes: None.

Comments: One commenter argued that characterizing the period of ineligibility as a two-year prohibition is inaccurate, arguing that the practical result of the restriction on seeking eligibility for a program that was previously determined to be a low-earning outcome program until the program has not failed the earnings premium calculation for the most recent two award years is an indefinite period of ineligibility with a two-year minimum. The commenter further opined that making this clarification would remind institutions that their programs will continue to be evaluated under the earnings premium test even during the ineligibility period.

Discussion: The Department thanks the commenter for making this point and will emphasize in training and guidance to institutions that the period of ineligibility is an indefinite period of ineligibility with a two-year minimum.

Changes: None.

Comments: A few commenters argued that students who entered a program in good faith should not lose access to title IV, HEA programs midstream because of a retrospective earnings calculation, and urged the Department to protect currently enrolled students partway through a program by allowing them to retain eligibility after the program is determined to be a low-earning outcome program.

Discussion: The Department disagrees with the commenter for several reasons. First, the statute prevents the Department from permitting an extension of student eligibility if they are enrolled in degree programs or graduate non-degree programs. Second, the Department wishes to harmonize the requirements for undergraduate certificate programs with those of all other programs eligible for title IV, HEA program funds. Finally, the Department does not believe it is appropriate for a student to continue receiving title IV, HEA funds in a program that has demonstrated that it does not confer adequate financial value. Institutions are required to warn students that they will lose Direct Loan eligibility when a program has failed the metric for at least one year, and this will allow students to make their own informed decision about whether to remain enrolled in the program or seek to transfer elsewhere or discontinue enrollment.

Changes: None.

Comments: One commenter opined that the NPRM did not make apparent when the termination of a program's Direct Loan eligibility actually takes effect, particularly in the event the termination action concluded in the middle of a term, and requested that the Department clarify that a program's Direct Loan eligibility termination would not take effect until the beginning of the term after the term in which the Department completes the eligibility termination.

Discussion: As described in the “Termination Mechanism and Appeals Process” section, the Department has amended its policy for ending program eligibility when a program has failed the earnings premium measure in two out of three consecutive award years. The Department will now rely on any available mechanism to end the eligibility of a program, which could include a limitation action under 34 CFR Subpart G, a partial revocation action under 34 CFR 668.13, or a refusal to include the low-earning outcome programs on an institution's Eligibility and Certification Approval Report (ECAR) when it recertifies the institution.

Changes: None. Orderly Program Closure

Comments: Several commenters praised the inclusion of the orderly program closure provisions, noting that allowing a program to wind down over a reasonable period of time rather than facing immediate loss of program eligibility provides institutions and students a more orderly transition process, promotes continuity of student access to academic resources, and allows students to complete their studies without sudden disruption. One commenter additionally expressed support for requiring an institution to provide students the academic and financial options to continue their education in another program when conducting an orderly program closure.

Discussion: We agree with the commenters and appreciate their support.

Changes: None.

Comments: A few commenters expressed concern that the orderly program closure provision would reduce overall accountability benefits and protections for students under the earnings accountability framework by extending the timeline for a failing program to continue receiving title IV, HEA funds while creating risk for students who remain enrolled where better options may exist. A few commenters recommended that the Department eliminate the orderly program closure provision. If the Department retains the provision, commenters suggested limiting it to a single year, which would provide time for a student to transfer to another program if his or her program is longer than two years or the student is enrolled less than full time, and prohibiting programs longer than three years from accessing an orderly program closure.

Discussion: We appreciate the commenters' concern about the well- being of students but we maintain that, on balance, the orderly program closure option improves, not reduces, student protections and we decline the suggestion to remove it.

We note that during an orderly program closure institutions must provide an enhanced warning to students that discloses the status of the program and provides information about options to transfer to another program at the institution or at another institution. With regard to students currently enrolled in a program that has failed the earnings premium calculation and opts for an orderly program closure, we believe that students fundamentally have a right to make choices about where to complete their education, and such disclosures will provide the information necessary to inform and support that decision. The Department trusts that postsecondary students are sufficiently mature and competent to make wise enrollment decisions when provided with the relevant information at the point in time when that information would be most meaningful. If a student, who has been seen the required disclosures, makes the informed decision to finish his or her program of study during an orderly program closure, we believe that the Department and the institution should honor that decision and the student should have the opportunity to continue in that program until the student graduates or for the limited duration of the orderly program closure (i.e., up to three years or the length of the program, whichever is shorter).

Moreover, the orderly program closure process requires the institution to immediately cease enrolling new students in the program, thereby benefiting prospective students and taxpayers by incentivizing institutions to cease enrolling new students in at-risk programs one year earlier than the program would otherwise lose Direct Loan program eligibility if determined to be a low-earning outcome program.

Changes: None.

Comments: One commenter argued that many supposedly precipitous institutional closures of large for-profit chains were foreseeable because of these institutions' questionable admissions practices, inferior pedagogy, and failure to consider the employability of their students or their ability to repay student debt. The commenter observed that such programs do not operate in the best interest of students, and therefore suggested that the Department limit the orderly program closure option to programs where graduates are repaying their loans.

Discussion: We concur that precipitous institutional closures are both undesirable and problematic, but we do not believe that further limiting criteria for an institution to qualify for the orderly program closure option would address the issues described by the commenter. Conversely, we believe that allowing an institution to commit to an orderly program closure will reduce the likelihood of a precipitous institutional closure and improve the likelihood that a student, who makes an informed decision to do so, will be able to complete his or her program of study without the sudden disruption that is characteristic of a precipitous closure.

Additionally, we are concerned that adding a repayment rate criterion could undermine the legal sustainability of the earnings accountability framework, given that the original 2011 GE rule was vacated by a court on the basis of its loan repayment rate metric, and that the WFTCA does not prescribe a repayment rate calculation.

Changes: None.

Comments: One commenter posited that the Department should not prevent an institution from accessing the orderly program closure option solely due to being subject to the heightened cash monitoring 2 (HCM2) or reimbursement method of payment, and that the Department should consider the underlying reasons the institution was placed on a restrictive method of payment. This commenter noted that the decision to place an institution on a restrictive method of payment is a risk mitigation tool at the discretion of the Department, and theorized that the Department could therefore simply change an institution to a less restrictive method of payment momentarily to approve an orderly program closure agreement. The commenter also contended that not all institutions on a restrictive method of payment are in that status for reasons that should in every instance preclude the approval of an orderly program closure--for instance, under Sec. 668.175(h)(2)(iii) the Department may offset an institution's title IV, HEA draws to fund a financial protection, a process that can involve HCM2. The commenter also reasoned that the Department has tended to keep institutions on HCM2 for a period after an administrative problem has been resolved for a school to demonstrate a positive pattern of compliance through several successive compliant HCM2 payment request submissions, inferring that such institutions may not be able to access the orderly program closure option despite having resolved the administrative or compliance issue for which the institution was initially placed on a restrictive method of payment. The commenter further suggested that if an institution was placed on HCM2 due to an accrediting agency action or a state agency action, approving an orderly program closure could be advantageous for beginning an orderly winddown of an institution that may otherwise be in danger of precipitously closing, and highlighted that in such instances the Department could use the HCM2 submission requirements to ensure that the institution complies with the requirements of the orderly program closure agreement.

Discussion: We appreciate the commenter's concern, but in the Department's view placement on the HCM2 method of payment always represents a response to a significant risk to taxpayer funds, and any such risk is important enough to warrant precluding the orderly program closure option. Even in the example the commenter described under Sec. 668.175(h)(2)(iii) where the Department may offset an institution's title IV, HEA draws to fund a financial protection, the fact remains that a financial protection is required and a financial stability risk exists. The Department will consider the effects of HCM2 on this provision, among various other issues, when it decides whether to keep an institution on that method of payment.

Changes: None.

Comments: One commenter speculated that although the Department presented the orderly program closure option as a compassionate accommodation, in reality once an institution decides to undertake an orderly program closure faculty will depart, students will transfer, donor support will evaporate, and the program will collapse before the limited window of eligibility expires.

Discussion: We disagree with the commenter, and we do not believe that it is a foregone conclusion that an institution or program voluntarily undergoing an orderly program closure will experience a sudden collapse in the manner the commenter described. We believe that allowing an institution to commit to an orderly program closure will reduce the likelihood of a sudden collapse and will improve the likelihood that the institution will take the appropriate steps to retain faculty and support students through the program closure process.

Changes: None.

Comments: A few commenters expressed confusion about the interaction between the orderly program closure option and the regaining eligibility framework, as under proposed 34 CFR 668.604(b)(2) an institution could not add a program with the same four-digit CIP code if it shares any of the same SOC codes as one that was voluntarily discontinued (including via an orderly closure) or became ineligible, while under proposed 34 CFR 668.603(c)(4) failing programs could be permitted to continue their loan eligibility in the context of an orderly closure, but (per proposed 34 CFR 668.603(c)(4)(G)) must agree not to restart that program or a program in the same four-digit CIP code for at least two years without specifying any SOC code provisions. One commenter further recommended elimination of the orderly program closure provision.

Discussion: We acknowledge the inconsistency between the criteria for establishing the eligibility for a similar program in these two different contexts. The criterion for adding programs that are similar to one that the institution has opted to orderly close is more restrictive than for low-earning outcome programs that ceased Direct Loan participation. Because an institution voluntarily chooses whether to offer an orderly program closure and is aware of the conditions of doing so, we do not believe the stricter requirement for adding similar programs is unreasonable.

Changes: None.

Comments: One commenter expressed concern that limiting entry to the orderly program closure option to shortly after the first year a program fails the earnings premium measure would not meaningfully benefit undergraduate certificate programs which are typically shorter than one calendar year, because the population of currently enrolled students at any given point is small relative to annual program revenue, so the institution will in most cases lack sufficient revenue to continue operating through the completion of an orderly program closure for those remaining students. The commenter concluded that the

practical consequence would be an abrupt closure rather than an orderly teach-out, harming the very students the provision is designed to protect, and urged the Department to either change the timing for programs with normal lengths of less than one academic year or permit continued new enrollment during teach-out, subject to appropriate student disclosures.

Discussion: We disagree with assertions that limiting entry to the orderly program closure option to shortly after the first year a program fails the earnings premium measure would not meaningfully benefit undergraduate certificate programs. We further disagree that it is a foregone conclusion that any institution will lack sufficient revenue to continue operating through the completion of an orderly program closure for remaining students in a certificate program. Resources and staffing vary from institution to institution, and while in some cases an institution may determine that it is not feasible to offer an orderly program closure for a certificate program, other institutions will readily do so and their students will benefit from the option to finish the program.

