# Accountability in Higher Education and Access Through Demand- Driven Workforce Pell: Student Tuition and Transparency System (STATS) and Earnings Accountability > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A2026-13286 ## Record - **Collection:** Federal Register - **Document type:** Rule - **Published:** July 1, 2026 - **Citation:** 91 FR 40136 ## Text DEPARTMENT OF EDUCATION 34 CFR Parts 600, 668, 685 [Docket ID ED-2026-OPE-0100] RIN 1840-AE06 Accountability in Higher Education and Access Through Demand-Driven Workforce Pell: Student Tuition and Transparency System (STATS) and Earnings Accountability AGENCY: Office of Postsecondary Education, Department of Education. ACTION: Final rule. SUMMARY: The Secretary of Education (Secretary) amends the regulations governing institutional eligibility, general provisions, and the William D. Ford Direct Loan (Direct Loan) Program under title IV of the Higher Education Act (HEA) of 1965, as amended (the title IV, HEA programs) to implement statutory changes to the title IV, HEA programs included in the Working Families Tax Cuts Act (WFTCA) signed into law by President Trump on July 4, 2025. These changes include revisions to program eligibility requirements for the Direct Loan program and the introduction of an earnings accountability framework that limits Direct Loan eligibility to programs whose graduates meet certain earnings benchmarks. This action finalizes regulations to implement the provisions of the WFTCA related to low-earning outcome programs and the Direct Loan program, and to harmonize those regulations with requirements for programs that are required to lead to gainful employment (GE programs). DATES: Effective dates: This rule is effective July 1, 2027, except for instructions 13 and 14, which are effective August 31, 2026. Implementation dates: For the implementation dates of the regulatory provisions, see the Implementation Date of These Regulations in SUPPLEMENTARY INFORMATION . FOR FURTHER INFORMATION CONTACT: Joseph Massman, Office of Postsecondary Education, 400 Maryland Ave. SW, 5th Floor, Washington, DC 20202. Telephone: (202) 453-7771. Email: Joe.Massman@ed.gov. If you are deaf, hard of hearing, or have a speech disability and wish to access telecommunications relay services, please dial 7-1-1. A brief summary of these final regulations is available at www.regulations.gov/docket/ED-2026-OPE-0100. SUPPLEMENTARY INFORMATION: Table of Contents I. Abbreviations II. Executive Summary 1. Summary of Major Provisions 2. Summary of Costs and Benefits III. Purpose of this Regulatory Action IV. Background V. Implementation Date of These Regulations VI. Authority for the Regulatory Action VII. Analysis of Public Comment and Changes VIII. Regulatory Analyses 1. Regulatory Planning and Review Including Regulatory Impact Analysis a. Need for Regulatory Action b. Summary of Comments and Changes From the NPRM c. Discussion of Costs, Benefits, and Transfers d. Accounting Statement e. Alternatives Considered 2. Regulatory Flexibility Act 3. Paperwork Reduction Act of 1995 4. Congressional Review Act Intergovernmental Review Assessment of Education Impact Federalism I. Abbreviations AHEAD: Accountability in Higher Education and Access through Demand-driven Workforce Pell ACS: American Community Survey AGI: Adjusted Gross Income APA: Administrative Procedures Act BLS: Bureau of Labor Statistics CFR: Code of Federal Regulations CIP Code: Classification of Instructional Programs Code CPI-U: Consumer Price Index for All Urban Consumers CPS: Current Population Survey D/E Rates: Debt-to-Earnings Rates DEOA: Department of Education Organization Act Department: United States Department of Education DL: Federal Direct Loans E.O.: Executive Order EP: Earnings Premium FAFSA: Free Application for Federal Student Aid FSA: Federal Student Aid FVT: Financial Value Transparency GE: Gainful Employment GEPA: General Education Provisions Act HEA: Higher Education Act of 1965, as amended IPEDS: Integrated Postsecondary Education Data System NPRM: Notice of Proposed Rulemaking OIRA: Office of Information and Regulatory Affairs Pell Grant: Federal Pell Grant PDF: Portable Document Format PRA: Paperwork Reduction Act of 1995 PRCS: Puerto Rico Community Survey (PRCS) RFA: Regulatory Flexibility Act RFRA: Religious Freedom Restoration Act RIA: Regulatory Impact Analysis SOC: Standard Occupational Classification Title IV, HEA Programs: Student financial assistance programs authorized under title IV of the HEA rtf: Rich Text Format SBREFA: Small Business Regulatory Enforcement Fairness Act of 1996 txt: Text format UI: Unemployment Insurance WFTCA: Public Law 119-21, also known as the Working Families Tax Cuts Act and the One Big Beautiful Bill Act 1 1 The Department previously referred to the Working Families Tax Cuts Act as the “One Big Beautiful Bill Act,” including in the Notice of Proposed Rulemaking published on April 20, 2026. II. Executive Summary The Secretary implements the amendments made to the HEA relating to earnings outcomes made by Public Law 119-21, the WFTCA, through these final regulations. These regulations overhaul the accountability framework for the title IV, HEA programs by replacing the former debt-to-earnings (“D/E”) metric with a revised earnings premium measure, expanding transparency, and strengthening institutional compliance standards. Maintaining robust accountability measures will ensure program integrity and protect students from low-earning outcomes, aligning with Congressional objectives for higher education oversight. This rule removes outdated definitions tied to D/E metrics, introduces the term “earnings,” and revises several existing definitions. The Student Tuition and Transparency System (“STATS”) will apply to all programs qualifying for title IV, HEA assistance, using the earnings premium measure as the new accountability standard. Institutions will be required to report program-and certain student-level data, including tuition, fees, and financial aid awards such as grants and scholarships to the Department. This reporting will enable the Department to provide enhanced informational disclosures of net program cost to the public. A revised version of the earnings premium measure will apply to both GE and non-GE programs; those failing the earnings premium measure in two out of three consecutive years will lose Direct Loan eligibility, though limited extensions may be granted when an orderly program closure described under §  668.603(c)(4) is in the students' best interest. Institutions will be required to update Direct Loan-eligible program lists, issue warnings about program risk and Pell Grant lifetime limits, and meet a new administrative capability standard. This rule aims to incentivize institutions in every sector of higher education to offer programs that deliver economic value through a return on investment, enhance data accessibility for students, and protect taxpayers and students through stricter oversight and comprehensive disclosures on program outcomes. 1. Summary of Major Provisions of This Regulatory Action General Definitions These final regulations: • Amend §  668.2 to remove the definitions of “annual debt-to-earnings rate,” “debt-to-earnings rates,” “discretionary debt-to-earnings rate,” “metropolitan statistical area,” “poverty guideline,” “qualifying graduate program,” and “substantially similar program.” • Amend §  668.2 to add “earnings” and revise existing key terms, including “cohort period,” “earnings threshold,” “eligible non-GE program,” “Federal agency with earnings data,” and “institutional grants and scholarships.” • Amend § 685.102 to add the terms “eligible non-GE program” and “gainful employment program (GE program).” Subpart Q—Student Tuition and Transparency System (STATS) These final regulations: • Amend several provisions in subpart Q to reflect new numbering. • Amend §§  668.401, 668.402, 668.403, 668.404, and 668.405 to remove all references to the former D/E metric and use the earnings premium measure as the new accountability standard. • Amend §  668.401 to remove exclusions for institutions located in the U.S. Territories or Freely Associated States, and to remove an exclusion for institutions with no groups of substantially similar programs that produced 30 or more total completers over the four most recently completed award years. • Amend §  668.402(c)(3) to provide that if a program is designed to prepare a student for employment in an occupation that qualifies for a tax deduction of tip income, 50 percent or more of individuals in the occupation receive income from tips, and the earnings calculation would use graduate earnings data from 2025 or prior, the program will not be considered to have passed or failed the earnings premium measure but the Department will make earnings data and the earnings threshold that would have been used publicly available. • Amend §  668.403(b) to establish that the Secretary will obtain the median annual earnings of students who completed a GE program or eligible non-GE program during the cohort period for the fourth tax year following program completion. The earnings data will be obtained from at least one Federal agency and will include students who are working and not enrolled during the calendar year in which earnings are measured. • Amend §  668.405 to clarify that the Secretary will notify an institution that a low-earning outcome program will cease participation in the Direct Loan program in the same notice of determination that is used to notify the institution of the results of the earnings premium measure calculation. • Amend §  668.406 to require an institution offering any GE program or eligible non-GE program to report the total amount of Federal, State, private, or other grants and scholarships each student received for their entire enrollment. This reporting requirement will only apply to students who completed or withdrew from the program during the award year. Subpart S—Earnings Accountability These final regulations: • Amend §§  668.601, 668.602, 668.603, and 668.605 to remove all references of the former D/E metric. • Amend §  668.601(a) to establish that earnings accountability applies to an eligible non-GE program or a GE program offered by an eligible institution and the Secretary determines whether the program is eligible for Direct Loan program funds. • Add § 668.601(b) to establish exemptions for programs at institutions that enroll only students with Specific Learning Disabilities and Autism Spectrum Disorder. • Amend §  668.603(a) to establish that a low-earning outcome program is a GE program or eligible non-GE program that fails the earnings premium measure in §  668.402 in two out of any three consecutive award years for which the program's earnings premium measure is calculated. A low-earning outcome program's participation in the Direct Loan program will end upon the completion of a termination action of Direct Loan program eligibility under subpart G. • Amend §§  668.603(b) and (c) to provide the conditions for an institution to appeal the Secretary's determination that a program is a low-earning outcome program that will cease participation in the Direct Loan program. Institutions will have 30 days from receipt of a notification of determination indicating that a program is a low-earning outcome program to appeal the decision and may only appeal based on specific conditions explained in these subsections. • Add §  668.603(d)(4) to allow a program that has failed to satisfy the requirements of §  668.402, but is not a low-earning outcome program, to continue participating in the Direct Loan program if the institution voluntarily agrees to conduct an orderly program closure, provided the Secretary determines that it is in the best interest of the students. This flexibility will be limited to three years or the full-time duration of the program, whichever is less, and will require the institution and the Secretary to agree to make certain amendments to the institution's program participation agreement (PPA). • Add §  668.603(d)(5) to allow a program that has failed to satisfy the requirements of §  668.402, but is not a low-earning outcome program, to avoid a loss of title IV, HEA eligibility under the administrative capability requirements in §  668.16(t) if the institution voluntarily