Colleges with low-earning grads could lose access to student loans. Here’s why.

Some college programs whose graduates earn less than workers with only a high school diploma could lose access to federal student loans under the Republicans’ “big, beautiful bill” act, a change that could impact about 40,000 U.S. college students, according to a recent analysis.

About 2% of U.S. associate and bachelor’s degree-granting programs are at risk under the new provision, called “do no harm,” which takes effect in July, according to research from the HEA Group, a higher-education research firm. 

The provision, part of the GOP tax and spending law’s overhaul of student loans, requires programs to show that graduates earn more than high school graduates. College arts, religion and trade programs such as cosmetology are the most likely to be cut off from federal student loans, according to HEA.

Getting your money’s worth

The new rule reflects Republican efforts to bar federal student loans for degrees that “leave students worse off than if they never went to college,” according to a 2025 statement from the U.S. Senate Committee on Health, Education, Labor and Pensions. 

The value of a college education has increasingly come into question in recent years, especially as tuition costs have soared, leaving millions of Americans saddled with $1.8 trillion in student loans.

“There is a piece of law that states that each and every degree program should now be required to demonstrate that the majority of their graduates earn more than a high school graduate,” Michael Itzkowitz, president of HEA Group, told CBS News. “There is an intuitive understanding that if you go to college, you should make more than someone who doesn’t go to college.”

The “big, beautiful” act measures earnings four years after students get their degree, comparing graduates’ pay with that of a typical high school graduate. Programs that fail the test in two of three consecutive years could be barred from using federal student loans to finance students’ education.

Most won’t lose loan access

Most programs are expected to pass the earnings test, particularly those in STEM fields and who attend elite universities, whose graduates far outearn high school graduates, according to the analysis. Even grads of liberal arts programs, often criticized for churning out students who struggle to earn a living, also largely enjoy a wage premium. 

For instance, English major graduates from Kent State University earn about $36,241 per year four years after graduation, or about about $1,433 more than a high school grad, the HEA Group’s analysis found. 

At the same time, those earnings are far below the median income for recent college graduates, which stands at about $60,000 a year, according to the Association of Public and Land Grant Universities.

“Even if you’re majoring in history or philosophy, they generally are also outperforming high school students, so they’re not at risk” of losing access to federal student loans, Itzkowitz said. 

About 8% of studio and fine arts programs at four-year colleges around the U.S. are at risk of failing the new earnings test — the largest share of any bachelor’s degree major, according to a Jan. 15 analysis from the American Enterprise Institute, a nonpartisan think tank.

Roughly 3% of design and applied arts programs at four-year college programs around the U.S. also could fail, as well as 1% of English major degrees, the analysis found. 

According to The HEA Group’s analysis, the bachelor’s program with the largest earnings gap between its grads and people with only a high school diploma is Brigham Young University’s dietetics and clinical nutrition services program. The analysis found that BYU grads from that program earned about $18,300 per year four years after they graduated, or about $18,800 less than a typical high school grad. 

BYU didn’t return a request for comment. 

Top-earning college programs

Some college grads reap far higher returns on their educations, especially those from prestigious universities who study engineering, math and similar STEM-related fields, The HEA Group’s analysis found.

“Consistent with previous studies, we do see students who concentrate in the STEM fields earning more, but we see strong outcomes across all different kinds of majors, whether that be sociology or operations research or nursing,” Itzkowitz said. 

He added, “So this is a really good first slice of information that students and families can use when thinking about which institution to attend or which college major to pursue.”

Shielding taxpayers?

The provision may also help shield U.S. taxpayers from losses tied to low-earning grads, who may struggle to repay their student loans, noted Preston Cooper, senior fellow at AEI.

Almost $3 billion in student loans were granted to students enrolled in programs that failed the earnings test during the 2024-25 academic year, Cooper noted in the AEI’s Jan. 15 analysis.

“Given the low earnings of these programs’ graduates, much of that debt is unlikely to be repaid in full. Cutting these programs off from federal loans is therefore a significant win for taxpayers,” Cooper wrote in a blog post about the new provision. 

Colleges with programs that fail the earnings test should begin preparing now, Cooper added. Students in those programs would lose access to federal loans but could seek private financing or pay out of pocket.