We also note that, as a general ongoing condition of title IV, HEA participation, institutions must demonstrate financial responsibility, which includes the requirement to have operating funds sufficient to pay title IV, HEA credit balances; satisfy payroll obligations; make refunds under its own refund policy (as applicable); return unearned title IV, HEA funds for which it is responsible; and more generally to provide students with the programs and services that the institution marketed to them. Broad claims that an institution offering a certificate program could not benefit from an orderly program closure based on revenue concerns suggest that the institution was not meeting financial responsibility requirements even before the program failed the earnings premium calculation.

Changes: None.

Comments: A few commenters pointed out that the regulatory text does not explicitly exempt programs undergoing an orderly program closure from continued earnings premium calculations and opined that there is ambiguity regarding whether such a program can accumulate a second failure during the wind-down period, thereby becoming a low- earning outcome program and counting toward the 50 percent administrative capability threshold. One commenter encouraged the Department to explicitly exempt programs from continued earnings premium calculations if the institution chooses to undergo an orderly program closure.

Discussion: The regulatory text at Sec. 668.603(d)(4)(i) provides that when an institution agrees to amend its program participation agreement to carry out an orderly program closure, the Secretary allows such program to continue participation in the Direct Loan program under the conditions of the agreement. In essence, upon the countersigning of an orderly closure agreement, the program is set aside and, for the limited duration of the orderly closure process, is not considered a low-earning outcome program and does not count toward the 50 percent administrative capability threshold.

Changes: None. Student Warnings and Acknowledgments

Comments: Many commenters argued that the implementation of student warnings after a single metric failure may cause reputational harm, enrollment disruption, and program closure, even in cases where programs remain viable and aligned with state licensure requirements.

Discussion: The Department disagrees with the commenters that stressed a warning would cause irreparable harm and an industry-wide closure of viable institutions. The statute requires institutions to actively warn prospective and current students when an eligible non-GE program may become ineligible for the Direct Loan program based on its earnings premium measure in order to help the student make educated decisions on where to invest their time and money in pursuit of higher education. The Department is applying the same set of requirements to both GE and eligible non-GE programs consistent with its intent to harmonize all earnings accountability requirements and establish a better understood and more uniform framework for providing consumers with information about failing programs. The Department believes these changes are necessary to incentivize institutions to offer programs that deliver appropriate return on investment, enhance data accessibility for students, and protect taxpayers and students.

Changes: None.

Comments: Several commenters requested the ability to add contextual information to the student warnings such as specific labor- market data, program improvement plans, that four-year snapshots are not predictive of lifetime earnings in fields with demonstrated long- term growth, or otherwise state that educational quality and student outcomes may not be measured solely through earnings data.

Discussion: The Department acknowledges the concerns raised by commenters, but is concerned that including additional information on the warning could detract or confuse students from the critical content of the warning. The Department clarifies that institutions may provide supplemental information and explanations to accompany the warnings, but these must be separate from and in addition to the warning itself, as the warning content specified in the regulation must be the only substantive content of that communication. The Department reiterates that no supplemental information or explanations that accompany the warnings may dilute, obfuscate or otherwise downplay the Department's efforts and intentions to inform and protect taxpayers and students.

Changes: None.

Comments: A few commenters argued against the elimination of required alternate language student warnings. These commenters stressed that institutions serving populations in which a significant percentage of students or their families are non-English speaking would be more effective in conveying information to them.

Discussion: The Department acknowledges these concerns but declines to make a change due to the administrative burden imposed by the requirement. Institutions must provide the warning in English but may additionally provide a separate warning in an alternate language if they wish.

Changes: None.

Comments: A few commenters stressed that warnings would be detrimental to students from lower income backgrounds, who may be disproportionately dependent on federal loans to pursue higher education or otherwise more sensitive to regulatory signals about program risk. The commenters expressed the warnings would act to deter these students from enrolling.

Discussion: The Department believes that more robust and comprehensive disclosures are needed to protect all students, especially those from lower economic backgrounds, from low-earning outcome programs. If a student chooses not to enroll in an at-risk program based on a warning, we believe that is one outcome that indicates the warning is working as the statute and the regulations intend, in that the student made an informed enrollment decision based on timely information about the program. Another student

might choose to enroll nonetheless after receiving a warning, but in both cases the warning empowers the student to make a more informed decision. The Department reiterates that all higher education programs should deliver economic value and warnings will help convey important information about the potential earnings and economic benefits of a program when those benefits are in question.

Changes: None.

Comments: Other commenters stated that warning and acknowledgment requirements could disproportionately impact smaller institutions.

Discussion: The Department reiterates that all higher education programs, including those at smaller institutions, should deliver economic value and the warnings would help convey important information about the potential earnings and economic benefits of a program.

Changes: None.

Comments: Several commenters shared various suggestions regarding the content and process of the warning and acknowledgements required under 34 CFR 668.605. Some of the comments were to strengthen the warnings and acknowledgments with additional information, repeated warnings after failure, and an active acknowledgment process. Other commenters were against including remaining Pell Grant eligibility on the acknowledgments, arguing that so much information is unnecessarily burdensome.

Discussion: The Department appreciates the commenters' suggestions and enhancements. We believe the revised 34 CFR 668.605 strikes the appropriate balance of critical and optional information needed for consumer information related to the performance of their program. Regarding student acknowledgements of the warnings, the Department believes that the value of timely and relevant information regarding Direct Loan and Pell Grant eligibility justifies any administrative burden to institutions subject to the warning.

With respect to additional information that could be included in student warnings, the Department believes that the introduction of the administrative capability process in 34 CFR 668.16(t) requires that additional information be provided to students whose programs are in danger of losing all title IV, HEA program eligibility because at least half of the institution's revenue or students are associated with low- earning outcome programs. Therefore, in that circumstance we are adding a requirement for an institution to provide additional information to that effect in a student warning.

Changes: The Department added a new paragraph (iii) at the end of Sec. 668.605(c)(1) to establish an additional requirement for an institution that has failed to comply with the requirements of 34 CFR 668.16(t) in at least one of the three most recent consecutive award years. Such an institution would also be required to include in student warnings an explanation that students enrolled in a low-earning outcome program could also lose access to the other title IV, HEA programs. Appeals Basis for Appeals

Comments: A few commenters expressed support for limiting the basis for appeals, noted that the Department's obligation is to use IRS data as the best available data, and recalled that the broader appeals process under the 2014 GE rule yielded flawed earnings surveys that inflated alternate earnings estimates about 73 percent higher than earnings reported in SSA data under the GE calculations for all programs (and this inflated survey data was even more pronounced for cosmetology programs at 82 percent). One commenter surmised that allowing institutions to appeal based on alternative earnings measures or similar methodologies would likely lead to lengthy disputes, create incentives for manipulation that would disadvantage students, while continuing to direct funding to programs that provide little or no meaningful earnings benefits to graduates.

Discussion: The Department agrees with these commenters, and we thank them for their support.

Changes: None.

Comments: Many commenters claimed that the earnings accountability framework lacks a meaningful and transparent appeal process. Several commenters opined that limiting appeals to mathematical errors in calculating the earnings premium measure is too restrictive, rendering appeals an administrative formality. Several commenters postulated that an appeals process that does not allow substantive challenge to the data underlying the determination does not satisfy the intent of HEA Section 454(c)(5). A few commenters theorized that limiting the scope of appeals may depart from the Administrative Procedure Act, which considers sanctions lawful only if the institution has been given notice by the agency in writing of the facts or conduction which may warrant the action and the opportunity to demonstrate or achieve compliance with all lawful requirements.

One commenter expressed concern that the limited basis for appeals means institutions may be unable to independently replicate, verify, or evaluate the determinations underlying a failing program designation.

A few commenters argued that the appeals process should allow institutions the opportunity to challenge the formula itself, such as when an institution receives a calculation that is technically accurate under the Department's methodology while the methodology itself is ill- suited to the realities of a particular profession such as acupuncture practice. One commenter advocated for a methodological appeal if the program prepares students for a self-employment-intensive licensure profession, if the cohort or earnings threshold fails specified sample- size or reliability thresholds established by the Secretary, or the Federal agency with earnings data applies privacy suppression techniques in a manner that materially alters the reported median earnings.

One commenter emphasized a need for robust mechanism to challenge punitive findings and urged the Department to consider a data appeals process that encompasses databases such as the Cal Pass dashboard that underscore persistent disparities in visual arts majors gaining employment in underserved California regions.

Several commenters maintained that a “one-size-fits-all” framework does not account for the diversity of educational models and workforce outcomes across industries, and one commenter advocated that there should be no limitations on what aspects institutions can appeal.

Discussion: The Department disagrees with claims that the earnings accountability framework lacks a meaningful and transparent appeal process and with claims that the appeals process does not satisfy the requirements of the WFTCA or the APA. The WFTCA provides that the Secretary shall establish an appeals process so that if a program is determined to be a low-earning outcome program, the institution may appeal that determination. The WFTCA did not instruct the Secretary to allow institutions to appeal at each step of the determination, including the reliability of the data set as to that program. It instead leaves the Department discretion to make a reasoned choice of the best available data on which to make the low-earning outcome determination. We considered the difficulty in verifying alternative data in a timely manner and believe that, even were it

accurate, alternative data is unlikely to have a significant impact on the overall calculation. With regard to commenter concerns about the Administrative Procedure Act, the threshold question for procedural due process purposes is whether a person has been or will be deprived of a property interest protected by the U.S.

Constitution, but institutions lack such a protected interest in continued eligibility to participate in Federal student aid programs. A unilateral expectation of benefits is insufficient, institutions are neither promised nor led to believe that they will receive a continuing stream of Federal support without change in student aid rules, and neither institutions nor programs are direct beneficiaries of title IV, HEA aid to students. The final rule's appeal process is fair, and the risk of error is low in the first place because the Department will use quality data on earnings from a Federal agency combined with other reliable information, including information supplied by institutions themselves. We do however agree that institutions should be provided with adequate information about the information used to calculate the earnings premium measure for their programs, and commit to providing that information to institutions at the time that we provide the annual notice of determination of the results of the metric.

We strongly disagree that the appeals process should allow institutions the opportunity to challenge the earning premium formula or methodology itself. We even more strongly disagree with the suggestion that there should be no limits on what factors an institution can appeal. The WFTCA did not provide a menu of options and alternatives for the Department to consider for different types of institutions and programs. While we recognize that one of the defining features of the American higher education system is its diversity of options to meet each student's needs, it would be both impracticable and inequitable for the Department to develop unique metrics and unique appeal mechanisms for each and every institution, occupation, locality, or sector. Through the WFTCA, Congress selected one earnings premium methodology to measure a program's economic value, and the Department cannot allow institutions to circumvent that methodology through the appeal process.