agrees to prevent students from borrowing Direct Loans in the program under § 685.203(m)(2) for at least five years. This flexibility will extend as long as the institution prevents Direct Loan borrowing in the program, and will require the institution and the Secretary to agree to make certain amendments to the institution's program participation agreement (PPA). • Add § 668.603(d)(5) to clarify that the ending of a program's participation in the Direct Loan program under these regulations is not considered a limitation action under 34 CFR 668.94. • Amend §  668.604 to remove the transitional certification requirements and require an institution to establish a program's eligibility for Direct Loan program funds by updating the list of the institution's Direct Loan-eligible programs maintained by the Department. An institution will be prohibited from including programs that share the same 4-digit Classification of Instructional Programs (CIP) code and any overlapping Standard Occupational Classification (SOC) codes as a failing program that was subjected to a two-year loss of eligibility. • Amend §  668.605(c) to require an institution to provide a student who is eligible for Pell Grant funds with notice of their remaining lifetime eligibility for Pell Grant funds and an explanation that all Pell Grant funds received for enrollment in the program count against their future lifetime eligibility. • Amend §  668.605(d) to require an institution to provide an enrolled student with information regarding their remaining Pell Grant eligibility at the time that the institution makes a disbursement of Pell Grant funds to them. Standards for Participation in Title IV, HEA Programs These final regulations: • Add §  668.14(h)(1) to require institutions to be placed on provisional status if they fail to comply with 34 CFR 668.16(t) in two out of any three consecutive award years, which will result in the institution's low-earning outcome programs becoming ineligible for title IV, HEA funds. • Add §  668.14(h)(2) to allow an institution to appeal the Secretary's determination if they are found to have failed the conditions in 34 CFR 668.16(t) in two out of any three consecutive award years. • Add §  668.14(h)(3) and (4) to provide an exception of automatic ineligibility for title IV, HEA funds if the institution does not participate in the Direct Loan program or agrees not to allow students to borrow in a low-earning outcome program. • Amend §  668.16(t) to require an institution to demonstrate administrative capability by showing that at least half of the institution's recipients of title IV, HEA funds and at least half of the institution's total title IV, HEA funds are not from low-earning outcome programs under subpart S. • Amend §  668.43(d)(1) to require that the program information website includes the median length of calendar time taken for full-time and less than full-time students to complete the program's academic requirements and obtain the degree or credential awarded by the program. • Amend §  668.43(d)(2) to no longer require institutions to provide a prominent link to the website maintained by the Secretary on any web page containing academic information about the program or institution. The Secretary may require the institution to modify a web page if the information is not sufficiently prominent, readily accessible, clear, conspicuous, or direct. • Amend §  685.300 to explain that a GE program or an eligible non-GE program must meet the student tuition and transparency system requirements under 34 CFR part 668, subpart Q, and the earnings accountability requirements under 34 CFR part 668, subpart S to participate in the Direct Loan program. 2. Summary of Costs and Benefits: As further detailed in the Regulatory Impact Analysis (RIA), the Department estimates that the regulations will have significant impacts on students, educational institutions, and taxpayers. Certain degree programs are expected to lose eligibility for title IV, HEA funds under the earnings tests in the final regulations, while some undergraduate and graduate certificate programs are expected to gain eligibility relative to the prior Financial Value Transparency and Gainful Employment regulations enacted on July 10, 2023. Students will incur costs when the programs they attend lose eligibility for title IV, HEA funds, or if they enroll in low-earning certificate programs that gain access to title IV, HEA funds. Students will also benefit in cases where the regulations prevent them from attending low-earning and high-cost degree programs. Certain institutions (mainly public and private non-profit institutions) will incur costs when programs they offer lose access to title IV, HEA funds under the regulations. Other institutions (such as proprietary institutions) will benefit as more programs in this sector will remain eligible for title IV, HEA funds. Taxpayers will incur new budget costs via an increase in transfers of title IV, HEA funds to institutions relative to prior regulations because these regulations result in a net increase in the number of students attending programs that will be eligible for these funds. III. Purpose of This Regulatory Action This regulatory action seeks to effectuate regulations that address the statutory changes made by the WFTCA and to harmonize those regulations with requirements for programs that are required to lead to gainful employment (GE programs). IV. Background Gainful Employment (GE) Prior Rules Under Sections 101 and 102 of the HEA, there are two broad categories of title IV-eligible programs: degree programs offered by public and private nonprofit institutions, and programs required to lead to gainful employment in a recognized occupation (which include nondegree programs at any type of institution, and nearly all programs offered by proprietary institutions). The statute does not further elaborate on the gainful employment requirement. The Department has issued four previous regulations on GE, most recently in 2023, as part of the FVT/GE accountability framework. These regulations required the Department to calculate two separate metrics for the vast majority of programs that were eligible for title IV, HEA funds—a debt-to-earnings (D/E) rate and an earnings premium measure—but did not impose program eligibility consequences for programs other than GE programs. The regulations also established a process by which the Department would disclose key information about academic programs to current and prospective students at a point when the information would be most useful for them. WFTCA Earnings Accountability Framework The WFTCA, signed into law by President Trump on July 4, 2025, amended the HEA to establish a new accountability framework for most postsecondary programs of study that participate in the Direct Loan program. Congress designed this framework to compare the median earnings of graduates to those of working adults, and it requires the Department to discontinue a program's Direct Loan program eligibility if its graduates earn less than the comparison group. The WFTCA framework does not include D/E rates, and although the earnings comparison metric largely resembles the earnings premium measure under the FVT/GE regulations, there are differences in the populations of institutions and programs covered by the new framework, in the methodology by which the comparison must be performed, and in consequences for failing programs. To provide students, families, institutions, and the public with meaningful and comparable program information and to promote consistency in the treatment of programs across all credential levels and institutional sectors, the Department amends and simplifies its existing FVT and GE framework to harmonize with the accountability framework required under the WFTCA, establishing a single metric that will be calculated for nearly all programs eligible for title IV, HEA funds and including the same program eligibility consequences for failure of GE and eligible non-GE programs alike. V. Implementation Date of These Regulations Except for changes to 34 CFR part 685, these regulations are effective on July 1, 2027. The changes to 34 CFR part 685 are effective on August 31, 2026. Section 482(c)(1) of the HEA requires that regulations affecting programs under title IV of the HEA be published in final form by November 1 prior to the start of the award year (July 1) to which they apply. HEA section 482(c)(2) also permits the Secretary to designate any regulation as one that an entity subject to the regulations may choose to implement earlier and outline the conditions for early implementation. For the reasons described in “Authority for This Regulatory Action” below, the Secretary is waiving the master calendar requirements for the provisions of these regulations in 34 CFR part 685 that require institutions to agree to be subject to the earnings accountability requirements established in the WFTCA and these regulations. The Secretary is exercising her authority under HEA section 482(c) to designate certain regulatory changes to Part 668 in this document for early implementation beginning July 1, 2026. The Secretary has designated the elimination of all provisions pertaining to reduced institutional reporting requirements under 34 CFR 668.406 for early implementation, and will assume that any institution that chooses not to report items that have been removed has elected to implement the provisions early. VI. Authority for This Regulatory Action The Department's authority to engage in this rulemaking action and pursue a transparency and accountability framework for GE programs and eligible non-GE programs is derived primarily from seven categories of statutory enactments: (1) the Secretary's generally applicable rulemaking authority, which includes provisions regarding data collection and dissemination, and which applies in part to title IV, HEA; (2) authorizations and directives within title IV, HEA regarding the collection and dissemination of potentially useful information about higher education programs, as well as provisions regarding institutional eligibility to benefit from title IV; (3) the definition of institution of higher education under Section 102 of the HEA and other provisions within title IV of the HEA that address programs that prepare students for gainful employment; (4) the Secretary's authority to establish procedures and requirements relating to the administrative capacities of institutions of higher education; (5) recently enacted changes within title IV, HEA as a result of Section 84001 of the WFTCA, which establishes an accountability system limiting Direct Loan eligibility for programs that demonstrate low-earning outcomes; (6) the Secretary's authority to develop a quality assurance system under the Direct Loan Agreement; and (7) the Secretary's authority to include other provisions in the Direct Loan Agreement that she determines are necessary to protect the interests of the United States and to promote the purposes of the Direct Loan program. Finally, this section also addresses the WFTCA's waiver of the HEA's master calendar requirements for some of the regulations set forth in this final rule. The Secretary has broad powers to engage in rulemaking to implement programs administered by the Department. Specifically, Section 410 of the General Education Provisions Act (GEPA) grants the Secretary authority “to make, promulgate, issue, rescind, and amend rules and regulations governing the manner of operation of, and governing the applicable programs administered by, the Department,” such as the title IV, HEA programs that provide Federal loans, grants, and other aid to students, to assist in pursuing either eligible non-GE programs or GE programs. 20 U.S.C. 1221e-3. Likewise, Section 414 of the Department of Education Organization Act (DEOA) authorizes the Secretary to “prescribe such rules and regulations as the Secretary determines necessary or appropriate to administer and manage the functions of the Secretary or the Department.” 20 U.S.C. 3474. Loper Bright Enters. v. Raimondo, 603 U.S. 369 (2024) brought about a sea change in administrative law by overturning Chevron deference; however, Loper Bright did not disrupt Congress's ability to provide “a degree of deference” to agencies in specific statutes. 