Religious Colleges Still Concerned About New Earnings Test

Religious colleges and their representatives say the Education Department’s plan to spare them from a steep penalty under a new accountability measure still fails to protect many of their programs and risks hurting pipelines to church leadership.

Under the new accountability rule, which was finalized last week, college programs will have to show that their students earn at least more than an adult with only a high school diploma in order to remain eligible for federal student loans. Just over 5 percent of programs are expected to fail the test, according to a department analysis.

Religious colleges have warned for months that the accountability metric could devastate them. A department analysis found that 9 percent of undergraduate religious studies programs and 6 percent of graduate ones would fail the test. However, the Association for Biblical Higher Education Commission on Accreditation has said 53 percent and 89 percent of students in religious studies bachelor’s and master’s degrees, respectively, could lose access to federal loans. The president of the commission, Philip Dearborn, previously called the proposed policy an “existential threat to the future of religious higher education.” He and other advocates pushed for ministry-training programs at religious colleges to be exempt from the new rules.

Programs that fail the earnings test in two consecutive years could lose access to federal student loans, and some could eventually be cut off from the Pell Grant, though that’s expected to be a rare penalty.

In response to concerns raised in public comments, the Education Department acknowledged the rule would have had a significant impact on religious programs and adjusted how it will apply the most severe penalty—cutting off a program from the Pell Grant. Now, programs that haven’t received federal student loans for the most recent five years won’t lose access to the Pell Grant, even if at least half of the federal student aid dollars go to low-earning programs.

“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,” department officials wrote in the final rule. “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.”

The department added that “ultimately, the final rule is expected to benefit the religious sector, as fewer students in religious programs will be negatively impacted.”

According to the department, about 600 religious programs will be exempt from the earnings test because of the change.

Some faith-based institutions argued in public comments that the rule violates a federal law that prohibits ED from administering federal student aid programs “in ways that exert control over institutional curriculum and programs of instruction.”

The department disagreed with that view, saying in the final rule that the accountability framework “does not place a substantial burden on the exercise of religion.” Officials added that while the rule could make it more costly for students to enter programs that fail the test, ”it will not prevent students who are motivated by religious belief to enter into religious programs from doing so.”

Officials also repeatedly emphasized the test doesn’t take into account the subject matter of the program or the type of institution.

“Should a program fail the test and lose Federal student aid eligibility, it will not be because of its religious nature,” officials wrote. “It will be because the earnings of program graduates fail in the same way as a secular program that fails.”

How Institutions Are Responding

Agudath Israel of America, which represents Orthodox yeshivas, or institutions focused on Jewish text study, pushed for the exemption for programs that don’t rely on federal loans. Rabbi A. D. Motzen, the organization’s national director of government affairs, said the carve-out felt like the most “realistic” request, given lawmakers’ underlying concerns about student loan debt.

Most yeshivas don’t participate in the federal loan program because communities fundraise to keep tuition prices low and to keep students out of debt, he said. He stressed that the value of their religious education shouldn’t be measured by their salaries but “the value that they bring back to the community.”

“It does not mean that we wouldn’t potentially support other [exemptions], but it seemed to be a very reasonable request,” and ultimately it was “successful,” Motzen said. For many yeshivas, the finalized rule “allows those institutions to continue operating, allows students to continue to attend those schools using Pell Grants if they’re eligible.”

But other advocates for religious colleges feel less hopeful. They still fear the earnings test will hit their programs hard and say it’s unclear to what extent the exemption protects them.

“It’s a smaller concession from what we really wanted and what we asked for,” said Dearborn of ABHE. “We really don’t know what the impact is going to be.”

He acknowledged that a larger share of faith-based institutions forgo participating in the federal loan program compared to higher ed institutions over all. But he isn’t sure what share of his members fall into that category or how many programs would be shielded from the accountability metric’s negative consequences as a result.

He argued the earnings test is still too blunt a measure of whether ministry education programs are successful.

“Students aren’t in it to make money,” he said. “That salary is not their No. 1 concern. They’re answering God’s call on their lives and seeking to serve the church, seeking to serve society. That’s their motivation.”

His organization plans to help institutions educate themselves on and prepare for the policy, including by helping them figure out how to leave the loan program if they choose. He expects some may decide to move toward private loans from their denominations or elsewhere. But ultimately, he wants to keep on fighting for a broader exemption for religious programs.

“We’re not done advocating for sure,” Dearborn said. “Congress has the opportunity to fix this.”

The Council for Christian Colleges and Universities also plans to continue pushing for an exemption, or at least an appeals process for religious programs.

Joy Mosley, CCCU’s vice president for government and strategic relations, wrote in an email to Inside Higher Ed that she appreciates the carve-out for programs that don’t engage with the loan program, but it “provides little meaningful relief.” She emphasized that the “vast majority” of CCCU institutions do participate in the program to “ensure access and affordability for students from every economic background.”

“Asking a faith-based institution to withdraw from the Direct Loan program to protect a ministry or theology degree is not an accommodation — it is a trade-off between mission and access,” she said.

Frank Yamada, executive director of the Association of Theological Schools, said seminaries do their best to prevent students from taking on debt through scholarships and low tuition costs, but similar to CCCU colleges, most of these institutions do participate in the federal loan program. Seminaries’ ministerial education programs also tend to be at the graduate level, so maintaining access to Pell Grants wasn’t his concern.

He worries students, particularly those working multiple jobs, making a career change or already working in churches and trying to upskill, are going to struggle to afford these programs without access to loans. As a result, enrollments at these institutions are likely to drop, which is bound to have ripple effects on religious communities, he said.

“It’s going to do a lot of harm to programs that are actually seeking to do the kind of good that only faith-based institutions and churches and synagogues can do,” Yamada said. “What you’re likely going to see in congregations are either uneducated, not sufficiently trained ministers or fewer ministers. And I think that will just be devastating for congregations.”