With regard to the commenter who requested the use of alternate earnings data from State data systems to address disparities in earnings outcomes for certain disciplines or localities, we disagree and believe that the appeals process should apply to all programs consistently. We discuss more fully in the “Use of Alternate Earnings Data for Appeals” section other comments requesting the use of supplemental earnings data from State data systems.

Changes: None.

Comments: A few commenters suggested that an institution should be able to appeal a low-earning outcome program determination based on evidence of a program's civic and societal value, to account for the benefit of lower-paying fields that serve the public good and whose societal benefits may not be reflected by earnings.

Discussion: The Department disagrees with the commenter. Although postsecondary programs offer value in a variety of ways, including to students and society, these regulations and the earnings test set forth by Congress in the WFTCA specifically measure the economic value conferred by the program. The statute does not require consideration of civic or societal value, and in any event it would be impractical for the Department to accurately and consistently measure the civic or societal value of a postsecondary program.

Changes: None.

Comments: A few commenters claimed the Department's demonstration data contained inaccuracies including programs misassigned to institutions in fields they do not offer and that, without an earnings appeal process, institutions would be vulnerable to outcomes based on flawed inputs. One commenter representing several institutions claimed that in the Department's demonstration data, some institutions had programs listed with graduates in CIP codes for which no programs have ever existed at the institution, and the commenter highlighted the importance that institutions be able to appeal data errors of this sort. A few commenters more broadly contended that institutions should be able to appeal improperly constructed cohorts.

Discussion: The Department believes the appeal process already allows institutions to appeal and correct errors of this type. We remind commenters that the graduates included in the earnings cohort are based on data reported by institutions to the Department, and institutions are required to report accurate student-level title IV, HEA recipient information to the Department, including correct CIP codes for each recipient's program of study. Although institutions cannot directly challenge the administrative earnings data the Department obtains from a Federal agency with earnings data, the regulations provide institutions the opportunity to review and correct the completers list for each program. In addition, institutions can through the appeals process review and challenge the completers list the Department uses to obtain graduate earnings data.

Changes: None.

Comments: A few commenters posited that the appeal process should include adequate notice, access to the underlying data and methodology used to establish cohorts and calculate earnings outcomes, and sufficient time for institutions to review and respond before consequences apply.

Discussion: We agree with the commenters that institutions should be provided with adequate information about the information used to calculate the earnings premium measure for their programs, and commit to providing that information to institutions at the time that we provide the annual notice of determination of the results of the metric.

Changes: None.

Comments: A few commenters called for additional specificity regarding the appeals process. One commenter broadly claimed that the appeals process is not clearly articulated. One commenter opined that the Department should specify the allowable grounds for challenge, the procedures and deadlines for submitting a challenge, the documentation institutions may provide, and the timeline within which the Department must respond.

Discussion: We agree with the commenters that additional specificity about the appeals process is warranted, and believe the changes that we made to Subpart S in response to a comment below provide greater clarity about the criteria that an institution may use to appeal a loss of Direct Loan eligibility. We decline to regulate the Department by providing complete information about the procedures and deadlines for submitting an appeal in the regulations, but commit to providing that information via sub-regulatory guidance prior to the first appeals submitted by institutions.

Changes: None. Ability To Challenge Graduate Earnings Data

Comments: Many commenters emphasized that institutions should be able to examine and appeal underlying earnings data. Several commenters elaborated that earnings data appeals are appropriate because of limitations with IRS earnings that may not fully reflect self- employment, business income, tip

income, and an earnings measurement window that captures practice- development periods rather than longer-term earnings patterns. Several commenters suggested that the Department allow earnings appeals on the basis of alternative state wage data, graduate surveys including tipped income, or BLS occupational data for the relevant occupation and geographic area.

Discussion: The Department strongly disagrees with suggestions that we should allow appeals to substitute or modify the earnings data using alternative earnings data. We maintain, as discussed at length in negotiated rulemaking at in the NPRM, that it is inappropriate to accept appeals on the basis of alternative earnings for numerous reasons. IRS earnings data represent the highest quality and most accurate available data source and, accordingly, are also currently used for determining student and family incomes for purposes of establishing student title IV, HEA eligibility and determining loan payments under income-driven repayment plans. Moreover, past data submitted by institutions in alternate earnings appeals, such as graduate earnings surveys and employment verifications, was unreliable and was of considerably lower quality than the earnings data available from administrative data sources.

As discussed more fully above in the “Earnings of Program Completers--Use of IRS Data” section, tipped income is already included in Federal tax data, as it is legally required to be reported under the tax code. Given the use of median earnings data, the possibility of under-reported tipped income would only occur if program graduates were unlawfully not reporting tipped income en masse and over half of graduates from a program illegally under-report their tipped income for this purported issue to impact the median earnings value of a program. Such a large amount of illegal under-reporting of tipped income seems implausible, and the Department believes the “no tax on tips” policy included in the WFTCA will further reduce the prevalence of any potential underreporting in tipped income. We also note that, as explained above in the “Earnings of Program Completers--Use of IRS Data” section, if a program is designed to prepare a student for gainful employment in a recognized occupation that qualifies for a deduction of tip income under IRS “No Tax On Tips” regulations, and 50 percent or more of individuals in the occupation receive income from tips, eligibility consequences will not apply in cases where earnings premium calculation would use earnings data from 2025 or prior. Given that change, we believe that the results for tipped occupations will be significantly more reliable indicators of the true earnings of graduates, and therefore no further adjustment is necessary or appropriate though the appeal process to account for tipped income.

With regard to the earnings measurement window, we note that many, if not most, occupations are characterized by earnings that increase over time. Contrary to commenters' assertions, that is a natural and expected function of career and economic growth over time, not an outlier unique to a particular program or field. In the WFTCA, Congress nonetheless specified a four-year earnings measurement window for all programs. Given the significant costs of higher education, we believe that students and taxpayers have a right to expect a timely return on their investment, and we do not believe it would be supportable or appropriate to contradict Congressional intent by offering a longer earnings measurement through the appeals process.

Changes: None.

Comments: One commenter cautioned the Department to avoid creating an appeals process that becomes overly burdensome for schools and the Department to process, noting that smaller institutions may not have the necessary staff and resources to track down former students, verify informal earnings reports, or assemble individualized documentation to support an appeal. The commenter also observed that even when graduates are working, some may be reluctant to provide employment information, and reasoned that if a graduate is not reporting income fully to the IRS, it is unrealistic to expect that graduate to report it to an institution for purposes of an appeal.

Discussion: We agree that documenting alternative graduate earnings data, such as by developing and administering graduate earnings surveys, would be time-consuming and burdensome both for institutions to administer, and for the Department to adjudicate. We also agree that such alternative earnings data is unlikely to be more complete or of better quality than administrative earnings data provided by the IRS or another Federal agency with earnings data. These are some of the reasons the Department believes it is necessary and prudent to thoughtfully limit the basis for appeals to errors in the earnings premium calculation based on supportable administrative data.

Changes: None. Use of Alternate Earnings Data for Appeals

Comments: A few commenters suggested that the Department allow for appeals of graduate earnings data based on State longitudinal data systems. A few commenters claimed that many States have developed data systems that allow them to track information such as enrollment and completion data; program performance data; financial aid data; workforce data; and return on investment data that includes student debt, time to degree, and earnings of graduates by degree type, program, and institution, and contended that if an institution is in a State with a robust data system, the institution should be afforded the opportunity to submit State earnings data. One commenter speculated that using such state data systems would align with the Secretary's broader aim of returning education to the States.

Discussion: We appreciate the commenters' suggestion, but we do not believe such an approach would be fair or practical. Although some States may have developed relatively robust longitudinal data systems, which may in some cases include graduate earnings data, other States may not have done so. Even for those States where such systems may be available, the data available may not be consistent or comparable between different States, or even within different sectors or occupations within the same State, and the Department has no reason to believe that such earnings would be more complete or accurate than Federally sourced data. In addition, we believe it would be inconsistent and unfair for institutions located in some States to have access to appeals using alternative State administrative data, when institutions located in other States, as well as eligible foreign institutions, would not have access to a similar appeal option. Moreover, given that graduates may seek employment in States other than the one where an institution is located, even within a given institution or program the availability and applicability of State- level earnings data would be unreliable.

Changes: None.

Comments: Several commenters recommended that the Department establish an alternate earnings appeal process whereby religiously controlled institutions with a failing religious program could appeal and retain eligibility if the institution establishes that the earnings of graduates working in ministry-related positions exceed the earnings of workers in those same occupations with only a high school

diploma or equivalent (for baccalaureate programs) or with only a baccalaureate degree (for graduate and professional degree and graduate certificate programs).

Discussion: We decline to provide a unique earnings appeal process for a single type of institution. We continue to believe that alternate earnings appeals are both impracticable and result in less accurate information than that collected by Federal agencies. These concerns apply equally to all types of institutions, including religiously controlled institutions.

Changes: None. Other Categories of Appeals

Comments: Many commenters noted that wages and living costs in rural areas are lower than in metropolitan areas, and requested that the Department add a local earnings appeal to allow programs offered in lower-wage areas to be evaluated based on local economic data rather than broader State or National data. Several commenters requested expanding appeal categories to allow regional cost-of-living adjustments. A few commenters further requested that the Department reconsider incorporating a “branch appeal” process similar to one submitted by a negotiator,\22\ which would compare graduate earnings to the median earnings of working adults where each individual campus is located, arguing that earnings for programs offered by institutions with campuses in several States will always be compared to the national benchmark, when some or all of the States where the institution is located may have lower median earnings than the national benchmark.

\22\ https://www.ed.gov/media/document/2025-ahead-2026-1-6-np- accountability-appeals-submitted-submitted-aaron-lacey-112961.pdf.

Several commenters suggested that the Department allow additional categories of appeals, such as an appeal for economically disadvantaged students based on the program's percentage of Pell Grant recipients, an appeal based on low median graduate debt, loan repayment rates, an appeal based on licensure outcomes, completion outcomes, job placement outcomes, cohort demographics, part-time work, or self-employment. One commenter suggested that the Department allow institutions to present evidence of successful graduate outcomes, career advancement, entrepreneurship, and workforce participation. One commenter recommended that the Department allow institutions to appeal based on caregiving interruptions to a graduate's participation in the workforce.