603 U.S. 369, 394 (2024). Indeed, the Court directly acknowledged that Congress may “delegate . . . discretionary authority to any agency” by giving directions to agencies to promulgate rules that are “reasonable” or “appropriate.” Id. In a post- Loper Bright case challenging the 2023 FVT/GE rule, a lower Court specifically held that the Department has been explicitly granted such deference by Congress under the provisions of GEPA and the DEOA. American Assoc. of Cosmetology Sch. v. Dep't of Educ., 2025 WL 4219345, at *5 (N.D. Tex. Oct. 2, 2025) (citing 20 U.S.C. 1221e-3); 20 U.S.C. 3474). The Court further stated that, through the HEA, the Congress had clearly granted the Secretary to promulgate rules necessary for the administration of the title IV, HEA programs: “the Supreme Court in Loper Bright recognized that Congress may `delegate[ ] particular discretionary authority to an agency' by leaving it with `flexibility' through terms `such as `appropriate' or `reasonable' ” and that the HEA confers such authority [on the Secretary] by including the additional specific direction to `prescribe such regulations as may be necessary to provide for . . . any matter the Secretary deems necessary to the sound administration of the financial aid programs[.]' ” American Assoc. of Cosmetology Sch. *6 (citing 20 U.S.C. 1094(c)(1)(B); 1099c). Section 431 of the GEPA grants the Secretary additional authority to establish rules to require institutions to make data available to the public about the performance of Federally supported education programs and about students enrolled in those programs and to collect data and information on applicable programs for the purpose of obtaining objective measurements of the effectiveness of such programs in achieving their intended purposes. See 20 U.S.C. 1231a. This provision authorizes the reporting and disclosure requirements in the proposed rule, which would enable the Department to collect data and information for the purpose of developing objective measures of program performance. The reporting is not only for the Department's use in evaluating programs but also serves to inform the public—including enrolled students, prospective students, their families, institutions, and other stakeholders—about relevant information to those Federally supported programs. The Secretary's authority to establish rules requiring institutions to provide information to the Department is further bolstered by the fact that certain provisions of the HEA would be rendered inoperable if such data was not provided. For example, without collecting data from institutions regarding students participating in title IV, HEA programs, the Department would have no ability to determine whether a program offered by that institution satisfies the earnings test set forth in HEA Section 454(c)(2), added by the WFTCA. Therefore, in any such case in which the HEA directs the Department to conduct analysis that requires information that an institution possesses, the Secretary is permitted to establish regulations regarding such data collection under the Secretary's broad authority to promulgate regulations necessary or appropriate for governing the applicable programs administered by the Department. See 20 U.S.C. 3474. Furthermore, in the GE setting, the Department has not only a statutory basis for pursuing the effective dissemination of information to students about a range of GE program attributes and performance metrics, but also has the authority to use certain metrics to determine that an institution's program is not eligible to benefit from one or more of the title IV, HEA programs. When an institution's program is at risk of losing eligibility based on a given metric, there should be no real doubt that the Department may require the institution that operates the at-risk program to alert prospective and enrolled students that they may not be able to receive assistance from one or more title IV, HEA programs for the program in question. Without direct communication from the institution to prospective and enrolled students, the students themselves risk losing the ability to make informed choices about their educational pursuits. Congress clearly intended to require institutions to provide this manner of direct communication to students, as plainly evidenced by the presence of the student notice requirements for at-risk degree programs under HEA Section 424(c)(7), as revised by the WFTCA. In keeping with the Department's effort to harmonize the accountability requirements for non-GE and GE programs, we believe it is appropriate to similarly require institutions to provide warnings to prospective and enrolled students regarding at-risk GE programs consistent with the warnings expressly required in statute for eligible non-GE programs and that the Secretary is authorized to do so under the Secretary's general authority to promulgate regulations that are necessary or appropriate to administer the title IV, HEA programs. See 20 U.S.C. 1221e-3; 20 U.S.C. 3474. The data to be collected and analyzed by the Department will not violate the student unit record prohibition found in HEA Section 134. The Department does not propose creating any new databases of student records. It will collect from institutions individual title IV, HEA recipient data, including PII, and will securely transmit that data to at least one Federal agency with earnings data for matching. The metric calculation will only utilize median earnings data that does not include PII data from student recipients of title IV, HEA assistance. The proposed regulation is also supported by the Department's statutory responsibilities to observe eligibility limits in the HEA. Section 498 of the HEA requires institutions to establish eligibility to provide title IV, HEA funds to their students. 20 U.S.C. 1099c. Eligible institutions must also meet program eligibility requirements for students in those programs to receive title IV, HEA assistance. One type of program for which certain types of institutions must establish program-level eligibility is “a program of training to prepare students for gainful employment in a recognized occupation.” 20 U.S.C. 1001(b)(1)(A)(i), (c)(1)(A). Section 481 of the HEA articulates this requirement by defining, an “eligible program,” in part, as a “program of training to prepare students for gainful employment in a recognized profession.” The HEA does not more specifically define the terms “training to prepare,” “gainful employment,” “recognized occupation,” or “recognized profession” for purposes of determining the eligibility of GE programs for participation in title IV, HEA programs. At the same time, the Secretary and the Department have a legal duty to interpret, implement, and apply those concepts in order to observe the statutory eligibility requirements in the HEA. The Department has long interpreted the word “gainful” in this context to mean “profitable.” Program Integrity: Gainful Employment, 79 FR 64890, 64894 (Oct. 31, 2014); American Assoc. of Cosmetology, 2025 WL 4219345, at *5. 2 And the Department has consistently interpreted the broader phrase “gainful employment” to mean that the program “actually train[s] and prepare postsecondary students for jobs that they would be less likely to obtain without that training and preparation.” 3 This would not include, for example, “baccalaureate degree[s] in liberal arts” as those programs are statutorily prohibited from being eligible for title IV, HEA assistance in most instances. 4 2 “Gainful.” Merriam-Webster.com Dictionary, https://www.merriam-webster.com/dictionary/gainful. Accessed March 20, 2026. 3 Financial Value Transparency and Gainful Employment (GE), 88 FR 32,300, 32,342 (May 19, 2023). 4 Section 102(b)(1)(A)(ii) provides that baccalaureate degrees in liberal arts are no longer considered to be gainful employment programs, but Congress provided a grandfather clause to allow certain institutions that have offered such programs since January 1, 2009 to continue to offer such programs. Those baccalaureate degree programs are now covered by the accountability provisions in the WFTCA. It is relevant to acknowledge that there is some degree of ambiguity in the term “gainful employment.” See Ass'n of Priv. Colleges & Universities v. Duncan, 870 F. Supp. 2d 133, 145 (D.D.C. 2012) (stating that “There is no unambiguous meaning of what makes employment `gainful' ”); Ass'n of Proprietary Colleges v. Duncan, 107 F. Supp. 3d 332, 359 (S.D.N.Y. 2015) (quoting Ass'n of Priv. Colleges & Universities v. Duncan, 870 F. Supp. 2d 133 at 145, and adopting its conclusion that “There is no unambiguous meaning of what makes employment `gainful' ”). Indeed, some dictionaries that define the whole phrase “gainful employment” define it as meaning “work that you get paid for.” 5 Under this definition, the only programs that do not prepare students for “gainful employment” would be programs that train students for unpaid volunteer positions or hobbies. But courts have warned about reading phrases in isolation like this, as the text of a statute must be construed as a whole. See Kmart Corp. v. Cartier, inc. 486 U.S. 281, 291 (1988) (per Kennedy, J.) (“In ascertaining the plain meaning of the statute, the court must look to the particular statutory language at issue, as well as the language and design of the statute as a whole.” The interpretative canon, which is generally referred to as the Whole-Text Canon or the Whole Act Rule, provides that the context of the broader statutory scheme is the “primary determinant of meaning.” Scalia & Garner, Reading Law, 167 (2012). 5 See “Gainful Employment”, Cambridge Dictionary Online, https://dictionary.cambridge.org/us/dictionary/english/gainful-employment. Accessed March 22, 2026. As we look to other parts of the statute, we find provisions that help provide clarity regarding the definition of gainful employment. In the first instance, Congress has created two definitions of “institution of higher education.” The first definition, which is in Section 101 of the HEA, authorizes non-profits and public institutions to participate in title IV student aid programs. 20 U.S.C. 1001. The definition in Section 101 does not include references to gainful employment, which is a notable omission and strongly suggests that Congress did intend to limit the universe of eligible programs when using that phrase elsewhere. In Section 102, Congress provides its second definition of institution of higher education, this time defining it to mean proprietary institutions, vocational institutions, and foreign institutions. Here, Congress tells us that if a subset of these types of institutions (proprietary and vocational) wants to participate, they must provide “an eligible program of training to prepare students for gainful employment in a recognized occupation.” The broader phrase makes it clear that these programs “train” students for “a recognized occupation.” Further, we know that Congress does not think baccalaureate degree programs in liberal arts are gainful employment programs, because Congress says that proprietary institutions can offer (1) gainful employment programs, OR (2) programs leading to a baccalaureate degree in liberal arts if the program has been provided since January 1, 2009 and the institution is accredited by a certain type of accreditor. The disjunctive “or” in this context shows us that “gainful employment” does not mean liberal arts. For the reasons above, it is clear that the operative purpose of Section 102(b)-(c) is to use taxpayer funds to help support students in their quest to obtain more training such that they may enter a recognized occupation. The Department thinks that this context is key in demonstrating that Congress only wants to fund programs that help make the student better off in their “gainful employment.” Gainful means “profitable,” so Congress takes a common-sense approach where they want students to receive training that enables them to be more profitable than before they went to school. As such, the Department interprets the term “gainful employment” to mean that a program must, on average, make students better off financially than they would have been had they not attended the program. In other words, institutions must ensure that the median student in a gainful employment program earns a premium, compared to what they would have earned if they had never gone to school. This is the same earnings premium measure called for in the WFTCA, but the Department believes that the gainful employment statute calls for this type of accountability independent from the amendments made by the WFTCA. The Department's interpretation of the phrase “gainful employment” aligns with the statute and is supported by case law concerning the Department's previous gainful employment regulations. In Ass'n of Priv. Colleges & Universities v. Duncan, 870 F. Supp. 2d 133, 146 (D.D.C. 2012), the court stated that term “gainful employment” must be understood in the context of the statutory command that “a given program `prepare students for gainful employment in a recognized occupation.' ” That court reasoned that the “real question, then, is not how much gain is enough but rather how much preparation is enough” and found that the Department's attempt to “answer that question by reference to the economic success of a program's former students” was not precluded by the HEA, as the HEA does not specifically state “how to determine which programs actually prepare their students and which programs do not.” Id at 146. 