Education Dept To Warn Applicants For Aid At Schools With Low Earnings For Grads
In a bid to help young Americans make better-informed judgements about the costs and benefits of college education, the US Department of Education has started issuing warnings to students applying for financial aid to attend schools whose graduates have weak earnings.
The red flag is now being presented within the Free Application for Federal Student Aid (FAFSA) process. It's triggered when applicants indicate they're considering a school where the average graduate earns less than a high school graduate. Secretary of Education Linda McMahon said the move will help clear the fog that's led too many students to stumble into educational paths that carry a high risk of a crummy earnings:
“More than half of all Americans now say a college degree is not worth the price, and total outstanding student loan debt is approaching $1.7 trillion. Families deserve a clearer picture of how postsecondary education connects to real-world earnings, and this new indicator will provide that transparency. Not only will this new FAFSA feature make public earnings data more accessible, but it will empower prospective students to make data-driven decisions before they are saddled with debt.”
As students complete the FAFSA, they will be presented with an "earnings indicator" for every school where they direct FAFSA to provide information to. When applicants apply to a school that fails the high school comparison, a "low earnings" warning will appear, and the school's average graduate earnings will be depicted with the color red in the accompanying chart.
According to the Education Department, more than 2% of the country's undergrads are attending colleges that fit that dismal profile. However, more than 22% of colleges in the Education database are in the "low earnings" category. Most of them are for-profit schools -- such as beauty schools -- and there are also an assortment of historically black institutions, Bloomberg reports. Collectively, colleges whose grads lag high school graduates are raking in upwards of $2 billion in federal aid every year.
At CollegeScorecard.ed.gov, students can not only view average earnings at some 5,900 colleges, but also dive deeper to see earnings at the program level. For example, the report on Bucknell University shows that median graduates of the selective Pennsylvania school earn $93,807, compared to the $53,747 midpoint for four-year colleges. (These figures are incomes 10 years after entering a school.) For economics majors, the Bucknell median is $101,580. Meanwhile, the historically black Virginia University of Lynchburg's median earnings are just $28,000 -- below the $32,860 median for American high school completers.
Nudging people away from schools with lousy earnings profiles doesn't only help students, it may also serve taxpayers by trimming the number of people who default on federal loans. Student loan delinquencies are soaring following the end of the Biden-era payment holiday / vote-buying scheme. More than 9 million student-loan debtors have missed at least one payment in 2025, and the share of accounts more than 30 days past a payment due-date has doubled from the level seen before the payment suspensions kicked in during the Covid pandemic, according to the Financial Times.