A few commenters presumed that the earnings premium measure should reflect or replace the cohort default rate (CDR) as an accountability mechanism, opined that a program with low earnings is likely to also have high default rates, and suggested that institutions with low- earning outcome programs should have access to appeal categories similar to CDR appeals provided under Sec. 668.189(a).

Discussion: We disagree that a local or branch appeal is necessary or appropriate. As we further discuss below in the “Summary of Comments from the NPRM” section of the RIA, the Department specifically considered the impact of the proposed regulation on programs in rural areas. The Department's analysis shows that the regulation will result in only a slightly higher share of failing programs and students in rural areas relative to the current regulation. We remind commenters that both the graduate cohort earnings and the working adults threshold earnings include rural earners, and we note that the earnings threshold definition is predicated on the highly specific statutory requirement outlined in Section 84001 of the WFTCA, where Congress explicitly instructed the Department on how the earnings test would be conducted. Therefore, the Department does not believe it has the authority to alter the earnings test for programs located in rural areas.

The Department is unpersuaded by commenters' requests for additional categories of appeals. An appeal for economically disadvantaged students based on the program's percentage of Pell Grant recipients, or one based on cohort demographics, would be poorly targeted given the primary focus of the accountability framework on Direct Loan eligibility. In addition, we believe such an appeal option would lessen accountability for programs that serve the highest proportion of vulnerable students, which we believe would contradict the purpose of the accountability framework in protecting students and promoting strong economic outcomes.

An appeal based on low median graduate debt or high loan repayment rates, while better targeted toward Direct Loan-related issues, appears to exceed the scope of appeals contemplated in the WFTCA in describing “the opportunity to appeal the programmatic median earnings of students working and not enrolled determination.” If Congress wished to exempt such programs from the accountability framework, it could have done so explicitly in the WFTCA.

While licensure, completion, job placement, workforce participation, and career advancement are important program outcomes, those factors are not the ones that Congress specified should be examined by the Department in the earnings accountability framework. Moreover, those factors already directly contribute to the ability of graduates to produce measurable earnings, which is the factor Congress emphasized in the WFTCA. We do not perceive strong licensure, completion, or placement results as a supplemental benefit or an unusual circumstance; such results constitute the absolute floor of acceptable program performance and are the Department's expectation for all participating programs, not the exception.

We believe an appeal or adjustment to reflect part-time work or self-employment would be inappropriate. As discussed in more detail above in the “Earnings and Earnings Threshold” section, both the graduate earnings group and the working adults comparison group include part-time workers and entrepreneurs. It would not be appropriate to adjust only the graduate earnings side of the calculation without also adjusting the benchmark group. In addition, an appeal based on part- time work could not be based on administrative data sources, as the IRS does not capture whether filers worked full time or part time. Moreover, the WFTCA does not specify any adjustment for part-time work or self-employment on either side of the earnings premium calculation.

Although we understand the commenter's concern about caregiving interruptions to a graduate's participation in the workforce, such interruptions also impact the working adults comparison group. In addition, we believe that in passing the WFTCA Congress intended to incentivize graduate workforce participation and earnings, not caregiving.

While we certainly acknowledge the relevance and importance of the cohort default rate as an accountability mechanism, and we agree that a program with lower earnings is likely to also have higher rates of default, we do not believe that Congress intended these two metrics to be interchangeable or integrated. Section 435(a)(2)(D) of the HEA explicitly sets forth several categories of cohort default rate appeals and challenges for a variety of situations, demonstrating that Congress knows how to specify categories and criteria for appeals when it wishes to do so. Congress did not, however, choose to

employ those same appeal categories and criteria for the earnings accountability framework under the WFTCA, nor did it choose to specify other particular parameters for appeals. Absent such explicit directives, as discussed earlier in the context of the basis of appeals, the Department believes the best reading of the statute is to limit the basis of appeals to the earnings premium calculation itself.

Changes: None.

Comments: One commenter noted that some occupations in fields such as defense manufacturing require workers to obtain a security credential, which can in some cases take a year or more to obtain, and recommended that the Department amend the appeals process to recognize documented evidence of clearance-related employment delays as a basis for adjustment to the earnings calculation.

Discussion: The Department declines to create an exception for security clearances. We believe that the time between graduation and earnings measurement is sufficient to account for the time needed to obtain a security clearance.

Changes: None.

Comments: Several commenters urged the Department to expand the appeals process to allow institutions to appeal a low-earning outcome determination when the program prepares students for a documented Federal or State workforce shortage field, a profession named as an area of national need in the Public Service Loan Forgiveness program, or supports a public service workforce.

A few commenters recommended that the Department include a “force majeure” appeal option to protect programs from adverse consequences due to industry-wide disruptions such as strikes or regional economic shifts. One commenter elaborated that this determination should entail both Federal-level and State-level review, and that a Governor or designated State agency should be able to suspend, adjust, or waive earnings premium determinations.

One commenter suggested that the Department consider a “Primary Program Remediation Agreement” in lieu of automatic Direct Loan ineligibility after two EP failures for situations where a single six- digit CIP code program composes at least seventy-five percent of total enrollment, under which the institution would commit to tuition freezes, quarterly reporting of placement and gross receipts data, and enhanced financial literacy training for students for a defined period (e.g., five years), with transparent monitoring.

Discussion: The Department declines to add options for institutions to appeal on the basis of workforce shortages or areas of national need or in situations where an institutions commits to taking steps to mitigate the potential harm to students such as tuition freezes or additional financial literacy training. It is not practical for the Department to determine, on an annual basis, whether a program is associated with an area of national need. In addition, such programs should support adequate earnings for students, perhaps even more so if the workforce is in need of skilled workers in such an area.

Similarly, we do not believe it is appropriate or practical to protect programs whose graduates could be affected by industry-wide disruptions such as strikes or economic changes. Very broad economic changes will affect both the earnings threshold value and the earnings of program graduates, whereas more localized issues such as strikes are unlikely to affect the earnings of individuals across the country, and the Department cannot account for nuanced changes in local or regional industries.

We also do not believe we have the authority to allow an institution to avoid the consequences of failing the earnings premium measure simply by taking remedial action to improve aspects of a program. We anticipate most institutions would take advantage of such an option, substantially reducing the cases where consequences would apply, which would be contrary to the statutory requirement. Additionally, we do not believe such remedial action would adequately compensate for the lack of economic value conferred by the program, which is detrimental both to students and to the taxpayers whose funds supported those students' enrollment in the program. Moreover, no objective and administrable data source exists to document and support appeals on the basis of remedial or curricular actions to improve a program, and therefore such an appeals process would necessitate costly and burdensome review by the Department of subjective evidence and criteria. For this reason, and for the reasons the Department has expressed repeatedly, including in the 2023 final rule and in the NPRM preceding this final rule,\23\ the Department will not establish a burdensome appeal process that is more likely to generate inaccurate, unreliable, and inconsistent information about student earnings than the data source the Department is using in the first place.

\23\ See 88 FR 70004, 70095 (Oct. 10, 2023) and 91 FR 21114 (April 20, 2026).

Changes: None.

Comments: A few commenters urged the Department to establish a waiver or appeals process for programs in career pathways where evidence has demonstrated delayed earnings growth beyond the four-year earnings measurement window, and suggested granting earnings measurement periods of up to 10 years for such programs based on a successful appeal.

Discussion: The Department declines to adjust the earnings measurement window for particular programs or occupations. As many commenters from a variety of fields and sectors have argued, most occupations are characterized by earnings that increase over time. In addition, many occupations require a period of postgraduate clinical or residency work or professional licensure before full employment or practice. In the WFTCA, Congress specified a four-year earnings measurement window for all programs, without exceptions for licensed or security-cleared professions. Given the increasing costs of higher education, we believe that students and taxpayers have a right to expect a much more timely return on their investment than the 10 years suggested by some commenters and, given the approach adopted by Congress in the WFTCA, we do not believe it would be supportable or appropriate to contradict Congressional intent by superimposing a longer earnings measurement window for particular occupations or professions.

Changes: None.

Comments: A few commenters acknowledged the Department's concern about the low quality of past data submitted by institutions in alternate earnings appeals, but urged the Department to permit institutions to raise appeals challenging cohort inclusion decisions, including disputes regarding the accuracy of cohort expansion determinations.

Discussion: We appreciate the commenters' support, and we also acknowledge the importance of permitting institutions to raise appeals challenging cohort inclusion decisions. In the final rule we have amended Sec. 668.603 to clarify the factors an institution can appeal. Those factors include the individuals that are included in the list of completers, the determination of the appropriate version of the earnings threshold, the comparison of the median earnings determined by the Federal agency with earnings data and the earnings threshold for the program, and such other bases for appeal determined by the Secretary.

Changes: The Department amends Sec. 668.603 to specify the allowable bases for appeal, as described above. Other Accommodations and Special Circumstances

Comments: One commenter thought that some cohorts that will be evaluated under the earnings accountability framework would include graduates from the 2020-2021 academic year, had experienced unusual labor market disruptions, and suggested that the Department provide an appeal option for cohorts whose early career outcomes were significantly affected by the COVID-19 pandemic.

Discussion: Although some early cohorts may include graduates from the 2020-2021 award year, we are not persuaded that an accommodation or exemption would be appropriate. The impact of the COVID-19 pandemic was most pronounced in 2020, and the labor market had largely recovered by 2022. Commenters made similar arguments regarding the FVT/GE rule, which used earnings data measured as soon as three years following graduation, and we note that under the new STATS framework the earnings premium calculation uses earnings data measured four years following graduation, providing graduates more time to secure employment and establish income and making the earnings measurement less susceptible to temporary market disruptions. We believe that even for graduates who entered the workforce during the 2020-2021 award year when the primary impact of COVID-19 occurred, a four-year measurement window allows ample time for graduates to demonstrate accurate earnings outcomes for a program of study.

Changes: None. Program Eligibility During Appeals Process

Comments: A few commenters opined that any appeal should stay the effect of the Department's determination pending resolution of the appeal. One commenter urged the Department to explicitly state in the final rule that no program will lose eligibility until all appeal rights have been exhausted and argued that allowing programs to retain eligibility during an appeal protects students and avoids disruption to workforce pipelines.

Discussion: We agree that an appeal stays the effect of the Department's determination, pending the resolution of the appeal. Section 454(c)(5) of the HEA, as amended by the WFTCA, specifies as much, stipulating that “[a]n educational program shall not lose eligibility . . . unless the institution has had the opportunity to appeal” the Department's determination. We note, however, that in cases where an appeal does not change the Department's determination, the effective date of the cessation of program participation is the date of the Department's initial determination, not the date the appeals concluded.