6 Additionally, in a post-Loper Bright case, American Assoc. of Cosmetology, the Court stated that the ordinary meaning analysis supported the Department's conclusion that students are not prepared for gainful employment if a program is designed to leave its graduates financially worse off than when they started, and they are unable to repay their loans. 2025 WL 4219345, at *5. 6 This conclusion was directly restated several years later in Ass'n of Proprietary Colleges v. Duncan, 107 F. Supp. 3d 332, 359 (S.D.N.Y. 2015), which excerpted a considerable portion of the D.D.C.'s opinion in Ass'n of Priv. Colleges & Universities v. Duncan, 870 F. Supp. 2d 133, 146 (D.D.C. 2012). Furthermore, the Secretary is authorized to establish and enforce administrative capability standards for institutions participating in title IV, HEA programs and to terminate the participation of any institution who the Secretary determines does not meet those standards. Section 498(a) of the HEA provides that, for purposes of qualifying institutions of higher education for participation in title IV, HEA programs, the Secretary shall determine the administrative capability of an institution of higher education. Section 498(d)(1) authorizes the Secretary “to establish procedures and requirements relating to the administrative capacities of institutions of higher education” which can include “consideration of past performance of institutions.” Section 498(d)(2) further authorizes the Secretary to any other reasonable procedures necessary to ensure compliance with the administrative capability standard. Therefore, because of the broad authority conferred on the Secretary to establish such standards and procedures, as well as to consider the past practice of an institution in determining whether or not it satisfies the administrative capability standard, the Department believes that it is well within the Secretary's authority to establish a standard that would penalize an institution where at least half of the institution's recipients of title IV, HEA funds and at least half of the institution's total title IV, HEA funds are from low-earning outcome programs under subpart S (and have remained so for two out of three consecutive years) by terminating the overall title IV, HEA program eligibility of all such programs and requiring the institution to participate in title IV, HEA program on a provisional basis. Section 84001 of the WFTCA amends HEA Section 454 to create a new accountability framework, including an earnings test under HEA Section 454(c)(2) for title IV, HEA programs that lead to an undergraduate degree, graduate or professional degree, or graduate certificate. It further specifies under HEA Section 454(c)(7) that such programs which fail the earnings test are ineligible for Direct Loan program participation for a period of not less than two years. HEA Section 454(c)(6) further requires institutions to provide warnings to each student enrolled regarding at-risk programs. Direct Loan Agreement Authority Institutions that participate in the Direct Loan program must agree to comply with the requirements set forth in Section 454 of the HEA. The requirements in this section, which has been called the Direct Loan Agreement, have been incorporated into the Program Participation Agreement (PPA) which covers other title IV programs, not just the Direct Loan program. As part of the Direct Loan Agreement, institutions must “provide for the implementation of a quality assurance system, as established by the Secretary and developed in consultation with institutions of higher education, to ensure that the institution is complying with program requirements and meeting program objectives.” 20 U.S.C. 1087d(a)(4). The Department has never developed a formal quality assurance system before this rulemaking, 7 but believes that the GE framework proposed herein is authorized by this provision and is itself a quality assurance system. 8 7 See Dan Zibel & Aaron Ament, Protection and the unseen: How the US Department of Education's underdeveloped authorities can protect students and promote equity in higher education, Brookings Economic Studies, 13 (Oct. 2020) (noting that the quality assurance authority in Section 454(a)(4) has never been relied upon, but that `[n]evertheless, section 454(a)(4) of the HEA (the “QA authority”) unambiguously provides that the DLA” shall implement a quality assurance system”), available at https://www.brookings.edu/wp-content/uploads/2020/10/ES-10.13.20-Zibel-Ament.pdf. 8 The Department has relied on its authority in Section 454(a)(7) to justify certain aspects of the 2016 Borrower Defense regulations, such as provisions prohibiting arbitration agreements in certain settings. See Student Assistance General Provisions, 81 FR 75926, 75932 (Nov. 1, 2026). These provisions were ultimately removed when the Department published 2019 borrower defense regulations, which are now in effect under Section 85001 of the WFTCA; however, the Department did not disclaim the authority to impose these provisions and made the change for policy reasons. See Student Assistance General Provisions, 84 FR 49788, (Sept. 23, 2019). The quality assurance system authority requires the Secretary to ensure that the institution is complying with program requirements and meeting program objectives. As such, it is important to discuss the “program requirements and program objectives” referenced in HEA Section 454. 20 U.S.C. 1087d(a)(4). The legal scholars Dan Zibel and Aaron Ament have noted that “the HEA is silent as to what is meant by `quality assurance,' `program requirements,' and what it means for an institution to `meet[ ] program objectives.' In such situations, the law affords the Department ample discretion to fill these statutory voids, resolve statutory ambiguities, and ensure that institutions of higher education are serving students and taxpayers.” 9 Zibel and Ament have argued that “a core `program objective' of the Direct Loan program is to ensure not only that students have access to higher education, but also to ensure that Federally issued loans are repaid.” 10 The Department largely agrees with these assertions that we have broad authority to provide details as to what the purpose of these programs are and that the Direct Loan program is designed to provide borrowers with capital to attend college and to repay their loans in most circumstances. However, certain subsets of programs within the HEA have additional purposes that are narrower in scope. 9 Zibel & Ament, supra note 8 at 14 (cleaned up). 10 Id. Here, the Department believes that the gainful employment text in Section 102(b)-(c) of the HEA provides significant context as to what the program objectives are for proprietary and vocational institution programs as they participate in the Direct Loan program. Both types of institutions are required to provide “an eligible program of training to prepare students for gainful employment in a recognized occupation.” 20 U.S.C. 1002(b)-(c). As such, the purpose of these programs is to provide “gainful employment.” With that in mind, it is clear that the gainful employment authority operates in tandem with the quality assurance system authority, in that provisions intended to protect a GE program can be incorporated into a quality assurance system. As such, the Secretary is permitted to develop a quality assurance system on a curated basis for these specific GE programs that ensures quality in how these institutions are preparing students for gainful employment. As discussed above, the Department has determined that the gainful employment statute requires institutions to ensure that most graduates of a gainful employment program earn a premium compared to what they would have earned if they had never attended the program. In sum, the Department has concurrent authority under Section 454(a)(4) along with Section 102(b)-(c) of the HEA to require institutions to comply with the earnings premium measure. Institutions that fail to comply with Section 102 fail to meet the definition of “institution of higher education” for the purposes of title IV, and are no longer eligible institutions, the Secretary must terminate eligibility. Institutions that fail to comply with the terms of the Direct Loan Agreement under Section 454 are not eligible to participate in the Direct Loan program. As such, as part of this final rule, the Department is establishing the earnings premium measure as a quality assurance system that establishes eligibility for all GE programs to participate only in the Direct Loan program, consistent with the scope of Section 454, which only applies to Direct Loans. The quality assurance system authority also requires the Department to develop a quality assurance system in consultation with institutions of higher education, which we have done as part of the negotiated rulemaking process. In addition, institutions had the ability to comment on the proposed rule. The Department was required to consider making changes in response to all substantive comments under informal notice-and-comment rulemaking, and as such, we effectively consulted with institutions of higher education under the existing rulemaking procedures because we sought and obtained advice from institutions. 