Education Department approves rule ending federal funding for low-paying degrees

The Department of Education has finalized a new rule that requires college degree programs to show that their alumni earn more than the average high school graduate to continue receiving federal funds.

A panel of private and public policy sector stakeholders on Friday unanimously approved language that applies the accountability standard to all higher education programs, from trade school certificates to graduate degrees.

The new rule will end federal student loans and institutional support for consistently failing programs, including eligibility for Pell Grant payments serving low-income students, starting in July.

Under Secretary of Education Nicholas Kent said the Trump administration is working “to break the cycle of student debt and poor return on investment” that graduates increasingly experience.

“After more than 15 years of regulatory uncertainty under the previous three Administrations, we’ve developed an accountability framework that institutions can work with, students will benefit from, and taxpayers can rightfully expect to improve outcomes,” Mr. Kent said in a statement.

According to the Education Department, the Obama and Biden administrations distributed funds “based on tax status and politics rather than student outcomes,” increasing the federal student loan portfolio to $1.7 trillion.

“Poor earnings, coupled with high costs, make college a bad investment for too many students, ultimately leaving taxpayers to shoulder the burden when some borrowers default,” the department said in a release.

Higher education has braced for a 15% drop in the number of eligible college applicants this year due to the 2008 recession inspiring fewer people to have children.

Reached Tuesday for comment, academic insiders praised the Trump administration’s instinct to defund boutique programs that lack clear career paths as the trend unfolds.

“This doesn’t mean that colleges should cease to offer instruction in areas for which there is low demand for degree holders,” said Peter Wood, president of the conservative National Association of Scholars and a former associate provost at Boston University. “It just means that the resources of the federal government should be spent supporting students who are preparing for the work that the nation needs.”

He predicted that many universities will “cut their losses” by closing programs in the fine arts, humanities, social sciences and ethnic and sexual studies.

“This is return on investment,” added William Bennett, former education secretary in the Reagan administration. “The idea that one should be accountable for the receipt of federal funds is right.”

Some analysts criticized the rule as “complex,” questioning how the Education Department would enforce it.

“The federal government is a poor judge of credit risks of students,” said Michael Warder, a California-based business consultant and former vice chancellor at private Pepperdine University. “Further, colleges can just change the names of courses and majors without changing content.”

Dick Startz, an economist at the University of California, Santa Barbara, said the rule could shutter some programs that lift students from very low earning potential to “just plain low” wages that still lag behind most high school graduates.

“The positive side of the new plan is that there really are some programs that cost students and the government a lot of money and deliver no job skills at all,” Mr. Startz said.

The U.S. Career Institute estimates that the average high school graduate earned $42,590 in 2023.

Nir Kshetri, a business management professor at the University of North Carolina at Greensboro, noted that foreign language graduates earn around $40,000 a year, compared with starting salaries of $76,000 for aerospace engineers.

He said that low-earning graduates increasingly struggle to pay student loan debts that averaged $25,549 for public colleges, $32,806 for private nonprofit schools and $32,787 at for-profit campuses in 2024.

“Additionally, AI-driven automation is reducing demand for some entry-level positions that traditionally justified a college degree,” Mr. Kshetri said. “Roles in data analysis, customer support, coding, and administrative work are increasingly handled by AI tools, shrinking the pool of degree-dependent positions.”

Officials at the American Council of Trustees and Alumni, a liberal arts advocacy group, called the new rule “a valuable step forward” in helping students make informed decisions about their studies as the college applicant pool dries up.

“The demographic cliff will mean that institutions, especially those with declining enrollment, will have to demonstrate to applicants that their institution is worth the investment,” said Anna Sillers, a data analyst for the American Council of Trustees and Alumni.

But Jonathan Zimmerman, a professor of the history of education at the University of Pennsylvania, lamented that the rule could hurt “fields like history and literature” that inform a classical education.

“College isn’t just a workforce development program,” Mr. Zimmerman said. “It’s supposed to teach people about the world.”

This piece was originally published by The Washington Times on January 13, 2026.