Changes: None.

Comments: A few commenters expressed concern that allowing a program to remain eligible during an appeal period creates a window in which borrowing and enrollment continues despite unresolved concerns about the program's outcomes.

One commenter reasoned that under Section 454(c) of the HEA, the Department has the discretion, but not the requirement, to permit programs to continue participating in the Direct Loan program during an appeal, and must only provide the opportunity for (but not the decision on) an appeal before a program loses Direct Loan eligibility.

One commenter suggested that the Department (1) impose reasonable time limits on the length of an appeal so that programs cannot indefinitely delay the effective date of sanctions while continuing to draw federal funds; (2) condition or limit Direct Loan eligibility during an appeal, such as by capping enrollment in the affected program, restricting new first-time borrowers, or treating the program as provisionally ineligible until the appeal is resolved; and require institutions to provide enhanced disclosures to any students enrolling in a program during an appeal period clearly explaining that the program has failed the earnings test, that its eligibility is under review, and that continued enrollment may carry elevated financial and repayment risk. One commenter cited the recent reductions in the Department's staff and efforts to transfer the Department's functions as a risk to the Department's capacity to administer timely appeals, and expressed concern that institutions may prolong the eligibility of poor performing programs by dragging out the appeal process, resulting in harm to students.

Discussion: We share the commenters' concern about protecting students from programs for which the earnings outcome and future funding availability are in question. However, as we noted in discussing the other comments immediately above, in cases where an appeal does not change the Department's determination, the effective date of the cessation of program participation is the date of the Department's initial determination, not the date the appeals concluded. We believe this function serves to reasonably limit the appeals process and may discourage institutions from attempting to prolong access to Federal funds through appeals that are unlikely to succeed.

We disagree with the commenter who opined that Section 454(c) of the HEA provides the Department discretion to suspend participation during the appeal process. We believe Section 454(c)(5) of the HEA, as amended by the WFTCA, specifically requires that the Department permit an institution to continue program participation during an appeal. We similarly do not believe the WFTCA supports further conditioning or limiting eligibility during an appeal, including by capping enrollment, restricting new first-time borrowers, treating the program as provisionally ineligible, or requiring institutions to provide heightened disclosures.

With regard to the commenter who suggested that the Department impose time limits on the length of an appeal, while Department plans to provide institutions a limited window to decide whether to appeal an adverse determination and to submit an appeal if appropriate, the Department declines to regulate itself by enshrining a time limit to adjudicate a submitted appeal.

We appreciate the commenter's concern about the Department's capacity to administer timely appeals, and though we maintain that existing staffing and resources are sufficient to timely and effectively administer the appeals process described in the NPRM, as we explain below in the “Termination Mechanism and Appeals Process” section, in the final rule we have provided for an appeals process outside of part 668, subpart G, which we expect will result in timelier and more efficient consideration of appeals.

Changes: None. Termination Mechanism and Appeals Process

Comments: A few commenters expressed concern that requiring a subpart G termination and appeals process in all cases could turn be unmanageable for the Department, and encouraged the Department to maintain the 2023 GE rule's approach to removing eligibility for failing programs based on the certification status of the program. One commenter cited the Department's termination of significant portions of the Office of the General Counsel and FSA, which together manage subpart G proceedings, along with other retirements and voluntary

departures, raising questions about whether the Department has the capacity to fulfill the process steps required to terminate program eligibility in a timely manner. One commenter suggested that standard FSA reconsideration processes can further provide an opportunity for recourse for provisionally certified schools or schools that are up for recertification. One commenter advised the Department to use an alternative and more streamlined appeals process instead of the process detailed in subpart G.

Discussion: We understand the commenters' concerns about the Department's proposal to administer all eligibility actions under the earnings accountability framework as termination actions and to administer all appeals under part 668, subpart G. We note that any action to limit or terminate the title IV, HEA eligibility of a program is ultimately subject to subpart G, so to an extent that process is unavoidable, and this was one of the reasons that the Department originally adopted the subpart G approach for the outgoing FVT/GE rule, as well as in the proposed STATS and Earnings Accountability rule. The Department concurs, however, that adding a separate appeals process prior to the subpart G process would reduce the number of instances where institutions would need to resort to an appeal and hearing under subpart G.

In response to these concerns, the Department will make several changes to the regulations in part 668, subparts Q and S. The Department will no longer limit to part 668, subpart G the method for adjudicating appeals of the results of the earnings premium calculation and will regulate the process for submitting an appeal in subpart S instead. This effectively means that the Department will now rely on any available mechanism to end the eligibility of a program, which could include a limitation action under 34 CFR Subpart G, a partial revocation action under 34 CFR 668.13, or a refusal to include the low- earning outcome programs on an institution's Eligibility and Certification Approval Report (ECAR) when it recertifies the institution. The notice of determination under Sec. 668.405 now references the additional appeal process under subpart S. Additionally, as part of those new regulatory requirements in subpart S for submitting an appeal, the Department will stipulate that an institution has 30 days to appeal following a notice of determination that indicates that the program is a low-earning outcome program, which is consistent with 34 CFR 668.91(c). We will also specify the specific items on which an institution can base its appeal.

Changes: The Department amends the regulations in three ways. First, we revise 668.603(a) to revise the scope of the appeal process to not immediately invoke subpart G. We amend the policy for ending program eligibility when a program has failed the earnings premium measure in two out of three consecutive award years. Second, we revise Sec. 668.603(b) to provide an appeal process under subpart S to institutions prior to eligibility consequences. Consistent with existing timeframes for limitation or suspension proceedings under Sec. 668.91(c), institutions have 30 days from the date of the Secretary's determination to file an appeal. We also add Sec. 668.603(c) to clarify the factors an institution can appeal under subpart S. Those factors include the individuals that are included in the list of completers, the determination of the appropriate version of the earnings threshold, the comparison of the median earnings determined by the Federal agency with earnings data and the earnings threshold for the program, and such other specific bases for appeal determined by the Secretary. Third, as a conforming change we amend Sec. 668.405(b) to include information about the appeal process under part 668, subpart S in the notice of determination that will be sent to institutions following the calculation of the earnings premium measure. Reporting and Disclosures Reporting and Disclosures--General Comments

Comments: Many commenters argued that reporting and disclosure requirements already strain overburdened institutions. The commenters emphasized these requirements as excessive and costly and recommended that the Department reduce their number or eliminate them entirely.

Discussion: The Department is sensitive to these concerns and acknowledges that all institutional reporting requirements impose at least some administrative burden. However, we maintain that students, taxpayers, and the institutions themselves will benefit from these regulations in several ways that offset the burden associated with them. First, because the Department is eliminating some of the reporting requirements that were identified as duplicative or particularly burdensome, institutions will benefit from the reduced reporting requirements under the final rule relative to the reporting requirements under the existing FVT regulations. In total, the regulation reduces the number of data elements that institutions are required to report by approximately 30 percent. Many of these are elements the Department determined it can calculate and report through its administrative data systems (e.g., withdraw dates) and the Department will continue to report this information publicly under STATS. Because institutions no longer need to calculate and report this information, they will incur reduced administrative costs to comply with the regulations. Furthermore, the Department estimates that fewer students will attend failing programs under these regulations relative to the prior regulations. This result is beneficial to students and taxpayers, but it will also result in fewer institutional warnings and disclosures, ultimately reducing the burden on colleges to comply with these regulations. In total, the Department estimates that approximately 85,500 fewer disclosures would need to be sent to students by institutions (Table 5.12). Second, some institutions offer programs that failed the accountability framework under the previous regulations but will pass under the final regulation and retain access to title IV, HEA funds. The Department estimates that this would primarily benefit programs at proprietary institutions and undergraduate and graduate certificate programs from all sectors. Lastly, many institutions that offer GE programs will benefit from the fact that failing the accountability framework under the final regulation results only in loss of eligibility for Federal student loans, as compared to all title IV, HEA programs under the outgoing GE regulations.

Changes: None.

Comments: Several commenters stressed the need for additional context to be included with the disclosures to explain details such as career earning trajectories, institution mission alignment, licensure requirements and board certification timelines.

Discussion: Revised 34 CFR 668.605(c) details what information must be included in student warnings. Revised 34 CFR 668.605(d) and (e) detail the delivery to enrolled and prospective students respectively. The Department continues to believe that the items described in the regulations include the most important information for students. Institutions are always able to provide supplemental information and explanations to help convey important information to students. However, these must be separate from (and in addition to) the student warnings itself, as the student warnings content specified in the regulations must be the only substantive content of that communication, and the disclosure

process must adhere to revised 34 CFR 668.605(d) and (e).

Changes: None.

Comments: Several commenters agreed with the Department that improved reporting and disclosures were needed for consumer transparency. These commenters concurred with the need for clear reporting and strong disclosures that are nonetheless simple and not complicated and expressed support for the Department's approach.

Discussion: The Department appreciates the commenters' support for improved reporting and disclosures related to transparency and earnings accountability.

Changes: None.

Comments: Several commenters requested that the Department align the reporting requirements with existing Integrated Postsecondary Education Data System (IPEDS) and FSA reporting definitions to avoid duplicative and inconsistent efforts.

Discussion: The Department agrees that such an approach would be more efficient in obtaining key data from institutions. However, the required reporting items included in the final regulations are dissimilar to other FSA reporting functions. For example, the IPEDS report collects institutional data on title IV, HEA recipients and non- recipients. The reporting requirements included in these regulations are specific to title IV, HEA recipients and are student specific.

Changes: None.

Comments: A few commenters opined that all the required reporting items were not necessary to calculate the earnings premium measure and therefore should not be required or reported. Another commenter remarked that institutions that have not been approved to participate in the Direct Loan Program on or before July 1, 2026 should be exempted from the reporting requirements. The commenter contended that because their educational programs are not eligible for Direct Loans and this reporting should not be necessary to assess the Direct Loan Program eligibility of these educational programs.

Discussion: The Department disagrees. First, because of the changes that the Department has made to 34 CFR 668.14, it is true that institutions not participating in the Direct Loan program would not be subject to a loss of title IV, HEA program eligibility. However, for these institutions reporting is still required for calculation purposes. The Department will still calculate the metric for programs at these institutions, but the programs would not lose eligibility for any title IV, HEA program as a result of the earnings premium measure.