5 U.S.C. 553; 20 U.S.C. 1098a. Institutions must also comply with “other provisions as the Secretary determines are necessary to protect the interests of the United States and to promote the purposes of this part.” 20 U.S.C. 1087d(a)(7). Failure to abide by the terms of the Direct Loan Agreement results in disqualification from participating in the Direct Loan program, but not necessarily other title IV, HEA programs. The Department believes that it has authority under these provisions in Section 454 of the HEA, as well as the GE provisions in Section 102, to require GE programs to comply with the earnings premium standard. However, the Department believes that the appropriate remedy for programmatic noncompliance is the loss of eligibility for Direct Loans for such programs that fail the earnings premium measure, except when a large number of an institution's programs fail, which is discussed in greater detail below. The Secretary has been given significant deference by Congress in Section 454 in designing a quality assurance system, and that includes the option to tailor the remedy for noncompliance to a program-by-program basis to protect the interests of the United States. Indeed, it would not be in the interest of the United States to disqualify all programs at an institution if only one or a few programs are not performing because students in high performing programs would also lose access to programs that are adding value. The Department also has authority under Section 454(a)(7) for this final rule, which authorizes the Secretary to include in the Direct Loan Agreement (which is incorporated into the PPA) “such other provisions as the Secretary determines are necessary to protect the interests of the United States and to promote the purposes of this part.” 20 U.S.C. 1087d(a)(7). Indeed, this broad grant of deference to the Secretary gives the Department significant latitude in designing a quality assurance system necessary to protect the interests of the United States and promote the purposes of this part. As explained above, the holding in Loper Bright does nothing to disrupt deference provided to the Department in broad statutory grants of authority like we have here. Loper Bright, 603 U.S. at 394-95. As stated above, the purpose of authorizing proprietary institutions and vocational institutions to participate in title IV, HEA programs is to provide students opportunities for training designed to ensure that they may become gainfully employed in a recognized occupation. As such, the Department believes that Section 454(a)(7) provides additional authority for the Department to require the earnings premium measure, because doing so advances the purposes of the Direct Loan program through institutional eligibility under Section 102(b)-(c). In sum, the Department has overlapping and concurrent authority to require an earnings premium measure for GE programs under the gainful employment authority in Section 102(b)-(c), the quality assurance system authority in Section 454(a)(4), the “protect” and “promote” authority in Section 454(a)(7), and our broad authority to regulate Section 410 of the GEPA. The Department believes that all of these authorities work in tandem and authorize us, independent from the amendments made by the WFTCA related to accountability, require an earnings premium measure for such GE programs. In practice, the proposed earnings premium measure under the WFTCA is the same as the earnings premium measure under GE. The only type of program not covered by the earnings premium measure under the WFTCA are certificate programs, which are covered by GE. As such, if a court disagrees with our assessment of the robust legal authority we have, the accountability provisions relating to GE are severable and would only have a practical impact on certificate programs. Summary of Authorities The above authorities collectively empower the Secretary to promulgate regulations to (1) require institutions to report information about GE programs and eligible non-GE programs to the Secretary; (2) require institutions to provide disclosures or warnings to prospective and enrolled students regarding programs that do not meet earnings premium measures established by the Department; (3) implement Direct Loan program eligibility requirements pertaining to graduate earnings outcomes, including an earnings premium measure and associated reporting, certification, and warning processes; and (4) define the GE requirement in the HEA by establishing similar measures to determine the eligibility of GE programs for participation in the Direct Loan program, which also is supported by the overlapping authority the Department has to create a quality assurance system for institutions participating in the Direct Loan program. Waiver of HEA Master Calendar Requirements Congress may waive, modify, or rescind requirements in the HEA and Administrative Procedure Act (APA) that require the Department to follow certain processes and procedures when engaging in informal notice-and-comment rulemaking. See, e.g., Asiana Airlines v. F.A.A., 134 F.3d 393, 398 (D.C. Cir. 1998); Methodist Hospital of Sacramento v. Shalala, 38 F.3d 1225, 1237 (D.C. Cir. 1998) (finding that certain parts of the APA procedural framework had been waived when Congress gave an agency direction that conflicts with and is irreconcilable with the APA). At the same time, the court in Asiana Airlines made clear that the APA requires “clear intent” from Congress to justify a departure from the procedural requirements in the APA, noting that 5 U.S.C. 559 requires an explicit waiver of APA procedural requirements. Here, the Department is complying with all of the requirements for informal notice-and-comment rulemaking in 5 U.S.C. 553, so an explicit waiver is not needed. The explicit waiver standard in 5 U.S.C. 559 only applies to the procedural requirement of the APA, and does not apply to the Master Calendar provision in Section 482(c) the HEA. Had Congress wished for the HEA Master Calendar provision to have the same rule of construction as it does for procedural requirements of the APA, we would have expected that Congress would either cross reference and incorporate 5 U.S.C. 559 into the HEA or use similar language to 5 U.S.C. 559 within Section 482(c) of the HEA. Congress knows how to create these types of special rules of construction when they want to, and they declined to do so in Section 482(c) of the HEA. Absent an explicit rule of construction in the HEA, we rely on the ordinary tools of statutory interpretation to glean the meaning of the statute. The Harmonious-Reading Canon provides that statutes should, when possible, be interpreted in a way that renders them compatible, not contradictory, but such an approach is not always possible if context and other considerations (including the application of other canons) make it impossible to do so, and another approach to statutory interpretation, such as the General/Specific Canon must be applied. See Scalia & Garner, Reading Law, 155 (2012). The General/Specific Canon dictates that, in cases where a general prohibition is contradicted by a specific permission or a general permission that is contradicted by a specific prohibition, the more specific of the two provisions controls. Id. at 158. Because, as discussed below, the WFTCA contains provisions with effective dates that cannot possibly be implemented in regulation in accordance with the HEA's Master Calendar provision, the WFTCA implicitly provides a limited waiver of the HEA's Master Calendar provision, so far as it is necessary to promulgate regulations that give effect to those provisions. See Dorsey v. United States, 567 U.S. 260, 274 (2012) (stating that an agency's compliance with an existing statute “cannot justify a disregard of the will of Congress as manifested either expressly or by necessary implication in a subsequent enactment” (quoting Great Northern R. Co. v. United States, 208 U.S. 452, 465 (1908)). Here, the WFTCA was enacted on July 4, 2025. The WFTCA directs the Department to implement roughly a dozen provisions by July 1, 2026. Many of these provisions are not self-executing and could not be implemented absent the Department promulgating regulations to provide details for institutions on how to comply with the WFTCA. Congress gave the Secretary discretion within the WFTCA to implement the provisions impacting the title IV, HEA programs and knew that its commands were not self-executing when directing the Secretary to take action. Congress expected the Secretary to act via rulemaking before July 1, 2026, to enable these provisions to actually go into effect. The Master Calendar provision in the HEA provides that regulatory changes initiated by the Secretary affecting the title IV, HEA programs must be published in final form by November 1st in order for them to go into effect by July 1st of the following year. 20 U.S.C. 1089(c)(1). Section 492 of the HEA requires the Department to undertake negotiated rulemaking as part of any regulation under title IV of the HEA. In order to conduct negotiated rulemaking and meet APA requirements, the Department must have a public hearing (providing notice to the public), solicit nominations from the public to serve on a negotiated rulemaking committee, select non-Federal negotiators, hold negotiations, develop an NPRM, publish an NPRM (with at least a 30-day comment period), and then publish a final rule that responds to any substantive comments received. The fastest possible timeframe in which the negotiated rulemaking process for the rulemaking packages assigned to the AHEAD Committee could have occurred is 149 days, which is irreconcilable with the timeline allowed by the enactment of the WFTCA, due to the fact that there were 120 days from July 4, 2025, (the day the WFTCA was enacted), through and including November 1, 2025, (the publication date of the final rule required by the Master Calendar). It would not have been possible for the Department to undertake every step of the negotiated rulemaking process by November 1, 2025, in order to implement the provisions that become effective in the WFTCA by July 1, 2026, which is the statutory effective date. Congress was aware of this temporal impossibility when they passed the WFTCA, yet Congress decided that these provisions would still go into effect on July 1, 2026. Because these provisions are not self-implementing and cannot go into effect unless the Department promulgates a final rule, the WFTCA implicitly waives the Master Calendar provision. With important details unanswered by the plain text of the WFTCA, it is clear that the policy scheme set forth in the HEA made by the WFTCA cannot be implemented absent regulatory action by the Department. The Department was not able to comply with the master calendar requirements and Congress's statutory deadlines. Furthermore, the Office of Management and Budget has determined this is a major rule under the Congressional Review Act, and because major rules cannot go into effect until 60 days after publication, the effective date for the WFTCA provisions is August 31, 2026. Therefore, the WFTCA does not waive negotiated rulemaking nor any provision in the APA. For provisions in the WFTCA that become effective July 1, 2027, and beyond, Congress did not implicitly repeal the Master Calendar provision because it is possible for the Department to publish a final rule that complies with the Master Calendar to implement those provisions. Severability “It is axiomatic” that a regulation may be invalid in part but not in whole or as applied to one set of facts but not another. Ayotte v. Planned Parenthood of N. New England, 546 U.S. 320, 329 (2006). If a court finds one part of a regulation is unlawful, the “normal rule” is to enjoin only that part. Id. (quoting Brockett v. Spokane Arcades, Inc., 472 U.S. 491, 504 (1985). It is the Department's intent that if any provision of this subpart or its application to any person, act, or practice is held invalid, the remainder of the subpart or the application of its provisions to any person, act, or practice shall not be affected thereby. Statutes and regulations are severable if the separate provisions are “wholly independent of each other” and can operate independently. Brockett v. Spokane Arcades, Inc., 472 U.S. 491, 502 (1985). That is the case here. No part herein will be affected if another part is found to be unlawful. Nor does the Department believe courts or regulated parties would be unable to apply the rule if one part is held invalid. C.f. Dep't of Educ. v. Louisiana, 603 U.S. 866, 868 (2024) (per curiam) (denying the government's request to stay a preliminary injunction against an entire rule where only parts were found to be invalid because “schools would face in determining how to apply the rule for a temporary period with some provisions in effect and some enjoined”). While the Department's goal with these proposed regulations is to establish a universal earnings accountability framework that is applied evenly across all sectors and credential levels, because of the multiple bases of statutory authority the Department is relying upon for this regulatory action, the Department believes that it crucial to clarify that the provisions of this rule applicable to GE programs and non-GE programs are wholly independent of each other and can operate independently. The Department believes the application of a universal earnings accountability framework to GE programs and non-GE programs is severable, because while the standard applied to GE programs and non-GE programs will be the same, as discussed previously within this section, the Department is not relying on the same statutory authority to impose this unified framework. Likewise, the earnings accountability framework could be applied to only one category of programs without an issue operationally. Relatedly, as explained in detail in this rule, the Department believes that the application of the earnings accountability framework to all programs, irrespective of whether a program is religious in nature or is offered by a religious institution, does not place a substantial