College students pursuing majors, advanced degrees or certificates in traditionally low-paying fields will no longer be able to take out federal loans to pay for their education under new Trump administration rules.
Most of the degree programs that teach social workers, musicians, teacher's assistants and especially certification programs for hair stylists and nail technicians may fail a new federal litmus test: Will they make more money when they graduate than if they didn't enroll in the first place?
The new federal law, finalized by the Department of Education this month, comes amid a national student loan default crisis — and is part of a larger effort to ensure that a college degree or professional certificate serves as a way to boost the economy instead of a debt trap.
It has also sparked debate over whether the purpose of higher education – and aid to pay for it – should be tied to post-graduation earnings.
But unlike other aspects of the administration's education actions, the new policy has broad support, with some student advocates saying it should be tougher.
The Ministry of Education has not yet calculated the final details on which the institutions will be judged, leaving uncertainty as to which programs will face the results.
Most college and university degree programs and advanced degrees at public and nonprofit institutions are expected to be successful, while about 3% are expected to fail, according to department estimates.
However, about 33% of for-profit school programs are expected to fail.
Overall, 4.2% of students who receive loans or government grants are enrolled in programs expected to fail the new benchmark, according to the Department of Education. An estimated 5.2% of programs as a whole may fail, but not all students take out federal loans.
“For the first time in a very long time, … institutions and college leaders will be held accountable,” said Michael Itzkowitz, president of the education research organization HEA Group. “They will start to look and pay more attention to the economic results than before.”
Education experts said some institutions — public, private and for-profit colleges — with programs that fail to comply with the law will likely close, while others will adjust offerings to better match students with well-paying jobs.
Income vs. debt: what the student loan law requires
In order to keep federal loans flowing, the average income of students who have earned bachelor's degrees, associate degrees and graduate certificate programs must be higher than the average income of people who have only received a high school diploma.
Using data from the Internal Revenue Service, the Department of Education will measure the earnings of graduates four years after graduation. Their salary will be compared to the average salary of working adults aged 25 to 34 with a high school diploma only in the state where the college is located or nationally if the state has higher enrollment rates outside the state.
In California, the HEA says the benchmark is about $36,000 — roughly what a full-time worker earns on the state minimum wage.
For master's and doctoral programs, graduates must complete a bachelor's degree between 25 and 34 years in that particular field or all bachelor's degrees, whichever is lower.
“It's kind of a basic expectation for students that no matter what type of program they're in that they're better off because of the investment they've made,” said Diane Cheng, vice president of policy at the Higher Education Policy Center.
Degrees that may fail the federal income test
But music, theater and fine arts programs are expected to fail at high rates because their graduates earn very little, as is the case with master's programs in the field of mental health and social welfare, according to the Ministry of Education.
According to the Postsecondary Education and Economics Research Center at American University, California's mental and social health master's programs fare better than other places, because the state's graduates tend to earn more, an average of $70,485 compared to $60,175 nationwide.
At the undergraduate level, mental health and social care programs are expected to fail at the lowest rates nationwide, according to the HEA.
The highest percentage of failed programs is expected to be undergraduate certificates, especially cosmetology, massage therapy and film.
Similar rules existed under the Biden administration, but they only applied to certificate programs at public and private nonprofit schools and all degrees and certificates at for-profit colleges, though the rules were not in place long enough for the schools to face penalties, experts said.
Ted Mitchell, president of the American Council on Education, said “accountability is too late in higher education,” but said federal and state education policies may be needed to find other ways to support students in other failing programs.
“We need social workers,” Mitchell said. “Whether it's the fentanyl epidemic or homelessness in LA, we need people who can work on the streets and the people who need it most.”
There are also concerns for religious studies programs amid the different estimates of failure rates calculated by the Department of Education. Gregory Baylor, senior counsel for the Alliance Defending Freedom, said society benefits from people who choose to “serve the world with a religious calling.”
“The government should not punish people who make important calls because according to its decision they do not get enough money,” he said.
For-profit programs hit hard
For-profit colleges, which have long been criticized for loading students into debt for little profit, have a high expected failure rate.
Among the sectors most at risk are cosmetology and related grooming services, where the Department of Education expects more than 90% of graduate certificate programs to fail and, according to the PEER Center, annual income for graduates is typically less than $28,000.
The beauty industry has argued that graduates of their programs are underpaid, because many work part-time, and both part-time and full-time workers receive a significant amount in tips and may underreport those dollars to avoid taxes.
In response, the Department of Education has decided to delay the implementation of the law for at least one year in programs that prepare students for jobs where most employees receive tips so that the programs can be evaluated under the new Trump-backed “No Tax on Tips” policy.
If the reported earnings of graduate students do not increase significantly despite the tax being withdrawn from tips, and the law is amended to better reflect the part-time nature of many beauty professionals, “we will be short somewhere in the region of 100,000 new entrants every year,” said John Russell, who heads the American Assn. of Career Schools, a trade group for cosmetology, barbering and similar schools.
Education experts said one possible answer to the situation is that state legislatures that impose licensing requirements to determine certain occupations — such as barbers and stylists — actually require less training.
Anxiety about art
At the California Institute of the Arts, administrators expressed concern about judging salaries four years after graduation based on the type of field they teach.
“A lot of them are independent contractors, so it's a little different path than someone going into an engineering program,” said Michael Bryant, interim dean at CalArts. “It takes them a long time to settle.”
To reduce the potential for failed programs, Bryant said the college is taking a number of steps, including increasing its job fair and expanding industrial relations. If the programs do not work out, the college can use some of its funds to help students afford those programs.
“Southern California is an important cultural center and a major cultural production center,” said CalArts director Steven Lam. “We are at a time when the federal government is making a policy that could seriously damage that environment.”
Jonathan Gienapp, a professor of history and law at Stanford, emphasized that there are reasons for education beyond making money.
“In some fields of study, especially in the humanities, whether or not that program has been successful and has done a really good job in its educational campaign, everything may not be directly linked to the ability to get money quickly,” he said.