Additionally, the Department maintains that the purpose of the reporting is not simply to support the calculation of the earnings premium measure. Institutional reporting is also necessary for the Department to provide information to current and prospective students about the net price of postsecondary programs and other important factors about the financial value of such programs.

Changes: None. Reporting Deadlines

Comments: Several commenters recommended that the reporting and disclosure framework should be delayed by one to two years or otherwise allow for a phased-in or transitional period of implementation. These commenters argued that this approach would ease institutional burden and allow for a more thorough understanding of required reported data items.

Discussion: First, the Department reiterates that the reporting and disclosure requirements under this regulation are reduced compared with the prior regulation. The Department disagrees with the suggestion to delay the implementation of changes to the reporting disclosure framework because of the statutory requirements to calculate the earnings premium measure and the necessity for the Department to obtain some of the information in the reporting requirements in order to perform that calculation.

Changes: None. Data Elements Reported

Comments: Several commenters objected to the removal of the requirement for institutions to report, at a student level, the institutional debt that students owe after completing or withdrawing from programs. These commenters argued that students would be harmed by the removal of this requirement because information about institutional debt is critical for students to know.

Discussion: The Department disagrees with the commenters. There are several reasons the Department has removed this reporting requirement. First, the Department is sensitive to the significant administrative burden that calculating and reporting this particular data point has on institutions. As explained in the NPRM, we are removing the requirement for an institution to report the total amount of institutional debt the student may owe any party after completing or withdrawing from the program because it will no longer be needed for purposes of the debt- to-earnings rate (which we are eliminating) and because of the complicated way that institutions were required to report this information, particularly for withdrawn students. We believe this change will reduce burden for institutions. We also believe that information on institution-related debt is not as important for students compared to the other information included in STATS, such as tuition and fees, private loan debt, and the institutional, Federal, and State financial assistance received by the student.

Changes: None.

Comments: Many commenters expressed that the reporting should include more information than is required in the proposed regulations. These commenters argued for disclosures of career outcomes (i.e., salary outcomes) by occupational sectors, total income (not solely wages provided on the Form W-2), the typical earnings of individuals located in MSA and non-MSA areas, program completion rates and loan repayment rates.

Discussion: The Department agrees with the need for valuable information to be shared with students, but believes the reporting requirements detailed in revised 34 CFR 668.406 are appropriate without being unduly burdensome. In addition, we believe that overwhelming students with excessive or duplicative information would likely result in many students ignoring or only skimming the disclosures, ultimately proving less effective at informing enrollment decision than targeted, timely disclosures of the most relevant information at the time that information is most useful for students. The Department believes that the final rule strikes the appropriate balance with the reporting and disclosure of the most meaningful and relevant information.

In the future, the Department will continue to evaluate the efficacy of consumer disclosures under STATS and whether additional information can be obtained, either from institutions or elsewhere, that would supplement the information we currently plan to provide. Any changes to that process would only be made following consumer testing to determine the usefulness of the disclosures to the public.

Changes: None. Removal of Transitional Reporting and Metric

Comments: A few commenters urged the Department to retain the debt- to-earnings metric, arguing it was helpful in preventing unmanageable debt and

reducing the risk of continued harm to students.

Discussion: As further discussed above in the “Elimination of the D/E Rate” section, the Department removes D/E rates because the statute provides for an earnings premium metric as part of the new accountability framework. Also, the former D/E metric neither on its own nor in combination with the earnings premium calculation definitively distinguishes between high-quality and low-quality programs; these are strictly measurements of a program's debt and earnings outcomes, and through the WFTCA Congress expressed its preference for an earnings premium measurement. Further, calculation of D/E rates requires the use of a significant amount of data reported by institutions to the Department beyond what is normally necessary to administer the title IV, HEA programs. Although we continue to believe the resources needed to support the D/E rate were justified, the reduction in cost and burden for the government is an additional benefit of shifting our focus to the earnings premium, which was the clear preference of Congress. For these reasons we believe the new earnings premium measure will be more effective as a new accountability standard. Disclosure Website

Comments: A few commenters remarked that the disclosures do not go far enough and should be strengthened to facilitate data transparency requirements. The commenters stressed that enhanced disclosures should be used to provide:

Continued warnings after loss of eligibility (including during appeal periods)

Warnings for potential loss of all title IV aid

Additional information in warnings to assist students in decision making

A Department-managed student acknowledgement tracking system

Discussion: The Department thanks the commenters and shares commenters' concerns about ensuring that students are informed about their educational programs. However, we decline the commenters' request because of the additional burden on institutions (this could double or triple the number of disclosures made), the WFTCA specially calls out student loans and therefore that is the title IV program that is specified for penalty. Further, because students must acknowledge they reviewed the disclosure, we feel confident the student will be aware the program is at risk. Finally, a Department-managed student acknowledgement tracking system would not be feasible given the number of programs that are estimated to fail under the final regulation (Table 5.12). The Department has no plans to develop and manage a student acknowledgement tracking system.

Changes: None.

Comments: One commenter stressed that the disclosure link should be placed on the institution's web page that shares cost of attendance information, not other general academic information.

Discussion: The final regulation will amend 34 CFR 668.43(d)(2) to no longer require institutions to provide a prominent link to the website maintained by the Secretary on any web page containing academic information about the program or institution. Institutions will still be required to provide a prominent link to a website containing cost, financial aid, or admissions information about the program or institution. The Department believes this will reduce burden on institutions, while still providing a link to relevant program information on pages where that link makes the most sense. The Department contemplated the broad usage and applicability of the term “academic information” and believes it is far too general in nature and would require a prominent link on every page and subpage of an institution's website, likely hundreds of instances or more. The Secretary continues to reserve the right to require the institution to modify a web page if the information is not sufficiently prominent, readily accessible, clear, conspicuous, or direct.

Changes: None.

Comments: One commenter argued that the Department, rather than institutions, should manage and track the disclosure acknowledgement process. The commenter argued that the institution is expected to obtain an acknowledgement prior to a student enrolling in a program, but it is not required to document the acknowledgement. The commenter said that this runs the risk of institutions not complying with the acknowledgement and the Department being unable to conduct oversight. The commenter recommended the Department maintain this process to ensure students receive and acknowledge the information, which would reduce burden on institutions. The commenter stressed that if this is not possible, the Department should require that institutions document these acknowledgements from students.

Discussion: Institutions would no longer need to require student acknowledgments under 34 CFR 668.407, since the accountability framework in part 668, subpart S, including the student warning process in Sec. 668.605, would now apply to both GE and non-GE programs. The separate student acknowledgement process is not required under the WFTCA framework, and it is duplicative with the warning process described in 34 CFR 668.605. Institutions are expected to maintain documentation of the student's acknowledgement for review by the Department or by non-Federal auditors in the future.

Changes: None. Disclosure Content

Comments: One commenter stressed that the disclosure requirements (extending the disclosure requirement to prospective students, requiring institutions to obtain a signed acknowledgment from each prospective student before enrollment in an affected program and requiring the disclosure to indicate the program's failing status in language designed to convey program quality concern) would function as an enrollment-dampening mechanism, not as a neutral consumer information requirement.

Discussion: The Department disagrees. We believe these changes are needed to compel institutions to offer programs that deliver economic value, enhance data accessibility for students, and protect taxpayers and students through stricter oversight and comprehensive disclosures on program outcomes. Section 431 of the GEPA grants the Secretary authority to establish rules to require institutions to make data available to the public about the performance of their programs and about students enrolled in those programs. That section directs the Secretary to collect data and information on applicable programs for the purpose of obtaining objective measurements of the effectiveness of such programs in achieving their intended purposes and also to inform the public about Federally supported education programs. Further, the WFTCA requires warnings for programs at risk of losing Direct Loan eligibility under Section 454(c)(6) of the HEA.

Changes: None. Distribution and Linking Requirements

Comments: One commenter recommended that the Department streamline processes by publishing the program-level metrics on the College Scorecard in lieu of creating a separate program information website. The commenter opined this would avoid unnecessary confusion and duplication of information on multiple websites.

The commenter suggested institutions should be required to link to the program-level data in the College Scorecard, in place of the program information website, on any web page containing cost, financial aid, and admissions information about the program and institution. The student warnings should provide links to the program-level data on the College Scorecard, instead of the program information website.

Discussion: We thank the commenter for the suggestion and will consider it as we determine how to best implement this regulation. We note the definition of program information website could be any Department website, including the College Scorecard itself. Nonetheless, the commenter's suggestion is an option that we will consider and may pursue in the future.

Changes: None. Administrative Capability and Consequences Administrative Capability Requirements

Comments: One commenter claimed that the Department's proposed approach to apply programmatic sanctions to low-earning outcome programs only if more than half of Federally aided students or title IV, HEA revenue are in such failing programs is inconsistent with the structure of the administrative capability framework under Sec. 668.16, which applies more broadly at the institutional level rather than for particular programs or sets of programs.

Discussion: We disagree with the commenter. Although most of the other administrative capability criteria under Sec. 668.16 encompass an institution as a whole, some of the other existing requirements apply more narrowly to a program or set of programs. For example, Sec. 668.16(r) requires institutions to provide students, within 45 days of successful completion of other required coursework, geographically accessible clinical or externship opportunities related to and required for completion of the credential or licensure in a recognized occupation. That requirement could only apply to programs with licensure requirements. In addition, no provisions in the statute or regulations prohibit the Department from establishing an administrative capability criterion that applies only to particular programs.

Changes: None.

Comments: A few commenters characterized the 50 percent threshold for the administrative capability requirement at Sec. 668.16(t) as an overly permissive loophole that would still allow large institutions to continue operating predatory programs by cross-subsidizing or balancing them against a few high-earning programs, and suggested that the Department strengthen the administrative capability requirement by increasing the success threshold to require at least 75 percent of an institution's title IV, HEA recipients and funding not be from low- earning outcome programs.

A different commenter characterized the 50 percent threshold for the administrative capability requirement at Sec. 668.16(t) as too strict for specialized institutions that offer only one or a few programs, and suggested that the threshold should be lowered to require that 25 percent of an institution's title IV, HEA recipients and funding not be from low-earning outcome programs.