burden on the exercise of religion, in violation of the Religious Freedom Restoration Act (“RFRA”). However, should a court disagree with the Department's conclusion, the Department intends for the earnings accountability framework to continue to survive and remain in effect for all other programs. Relationship to Other Federal Agencies Earnings measures supplied by another Federal agency are statistical inputs to the Department's administration of the statutory accountability framework. The provision of such statistical products does not constitute the supplying agency's participation in, endorsement of, validation of, or responsibility for any Department eligibility, accountability, enforcement, or appeal determination. Any administrative appeal or litigation concerning a program's status under these regulations concerns the Department's application of statutory and regulatory standards, not a determination by the agency that supplied the statistical product. VII. Analysis of Public Comment and Changes On April 20, 2026, the Secretary published an NPRM for these regulations in the Federal Register (91 FR 21088) (April 20, 2026). The Department received 9,994 comments on the proposed regulations. The Department has grouped the comments by functional topics and by similar themes. We discuss substantive issues under the sections of the regulations to which they pertain. In instances where individual submissions appeared to be duplicates or near-duplicates of comments prepared as part of a write-in campaign, the Department posted one representative sample comment along with the total comment count for that campaign to www.Regulations.gov, which continues to be our standard practice. We considered these comments along with all the other comments received. In instances where individual submissions were bundled together (submitted as a single document or packaged together), the Department posted all the substantive comments included in the submissions along with the total comment count for that document or package to www.Regulations.gov. Generally, we do not address minor, non-substantive changes (such as renumbering paragraphs, adding a word, or typographical errors) within this final rule. Additionally, we generally do not address changes or comments recommended by commenters that the statute does not authorize the Secretary to make (such as forgiving all student loans), or comments pertaining to operational processes. Analysis of the comments and of any changes in the regulations since publication of the NPRM (91 FR 21088) follows. Process for Out-of-Scope Comments The Department does not typically address comments that are out of scope. For purposes of this final rule, out-of-scope comments are those that are not addressed in the NPRM (91 FR 21088) altogether. Generally, comments that are outside of the scope of the NPRM (91 FR 21088) are comments that do not discuss the content or impact of the proposed regulations or the Department's evidence or reasons for the proposed regulations. General Comments Negotiated Rulemaking and Public Input Comments: Several commenters argued that the Department failed to provide sufficient time for meaningful negotiated rulemaking and public comment. Some commenters requested the Department delay implementation until July 1, 2027, or later to allow for further study, stakeholder input, and adjustment. Discussion: As mentioned in the Implementation Date of These Regulations section, except for changes to 34 CFR part 685, these regulations are effective on July 1, 2027. The changes to 34 CFR part 685 are effective on August 31, 2026. However, we note that one of the provisions that the Department is changing in section “Earnings of Program Completers—Use of IRS Data” would have the effect of delaying the application of program eligibility consequences for programs in certain fields associated with tip income. Please see that section for more information. The Department is committed to conducting rulemaking in accordance with all statutory and regulatory requirements. For this rulemaking, we followed the procedures outlined in the HEA and the APA, including convening a negotiated rulemaking committee with representatives from a broad range of stakeholders and providing a public comment period consistent with Federal requirements. While we understand the desire for extended deliberation, the Department has a responsibility to implement timely reforms that protect students and taxpayers. Changes: None. Comments: One commenter urged the Department to engage in additional profession-specific outreach and operational consultation with institutions, accreditors, certifying organizations, and professional stakeholders within the acupuncture and herbal medicine community before finalizing any earnings accountability framework that could significantly affect student access to graduate healthcare education and professional workforce entry within this field. Discussion: The Department declines this suggestion. The Department strives to select negotiators with the goal of ensuring balanced representation across the communities most affected by the regulations. We will continue to apply this principle in future rulemakings. Changes: None. Comments: One commenter stated that the Department has already placed “lower earnings” warning labels on the Free Application for Federal Student Aid (FAFSA) form. They believed the warnings are premature since the rulemaking process is ongoing. Discussion: The Department has provided these disclosures for transparent information about program outcomes as students and families make important decisions about their education. The warning labels are based on currently available data and are intended to inform, not to presume the outcome of this rulemaking process. Changes: None. General Agreement With the Regulations Comments: Dozens of commenters including students, graduates, instructors, beauty and massage industry professionals, educators, and program owners support the overall goal of protecting students from predatory programs, ensuring programs lead to meaningful economic outcomes, and improving transparency. Commenters shared personal experiences of debt burdens, poor instruction, unsafe or inadequate equipment, and misleading job placement claims. A few commenters also raised concerns about the cosmetology sector specifically and urged the Department not to grant exemptions for programs or institutions represented by the American Association of Cosmetology Schools (AACS). These commenters asserted that accountability is necessary in this field and expressed concern that certain stakeholders are seeking relief from regulations designed to ensure program value. Discussion: We thank commenters for their support. The Department agrees with commenters that the earnings accountability framework in this regulation will help protect students from low-earning outcome programs. We agree with commenters who suggested that the rule may result in improved program quality, affordability, and outcomes. As explained in the “Earnings of Program Completers—Use of IRS Data” section, the Department also agrees that the earnings accountability framework must include cosmetology programs. The Department does not find a basis for providing the cosmetology sector with a blanket exemption to the rule; the intent of the rule is to ensure that all programs receiving title IV, HEA funds demonstrate that their graduates achieve earnings sufficient to support their educational investment. Changes: None. General Opposition to the Regulations Comments: Thousands of commenters are concerned that this rule will reduce Federal student financial assistance for beauty, wellness, early childhood, drama/theater programs, music programs, fine arts programs, and other fields. Commenters, including cosmetologists, estheticians, massage therapists, beauty school owners, parents, and students shared personal stories about how financial aid enabled them to attend school, pursue a career, achieve financial independence, support their families, and contribute to their communities. Many commenters stated they would not have been able to attend school or enter their profession without Federal student aid, and they are concerned that the earnings test would reduce economic activity and growth generally because it would lead to fewer educational opportunities as programs and colleges would be forced to close. Many commenters noted the high graduation rates and job placement rates of cosmetology programs, suggesting that they are high-quality programs based on these measures. Commenters also noted that the Department's data suggested that approximately 93% of cosmetology programs would fail the proposed rule. Some commenters stated that protecting the cosmetology sector is essential because these workers provide critical services for weddings, graduations, job interviews, and other celebrations. Other commenters stated that cosmetology programs provide critical preventative health services that, without them, would have adverse consequences for society. Many commenters also noted that this final rule could cause workforce shortages in essential service industries and create negative ripple effects on small businesses, local economies, and community services due to a shrinking pipeline of licensed professionals. Commenters further cited the effects of cosmetology program closure on unemployment and local communities and emphasized the inability of businesses to fill in-demand jobs if cosmetology and massage therapy programs and programs close. They also indicated that unemployment would increase from students who would otherwise have found jobs after attending these programs and because employees from these schools would lose their jobs. Commenters expressed the importance of protecting these programs and personal anecdotes about the success they have achieved by attending a cosmetology program. Discussion: The Department appreciates the extensive feedback from commenters regarding the importance of Federal student financial assistance. The Department's intent is not to reduce access to high-quality programs and career pathways. The purpose of the earnings premium measure is to ensure that students are not left worse off financially after completing a program. Students who attend programs that do not support improved earnings are often stuck with debt and little ability to pay it off, resulting in long-term financial challenges for those students. The Department has estimated the effects of the final rule on all types of programs, including specific analyses on the estimated impacts on cosmetology programs. Overall, we note that fewer students are anticipated to attend failing programs under this regulation relative to the current gainful employment regulation (Table 5.12). Regarding cosmetology programs, we note that compared with the current regulation, fewer cosmetology and massage therapy programs will fail the earnings test under the final rule (Tables 5.17, 5.18, 5.19, 5.20, and 5.28). Fewer of these programs are expected to fail the earnings test under the final rule because it measures earnings a year later than the current rule (4th year instead of 3rd year after completion) and it measures the median earnings of working individuals only (whereas the current rule measures the earnings of all completers regardless of whether they are working). As described in the “Earnings of Program Completers—Use of IRS Data”, “Department Authority (Including GE and Quality Assurance Authority)”, and “Orderly Program Closure” sections, the Department has included certain provisions to mitigate the disproportionate impact the rule has on certain types of programs. First, the final rule amends the accountability framework so that certain programs are exempt from the earnings test if they did not receive Federal student loans for the five award years prior to the earnings premium calculation. Many types of programs, including certain cosmetology programs, will be exempt from the earnings test due to this exemption (Table 5.27). Second, the final rule includes a new provision that allows failing programs to voluntarily remove themselves from the Federal student loan program after the first year they fail the accountability framework. In return, these programs