Discussion: The Department notes that commenters differ on the appropriate percentage threshold for this requirement. The Department's goal with this provision is to identify the point at which an institution's inability to offer programs that lead to acceptable earnings outcomes shifts from being a program-level issue to instead represent a widespread issue that shows there is a more systemic problem with the way the institution operates. The Department proposed the 50 percent threshold, and the AHEAD Committee agreed to that threshold, because that is the point where an institution has more title IV, HEA recipients or revenue associated with low-earning outcome programs than there are with those that are demonstrating acceptable earnings outcomes. This metric also considers the students who might be enrolling in a poorly performing program but not completing it, and it makes sense to consider how such programs may be impacting the larger pool of students while also making the same comparison for students enrolling in the passing programs at the institution. At that point, more of the title IV, HEA funds or recipients going to the institution are for enrollment in low-earning outcome programs than for students enrolling in programs that are consistent with continued participation in the Direct Loan Program. That is an obvious warning sign for the institution, and the 50-percent threshold represents a logical and relatively familiar and easily understood measure that is reasonably related to the Department's regulatory concerns. At lower percentages of title IV, HEA funds or recipients at risk it is, in our judgment, relatively more likely the case that the issue is tied to program- specific challenges and a lesser threat to the institution as a whole. We must draw a line for this rule to be fairly clear and administrable, and we have concluded that 50 percent reflects a reasonable balance of considerations based on available information.

Changes: None.

Comments: One commenter argued that the new administrative capability standard at Sec. 668.16(t) creates a perverse financial incentive for institutions to eliminate borderline programs not because those programs are failing students but because retaining them risk triggering consequences that impact the institution more broadly, not merely the program in question. A few commenters contended that this dynamic would particularly impact programs at comprehensive public universities where administrators would be pressured to cut programs in disciplines such as anthropology, sociology, and other social sciences where graduates are likely to enter public service careers, which are characterized by lower compensation not because of poor outcomes or institutional failure but because they operate within public, nonprofit, or community-based systems with constrained wage structures. One commenter recommended that the administrative capability standard should exclude programs that meet a minimum enrollment threshold, demonstrate graduate employment rates above a minimum threshold, and document that graduates pursue advanced degrees or public service occupations at rates substantially higher than national averages.

Discussion: The Department disagrees with the commenters' assertions and suggestions. We believe it is fitting and beneficial for the administrative capability requirement to prompt institutions to thoughtfully consider the economic value of their program offerings for students, particularly for programs that benefit from Federal funds provided by U.S. taxpayers who, in turn, expect a reasonable economic benefit for that investment. With regard to programs where graduates pursue advanced degrees at a higher rate than other programs, the regulations already accommodate such programs both by excluding from the earnings premium calculation students who have completed a higher- credentialed undergraduate program (for undergraduate programs) or a higher-credentialed graduate program (for graduate programs), and by excluding students who are enrolled during the year earnings would be measured for the student.

Changes: None.

Comments: One commenter opined that the phrase “failing program” in the NPRM was unclear in the context of the

administrative capability requirement at Sec. 668.16(t). This commenter contrasted the Department's use of that phrase in the May 19, 2023 NPRM for FVT/GE, which the commenter characterized as a forward- looking rule that considered the future risk of a program or set of programs failing the metric in a second or subsequent year, against use of the phrase in the April 20, 2026 STATS and Earnings Accountability NPRM, which the commenter characterized as having changed over time. The commenter suggested that the Department clearly define the term “failing program” in its regulations.

Discussion: Although the Department appreciates the commenter's suggestion, we believe the revised regulatory text at Sec. 668.16(t) is clear and unambiguous, obviating the need to define a “failing program” elsewhere in the regulations. Indeed, the new regulatory language at Sec. 668.16(t) is arguably clearer than the outgoing language. Under the outgoing language, an institution that offers GE programs was administratively capable if at least of its total title IV, HEA funds were from programs that were not “failing” under part 668, subpart S, meaning that the program(s) in question did not fail either the D/E rates or the EP measure. The revised language stipulates that an institution is administratively capable if at least half of the institution's recipients of title IV, HEA funds and at least half of the institution's total title IV, HEA funds are not from low-earning outcome programs under part 668, subpart S, and Sec. 668.603 under that subpart specifically defines a low-earning outcome program as one that has failed the earnings premium measure in Sec. 668.402 in two out of any three consecutive award years for which the program's earnings premium measure is calculated. The definition of a low-earning outcome program at Sec. 668.603 is clear and direct and, because the administrative capability criterion in question at Sec. 668.16(t) directly cross-references that definition rather more obliquely referencing failing programs, there is no need to define separately “failing program” for the purposes of the administrative capability requirement at Sec. 668.16(t).

Changes: None.

Comments: One commenter noted that not all title IV, HEA programs are processed through a single data system and questioned how the Department would efficiently collect data and determine whether at least half of an institution's title IV, HEA funds are not from low- earning outcome programs. The commenter suggested that the Department only measure whether at least half of an institution's Pell Grant and Direct Loan funds are from low-earning outcome programs for the purpose of the administrative capability criterion because doing so would enable the Department to use more unified existing reporting systems that could be more easily adapted for this purpose.

Discussion: We understand and appreciate the commenter's concern. In sub-regulatory guidance under the outgoing FVT/GE framework, we noted that the Department currently does not maintain information about an individual's receipt of Federal Work-Study (FWS), and therefore students who received only FWS funds for enrollment in a program could not be included on an institution's completer's lists.\24\ We anticipate that will remain true going forward at least for a time under the STATS framework, however it remains possible that the Department's systems may eventually accommodate more granular reporting and tracking of FWS funds. We believe it is appropriate not to carve out particular programs from the administrative capability measurement to allow the calculation to consider FWS-only recipients if and when that becomes possible.

\24\ See Q&A G-15 on FSA's FVT/GE frequently asked question page, available at https://fsapartners.ed.gov/knowledge-center/ topics/financial-value-transparency-and-gainful-employment- information/frequently-asked-questions.

Changes: None.

Comments: One commenter objected to the administrative capability standard at Sec. 668.16(t), claiming it is of a fundamentally different nature than the examples of administrative capability laid out in the HEA.

Discussion: We disagree with the commenter. Section 498(d) of the HEA provides the Secretary broad authority to establish procedures and requirements relating to an institution's administrative capability, including the authority to establish reasonable new procedures and requirements that will contribute to ensuring that the institution will be able to administer the title IV, HEA programs in a manner consistent with the goals of such programs. The statute does not limit the Secretary to promulgating only administrative capability criteria that closely resemble those examples that Congress may have specifically anticipated at the time the statute was adopted.

Changes: None.

Comments: One commenter sought clarification regarding the meaning of “at least half of the institution's recipients of title IV, HEA funds” for purposes of the administrative capability requirement at Sec. 668.16(t). The commenter requested that the Department confirm that, for purposes of Sec. 668.16(t), the phrase “recipient of title IV, HEA funds” will be calculated based on students receiving title IV, HEA funds during enrollment in the specific program being evaluated, and noted that this interpretation would be consistent with the WFTCA which states that the new earnings test measures earnings “of the programmatic cohort of students who received funds under this title for enrollment in such program.”

Discussion: We note that the definition of Student at Sec. 668.2, for purposes of the earnings premium calculation, defines a student as an individual who received title IV, HEA program funds for enrolling in the program. Because the administrative capability determinations under Sec. 668.16(t) are based on the earnings premium calculation, that definition would generally apply here as well. We also note, however, that Sec. 668.2 relatedly defines an eligible non-GE program in such a way as to include all coursework associated with the program's credential level. Therefore, for GE programs, the measurement is based only on amounts associated with the program itself. For eligible non-GE programs, however, the measurement also considers amounts associated with other coursework the student completed at the same credential level.

Changes: None. Consequences for Failure To Demonstrate Administrative Capability

Comments: Many commenters objected to the loss of title IV, HEA eligibility for all of an institution's low-earning outcome programs if the institution fails the new administrative capability requirement at Sec. 668.16(t). Many commenters noted that the WFTCA specifies only a loss of Direct Loan program eligibility for low-earning outcome programs, and argued that loss of overall title IV, HEA eligibility for such programs would therefore overstep Congressional intent by depriving low-income students of Pell Grants or other forms of title IV, HEA funds. A few commenters observed that Section 401 of the HEA establishes Pell Grant eligibility, that Section 84001 of the WFTCA does not amend Section 401 of the HEA, and one commenter suggested that the Department limit consequences to provisional certification status only, which preserves the Department's regulatory leverage without categorical title IV, HEA elimination.

Discussion: The Department disagrees with the commenters who objected to

the loss of title IV, HEA eligibility for all of an institution's low- earning outcome programs if the institution fails the requirement at Sec. 668.16(t). While the WFTCA mentions only a loss of Direct Loan program eligibility for low-earning outcome programs, that is the primary consequence at the individual program level of consistently failing the earnings premium metric. However, as noted in response to comments above, the Department believes that if more than 50 percent of an institution's title IV, HEA recipients or revenue are associated with programs that are demonstrated to lead consistently to low earning outcomes, it is likely that broader problems within the overall institution will impact its ability to administer the title IV, HEA programs consistent with the Congressional intent of those programs--to assist students in completing postsecondary education that will lead to improved employment and earnings outcomes. As we noted above, Section 498(d) of the HEA provides the Secretary broad authority to establish procedures and requirements relating to an institution's administrative capability, including the authority to establish reasonable new procedures and requirements that will contribute to ensuring that the institution will be able to administer the title IV, HEA programs in a manner consistent with the goals of such programs. In this case, we do not believe a mere disclosure to remind students about their limited lifetime Pell Grant eligibility would be sufficient to safeguard the interests of students, taxpayers, and the title IV, HEA programs.

Changes: None.

Comments: Several commenters posited that this provision particularly impacts institutions that are focused on preparing students for a particular job or employment sector, as such institutions frequently offer only one or a handful of programs, making it more likely that more than 50 percent of the institution's students would be enrolled in a single failing program, leading to a loss of both Direct Loans and Pell Grants. A few commenters predicted that this outcome would cause such institutions to close. A few commenters recommended that the Department more gradually phase in the administrative capability standard for these types of programs and institutions, such as an initial three-year period during which earnings metrics are used for disclosure and calibration only. A few commenters advocated for an exemption for highly specialized institutions. One commenter broadly advocated that institutions in general should only lose title IV, HEA eligibility under Sec. 668.14(h) for failing the administrative capability criteria at Sec. 668.16(t) for three consecutive years, rather than in two out of three years.

Discussion: As discussed in the RIA, the Department estimated the impact of the final regulation on single-program institutions, and our analysis reveals that single-program institutions are better off under the final regulation than under the outgoing FVT/GE framework, since fewer of these programs are estimated to fail the accountability framework relative to the baseline.

Changes: None.