preserve their Pell Grant eligibility in future years. Third, we amend the final rule to include a provision that delays the accountability framework for certain types of programs that are linked to predominantly tipped occupations. Furthermore, as discussed in the Regulatory Impact Analysis, this regulation is estimated to cost $1.5 billion in Direct Loan cohorts 2027 to 2036 and $8.8 billion in Pell Grants in FYs 2027 to 2036 due to the higher amount of financial aid that will be available to students as a result of this regulation. Commenters mistakenly believe the regulation is removing financial aid from programs, when in reality, certain types of programs will receive a much greater amount of financial aid as a result of this regulation. Ultimately, the Department's analysis and these included provisions suggests that the commenters' assertions about the harmful effects of this regulation are misguided: they incorrectly believe the rule is harming certain types of programs—including cosmetology programs, religious studies programs, and others—when in reality, this rule is often beneficial to those programs because fewer are expected to fail relative to the baseline policy. That said, the rule continues to hold all types of programs accountable, regardless of sector or credential level, to a fair and consistent accountability framework. The Department views this as critical because this framework helps protect students from programs that consistently deliver low-earning outcomes for their students. In response to the many commenters who expressed concern about the rule's specific impact on the cosmetology sector, the Department clarifies that the final regulation only impacts cosmetology programs that participate in the Federal student loan program. Many cosmetology programs will not be impacted by the rule because they operate outside of the Federal student loan program. While precise data on the number of these programs is scarce, one study found that approximately 86 percent of cosmetology programs in Texas operated outside of the Federal student loan program. 11 While this analysis is for a single State, it provides suggestive evidence that many cosmetology programs will be unaffected by the rule. Given this, the Department does not believe the commenters' assertions about the rule may result in workforce shortages in the cosmetology sector. 11 Cellini, S.R., & Onwukwe, B., (2022). Cosmetology Schools Everywhere: Most Cosmetology Schools Exist Outside the Federal Student Aid System. Washington, DC: PEER Center. www.american.edu/spa/peer/upload/peer_cosmetology_b.pdf. Changes: None. Comments: Hundreds of commenters noted that the final rule's earnings test will have a large impact on religious studies and theology programs. Commenters pointed to the Department's analysis (Table 3.16 from the NPRM) showing that a large share of religious studies programs are estimated to fail the earnings test. Commenters argue that it is inappropriate to measure these programs based on their graduates' earnings because they are not intended to provide high earnings for their graduates but rather aim to achieve important spiritual and societal benefits. Some commenters requested that programs in religion, theology, and ministry studies be entirely excluded from the earnings premium measure. The commenters argued that the income levels for religious programs are relatively low, at least during the first few years after graduation, but students enter faith-based programs knowing that they are accepting lower financial compensation in order to pursue religious service. One commenter pointed out that yeshivas do not participate in the Direct Loan program and therefore do not contribute to the problem of unsustainable student debt, which is the problem that the WFTCA was intended to address. The commenter further argued that the concern for such institutions is not the loss of Direct Loan program access, but rather the loss of Pell Grant funds. Some commenters noted that many theology and religious studies programs only receive Federal Pell Grants and do not participate in the Federal student loan program. These commenters argued that it would be unfair to remove these programs' eligibility for Pell Grants because they do not participate in the Federal student loan program. Discussion: The Department acknowledges the rule proposed in the NPRM would have had a significant impact on religious programs. However, as described in the “Department Authority (Including GE and Quality Assurance Authority)” section below, the Department is amending its regulations to exempt an institution's programs from the administrative capability penalty if the institution has not participated in the Direct Loan program for the five most recently completed award years, and to similarly exempt a program if an institution voluntarily agrees to forego disbursing Direct Loans to students in that program for at least five years. 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. 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. Specifically, the Department estimates that the final rule will have roughly half the impact on students and title IV, HEA program funds disbursed to religious programs relative to the impact of the current regulation (Table 5.18 and 5.19). Ultimately, the final rule is expected to benefit the religious sector, as fewer students in religious programs will be negatively impacted by the final rule relative to the current baseline. Changes: None. Comments: Hundreds of commenters urged the Department to allow institutions to demonstrate a program's value based on a broad set of factors rather than solely relying on graduates' earnings. Commenters recommended a variety of alternative metrics, such as program completion rates, transfer rates, job placement rates, employment rates, loan repayment rates, long-term earnings growth, business ownership rates, licensure pass rates, default rates, debt-to-earnings ratios, and levels of student satisfaction. Discussion: The Department declines the suggested proposals. The Department believes the accountability framework should rely on metrics that are standardized, consistently available across all programs, and derived from reliable administrative data sources. At present, nationally consistent data on long-term career progression, transfer outcomes, business ownership among graduates, student satisfaction, patient outcome measures, and lifetime earnings are not uniformly available across institutions or programs. Furthermore, the Department agrees that many of the alternative metrics cited by commenters, including debt and repayment measures, completion rates, and licensure attainment, all provide meaningful information on program quality. The Department intends to continue publishing this type of data through the STATS collection, which will provide important information for prospective students as they consider enrolling in higher education. However, the WFTCA specifically requires the Department to consider the earnings outcomes of degree and graduate programs. Congress did not include other metrics, such as job placement rates or licensure pass rates, in the accountability framework authorized under the WFTCA. Changes: None. Comments: Many commenters expressed concern that the earnings test will penalize programs that have low earnings but are in valuable fields. Commenters specifically pointed out the social value provided by early childhood education programs, K-12 education programs, special education programs, social work programs, counseling programs, museum and library science programs, religion/religious studies programs, health care programs, career & technical education programs, fine arts programs, and other types of programs. Commenters expressed that these fields provide value to students beyond their earnings that benefit society through the “social returns” these programs offer. Commenters recommended the Department exempt these fields of study from the earnings test or that the Department create “field specific benchmarks” that would lower the earnings test threshold for certain fields that provide higher levels of social returns. Commenters also highlighted that many of these socially valuable fields are already facing worker shortages, and that the proposed regulation would worsen these conditions. A few other commenters argued that a student may obtain a degree in one field and use it for a job in a different field. These commenters emphasized the broader value of higher education, noting that degrees can open doors to various career paths and that the skills and experiences gained are often transferable across industries. Discussion: The Department recognizes that postsecondary education can create benefits beyond higher earnings and that some programs that will be heavily impacted by the earnings test may face worker shortages. The Department also notes, however, that students need sufficient earnings to afford and repay their Title IV student loans, which makes the earnings test in the final rule an appropriate policy for student loan access. While the loss of title IV, HEA program assistance may lead to closure of programs in high demand fields or those that face workforce shortages, the Department is concerned that these fields and credentials do not produce adequate earnings to support the growing student debt. The Department believes that institutions of higher education, employers, and State and local policymakers have the opportunity to respond to the effects of the earnings premium measure by creating or modifying programs so that they lead to higher earnings, or by reforming employee pay policies or credentialing requirements. The Department is aware that the proposed earnings test will have a larger impact on certain fields and has provided an extensive analysis in the RIA (Tables 5.17, 5.18, 5.19, and 5.20) of which fields may be most affected. The Department's analysis shows that bachelor's degrees in the fine arts are estimated to fail the earnings test at relatively high rates. However, as many commenters noted, undergraduate students enrolled in Business/Management, Health, Vocational, and Technical programs all have lower fail rates (student-weighted) relative to the baseline policy (Table 5.18). Furthermore, the commenters who argued that the Department should measure the “social returns” of programs provided no basis, data, or recommendation for how the social returns could be fairly and consistently measured. Lacking the data and methodology necessary to perform such an evaluation, the Department notes that any attempt to classify the social returns of programs would be arbitrary. For example, the Department does not have the ability to determine if electrical engineers have more or less “social value” in society than musicians. Lastly, the Department does not have the statutory authority to set lower or different earnings benchmarks for the programs that commenters mentioned based on the potential social returns that these programs may offer. Congress provided specific statutory language on the way program earnings outcomes would be used to determine eligibility to title IV, HEA student loan programs. Congress did not provide any indication that the Department should also consider other factors, such as the “social value” of certain programs. Regarding commenters' assertion that programs can often set up an individual for a variety of different career paths, we agree that this can also be a source of value for graduates. This point has long been acknowledged in the Department's CIP-SOC crosswalk, where many programs are linked with a variety of different occupations and career paths. The Department also acknowledges that some occupations and career paths may have higher earnings outcomes than others, despite those occupations being linked to the same program. However, the Department contends that the commenters' concern is already addressed in the regulation. The earning premium metric includes all program graduates, regardless of the particular career path they enter. Then, the Department calculates each program's earnings value based on the median earnings of its graduates, thereby reducing the extent that outliers in high-paying or low-paying career paths have on the overall median