Comments: Many commenters opined that this provision disproportionately impacts religious institutions and exacerbates the rule's burden on religious exercise, because graduates of religious degree programs may earn relatively modest incomes (despite delivering other important societal benefits), pressuring institutions to stop offering religious degree programs because all low-earning outcome programs at such institutions could become ineligible for all title IV, HEA programs, not just the Direct Loan Program. A few commenters noted that such programs tend not to participate in the Direct Loan program and maintain low tuition rates to reduce the need for student borrowing. A few commenters suggested that the Department protect programs in this category by revising the administrative capability requirement at Sec. 668.16(t) to exempt programs for which no students borrowed Direct Loan funds since July 1, 2021. A few commenters requested a general religious exemption from the administrative capability requirement.

One commenter expressed concern about the impact of these provisions on institutions located in rural or remote areas, including Tribal Colleges and Universities which generally do not participate in the Direct Loan program but 69 percent of whose students rely on the Pell Grant program.

Discussion: As discussed above in the “Legal Authority/Department Authority” section, we do not believe the rule unfairly burdens religious institutions or programs. We also do not believe that the rule unfairly burdens Tribally Controlled Colleges and Universities, and we maintain that it would be inappropriate to exempt certain institutions or sectors.

However, the Department understands the commenters' point regarding institutions that historically have not participated in the Direct Loan Program. In the final rule, we exempt an institution from the automatic loss of title IV, HEA eligibility under Sec. 668.14(h) if the institution does not currently participate in the Direct Loan program and has not participated in the Direct Loan program for the five most recently completed award years. In addition, under the final rule we will also exempt a program from automatic loss of title IV, HEA eligibility under Sec. 668.14(h) if the program is not yet determined to be a low-earning outcome program and the institution and the Department agree to amend the institution's program participation agreement to prevent students from borrowing for the program using the institution's authority under 685.203(m)(2) for a period of at least five years.

Changes: No changes based on these comments; however, as described in the “Legal Authority/Department Authority” section, the Department amends proposed Sec. 668.14(h) by adding paragraphs (3) and (4) to provide the exemptions for institutions or programs that do not participate in the Direct Loan program described in that section.

Comments: A few commenters explained that an effective institution could fail the administrative capability requirement for reasons that are not the fault of the institution, such as if the institution is located in an area with a lower cost of living and wages below those elsewhere in the state.

Discussion: As we further discuss below in the “Summary of Comments from the NPRM” section of the RIA, the Department specifically considered the impact of the proposed regulation on programs in rural areas. The Department's analysis shows that the regulation will result in only a slightly higher share of failing programs and students in rural areas relative to the current regulation. We remind commenters that both the graduate cohort earnings and the working adults threshold earnings include rural earners, and we note that this earnings threshold definition is predicated on the highly specific statutory requirement outlined in Section 84001 of the WFTCA, where Congress explicitly instructed the Department on how the earnings test would be conducted. Therefore, the Department does not believe it has the authority to alter the earnings test for programs located in rural areas.

Changes: None.

Comments: One commenter opined that the consequences for failure to meet the 50-50 administrative capability standard extend far beyond those that generally attach to an institution that is found to not be administratively capable. This commenter claimed that Sec. 668.14(h) is superfluous because Sec. 668.14(b)(6) already requires

institutions to agree to comply with the administrative capability standards under Sec. 668.16. The commenter cited 668.16(m) as an opposing example where an administrative capability criterion involves specific consequences but those consequences are specifically rooted in the HEA.

Discussion: We disagree. We believe that each of the administrative capability requirements under Sec. 668.16 are necessary criteria for any well-functioning institution that administers the title IV, HEA programs. Although most of the administrative capability criteria provide the Department reasonable discretion to administer appropriate corrective action based on the institution's circumstances, other administrative capability criteria necessitate a more specific and coordinated response. The example cited by the commenter of the cohort default rate-related requirement at Sec. 668.16(m) includes consequences specified in the HEA, but nothing in the statute or regulations prevents the Department from applying a specific remedy for other factors of administrative capability.

Changes: None.

Comments: Many commenters expressed general support for continued access to Pell Grants and concern about the potential loss of Pell Grant eligibility for institutions that fail the administrative capability requirement, noting that grant assistance makes higher education and workforce education available to students who otherwise could not afford it. One commenter claimed that maintaining Pell eligibility would reduce barriers to access for low-income students while still enforcing accountability for borrowing outcomes. One commenter suggested that maintaining the student notification requirement about remaining lifetime Pell eligibility while limiting institutional sanctions only to loss of Direct Loan eligibility would be an appropriate compromise.

Discussion: The Department appreciates and shares the commenters' concern about the importance of Pell Grants to students who otherwise could not afford postsecondary education. It is precisely because of our concern for the best interest of students that we believe it is necessary that an institution which derives over 50 percent of its title IV, HEA funding or recipients from programs that are demonstrated to lead to low earning outcomes must cease disbursing Pell Grants to students who enroll in such programs. As discussed above in response to other comments, failure to meet this administrative capability requirement calls into question the institution's overall operations and ability to administer the title IV, HEA programs in the way that fulfills Congress's intentions--i.e., to help students enroll in programs that lead to improved employment and earnings outcomes. In cases where an institution consistently cannot achieve that objective, the Department believes that students would be best served in preserving their limited title IV, HEA eligibility to enroll in other better-performing programs that the institution may offer, or to enroll at another institution where such programs are available. We do not believe a mere disclosure to remind students about their limited lifetime Pell Grant eligibility would be sufficient to safeguard the best interests of students.

Changes: None.

Comments: One commenter recommended that a case-by-case review, distinct from the Direct Loan eligibility determination, should be required prior to loss title IV, HEA eligibility for an institution's low-earning outcome programs under Sec. 668.14(h).

Discussion: The determination under Sec. 668.14(h) that an institution has failed to meet the administrative capability requirement at Sec. 668.16(t) in two out of three years will be made separately from the Direct Loan eligibility determination under Sec. 668.405. In addition, an institution facing a cessation of title IV, HEA participation for all of its low-earning outcome programs under Sec. 668.14(h) would be able to separately contest that action under part 668, subpart G.

Changes: None.

Comments: One commenter advocated for the removal of title IV, HEA eligibility after failing the administrative capability standard in any one year, rather than in two years out of three.

Discussion: The Department appreciates but declines this suggestion. Although we recognize that failure to meet the administrative capability requirement at Sec. 668.16(t) is a serious concern, we do share the concern expressed by numerous other commenters that ceasing title IV, HEA participation for all or a substantial portion of the institution's educational programs would significantly impact most institutions. Imposing that consequence after a single-year failure could result in a number of programs ceasing all other title IV, HEA program participation at the same time they cease Direct Loan Program participation. We believe that a two-of-three standard is appropriate under Sec. 668.14(h) for the same reasons a two-of-three standard is needed for the individual Direct Loan eligibility determinations under Sec. 668.603. For such a significant consequence, it is prudent to wait until the institution has failed the requirement in two out of three years, not only to reduce the possibility of adverse consequences attaching in borderline cases where an institution may actually have passed the 50 percent threshold, but also to protect both institutions and students from sudden disruptions in the availability of other title IV, HEA programs such as Pell Grants and to provide institutions one additional opportunity to improve their program offerings.

Changes: None. Other Public Comments Other Issues

Comments: A few commenters asked about what occurs for students who double majored in college and obtained a single degree. The commenters inquired if the earnings of that person would apply to one of the programs or to both.

Discussion: The Department clarifies that students who double major, including students who fulfill the course requirements for two separate programs but receive a single degree, would have their earnings counted in both programs they completed. Similarly, students who earned dual degrees, i.e., separate degrees for each program of study that they completed, also have their income counted toward both degrees they complete. The Department further notes that institutions will have the ability to review program completer lists prior to the point in which the median earnings value is determined, giving colleges the opportunity to ensure that students who fall into such categories are appropriately counted in both program completer lists. This review process mitigates the concern that commenters raised about how certain students may mistakenly be excluded from the completers list where they should be included.

Changes: None.

Comments: One commenter was concerned about the substantial role that third-party servicers play in the administration of the title IV programs and asked that the Department explicitly acknowledge that institutions may rely on such servicers for accountability-related functions.

Discussion: This final rule does not diminish the role that third- party servicers play in the administration of aid. Their activities continue to include “performing any function required by

any statutory provision of or applicable to Title IV of the HEA, any regulatory provision prescribed under that statutory authority, or any applicable special arrangement, agreement, or limitation entered into under the authority of statutes applicable to Title IV of the HEA” as explained in the definition under Sec. 668.2. This would encompass functions relating to these new STATS and earnings accountability regulations.

Changes: None.

Comments: One commenter asked that the Department add a cross- reference to comprehensive transition and postsecondary (CTP) programs where they appear in the list of students excluded from the earnings premium measure calculation in Sec. 668.403(c) and that the Department specifically state in the regulations that we will not publish an earnings premium measure for CTP programs.

Discussion: We decline to make these changes to the regulations as they are unnecessary. There is no cross-reference to prison education programs in the list of exclusions either, and because students in CTP programs are excluded from the earnings premium measure, there will be no metric to publish.

Changes: None.

Comments: One commenter was concerned about the implications under the earnings premium measure and accountability rule for Prison Education Programs or PEPs. Even though under Sec. 668.403(c) students enrolled in PEPs are not counted in the metric calculation, it is possible that a school might have a non-PEP program with the same 6- digit CIP code and credential level, and if it is designated a low- earning outcome program, the PEP version could be swept up in that. Although PEPs are only eligible for Pell Grants, that aid can be endangered when the school meets the 50 percent thresholds for number of students or amount of title IV dollars involved in low-earning outcome programs. If a small PEP that has few students gets rolled up with other programs at more general CIP code levels, the PEP could be associated with programs that are dissimilar.

Discussion: As the commenter noted, students in approved PEPs are not counted in the earnings premium measure calculation, and PEPs are not eligible for Direct Loans; therefore, there is no danger of the Department ending those programs' participation in the Direct Loan program. Also, as noted elsewhere in this final rule, programs that do not participate in the Direct Loan Program will not be subject to potential loss of Pell eligibility. And as with CTP programs above, there will be no metric calculated for PEPs, so the negative outcomes associated with the metric will not apply. Finally, when taking action to end the title IV, HEA participation of a program under the administrative capability penalty, the Department will ensure that any denial of participation applying to a program that includes students who are enrolled in a PEP or CTP program will not apply to those students.

Changes: We have amended the language of the PEP and CTP exclusions in Sec. 668.403(c)(5) and (6) to remove the present tense and clarify that students in those programs, regardless of when they were enrolled, will not be included in an earnings premium measure calculation.