earnings value. If programs are routinely leading students to enter into occupations that are unrelated to their field of study, the Department is concerned about the potential value of these programs and wants to ensure those graduates are included in the program's median earnings measure. Changes: None. Comments: Commenters expressed concern that the earnings test would result in programs being judged during anomalous economic periods, like during the COVID-19 pandemic, when wages were unusually low. Some commenters expressed that this would particularly harm cosmetology programs, music programs, and theater programs. This is because many barber shops, massage therapy centers, theaters, and performing arts centers were forced to close or suspend services during COVID-19, negatively impacting the earnings of their graduates. Ultimately, commenters expressed concern that the regulation would unfairly penalize certain types of programs for factors that were outside of the institution's control. Discussion: The earnings test in this final rule includes several features that will mitigate the effects the commenters raised. First, programs lose eligibility if they fail in two out of three consecutive years, which reduces the significance of a single year in the test. Second, the high school and bachelor's degree earnings threshold is aligned with the year that program graduates' earnings are measured. If earnings are depressed across the economy, then the earnings used to calculate median earnings for the test and the earnings of programs completers will similarly be depressed. Third, for small programs, the earnings of program graduates are based on completers from multiple years (see the cohort aggregation process described in the “Minimum Number of Completers, Privacy, and Statistical Reliability” section). Because many cosmetology and music programs are small, the earnings premium measure may be based on the earnings of graduates from multiple different years, smoothing the effect that one anomalous year has on the overall earnings measure. Fourth, the first year of the earnings test will primarily be based on completers who graduated during the 2021 award year, with earnings measured during the 2025 calendar year. Thus, the earnings period used to evaluate programs often occurred well after the conclusion of the COVID-19 pandemic. Collectively, these features will likely prevent programs from failing the earnings premium metric due to one year of anomalous data, similar to what occurred during the COVID-19 pandemic. Changes: None. Other General Comments Comments: A few commenters argued that low wages in fields like massage therapy, cosmetology, and other skilled trades are primarily the result of employer pay practices, not the quality of educational programs. The commenters suggested that the Department should focus on why employers underpay skilled workers, rather than penalizing educational institutions or restricting student access to financial aid. Discussion: The Department's regulatory scope is limited to educational institutions and the administration of Federal student financial assistance. The Department does not have authority over private sector wage-setting or employer compensation practices and therefore cannot adopt the commenters' suggestion. Changes: None. Comments: Some commenters argued that accountability rules should focus on fixing structural barriers that limit students' employment outcomes rather than penalizing academic programs for factors beyond their control. The commenters recommended a variety of things, including requiring universities to establish formal workforce agreements with government agencies, maintain dedicated staff responsible for securing paid public sector internships, and provide transparent data showing the different career pathways and job placement processes for career changers compared with students who enter programs with existing professional networks. Discussion: The Department does not adopt these recommendations. These proposals extend beyond the Department's current statutory authority and the scope of this final rule. Changes: None. Comments: A few commenters argued that a person may obtain a degree in one field and use it for a job in a different field. Commenters emphasized the broader value of higher education, noting that degrees can open doors to various career paths and that the skills and experiences gained are often transferable across industries. Discussion: Programs can often set up an individual for a variety of different career paths. As discussed above, the Department of Labor's CIP-SOC crosswalk specifically links academic programs with occupations, and in many cases links several occupations to a single program type. While students from the same program may choose different career paths, the Department believes that including all students in the program earnings calculation is necessary to appropriately determine program value. The Department is concerned that excluding certain students from program completers list based on the career path they enter into could result in gamesmanship by colleges, as they could potentially skirt the accountability framework by directing students into certain career pathways. Furthermore, if programs are routinely leading students to enter into occupations that are unrelated to their field of study, the Department is concerned about the potential value of these programs. Ultimately, the Department believes the commenters' suggestions would leave students unprotected from programs with low-earning outcomes. Changes: None. Comments: Several commenters suggested the Department compare a student's earnings before and after completion of a program to assess whether the program has provided economic value. Commenters argue that programs that improve their students' earnings outcomes relative to their pre-enrollment earnings should be exempt from the accountability framework regardless of whether the median earnings of program graduates exceeds the earnings threshold for the program. These commenters argue that this is a more appropriate comparison than between program graduates and the individuals surveyed on the ACS. Discussion: The Department declines to adopt this approach for several reasons. The first reason is feasibility: Not all students have pre-enrollment earnings. For example, many traditional college students, especially dependents who recently graduated from high school, do not have pre-enrollment earnings. Second, for the subset of these students who do have pre-enrollment earnings, it is likely that these earnings occurred while the student was enrolled in high school, which would greatly bias the measure of pre-enrollment earnings. Third, a significant body of economic research finds that students' earnings in the years leading up to college enrollment are downwardly biased ( i.e., “Ashenfelter's Dip” 12 ), providing an improper counterfactual to judge graduates' post-enrollment outcomes. Fourth, this proposal is not aligned with what Congress requires in the WFTCA. Congress instructed the Department to use earnings benchmarks based on working high school and bachelor-degree holders from a certain age and in the same geography; Congress did not contemplate pre-enrollment earnings as the benchmark. For these reasons, the Department rejects the commenters' proposal to use pre-enrollment earnings as the earnings benchmark. 12 Heckman, J.J., & Smith, J.A., (1999). The Pre-Program Earnings Dip and the Determinants of Participation in a Social Program: Implications for Simple Program Evaluation Strategies. NBER Working Paper No. 6983. www.nber.org/system/files/working_papers/w6983/w6983.pdf. Changes: None. Comments: Several commenters called for greater accountability and transparency regarding tuition and program costs and urged the Department to address the root causes of rising education costs rather than restricting financial aid or access to programs. Discussion: With extremely limited exceptions, 13 the Department does not have the statutory authority to regulate tuition and program costs. The HEA stipulates the amount of title IV, HEA program funds an eligible student can receive, not how much an institution can charge. 13 In the “Workforce Pell” provisions of the WFTCA, Congress established a “value-added earnings” framework applicable only to eligible workforce programs that would limit the tuition and fees that could be charged for such programs based on the earnings of graduates. See 91 FR 29254. Congress did not establish a similar framework for other programs. Changes: None. Legal Authority/Department Authority Department Authority (Including GE and Quality Assurance Authority) Comments: As described in the “Consequences for Failure to Demonstrate Administrative Capability” section below, many commenters objected to the loss of title IV, HEA eligibility for all of an institution's low-earning outcome programs if the institution fails the new administrative capability requirement at § 668.16(t), arguing that the WFTCA specifically only pertains to participation in the Direct Loan program and does not reference eligibility for other title IV, HEA programs. Additionally, several commenters expressed concern about the applicability of these regulations to programs or institutions that exclusively serve students with documented learning differences—Specific Learning Disabilities and Autism Spectrum Disorder (ASD)—all of which are considered disabilities under Section 504 of the Rehabilitation Act of 1973. The commenters pointed to well-documented differences in labor market outcomes for individuals with disabilities versus those without such disabilities. The commenters also noted that as a result of these documented earnings gaps, the proposed accountability framework may negatively impact the students who enroll in such programs and institutions solely on the basis of the students' disabilities. The commenters requested that if a program is offered by an institution that enrolls 100 percent of its students with such disabilities, the Department should exclude such programs offered by those institutions from the accountability framework. Discussion: Commenters make a strong argument that Congress did not intend for such programs to lose eligibility for title IV, HEA programs other than the Direct Loan program. Therefore, Department finds their assertion compelling that the application of the administrative capability test under 34 CFR 668.16(t) to institutions that do not participate in the Direct Loan program is inappropriate. The Department's intent in adopting the administrative capability provision during negotiated rulemaking was to improve program integrity by addressing institutions whose results suggest a more systemic set of concerns which extend beyond outcomes for individual programs. However, this argument must be placed in relation to the intent of Congress, which chose to apply the earnings accountability metric to non-GE programs participating in the Direct Loan program, rather than institutions. As a result, the Department acknowledges the likely intent of Congress not to apply sanctions to institutions that have not participated in the Direct Loan program for an extended period of time and will exempt an institution from the administrative capability provision under 34 CFR 668.14(h) if it has not participated in the Direct Loan program for the five most recently completed award years prior to the year during which the earnings premium measure is calculated. Similarly, the Department will exempt a specific program from the administrative capability penalty if, shortly after the first time that program fails the earnings premium measure, the institution commits to preventing students from borrowing Direct Loan funds for the program for at least five years under 685.203(m)(2). The metric would still be calculated for programs in these situations, but the programs would not be subject to a loss of eligibility for title IV, HEA programs other than the Direct Loan program due to the new administrative capability test in 34 CFR 668.16(t). The Department chose a five-year period because that time period is longer than the published length of most postsecondary programs. Using a period of this length is intended to identify institutions that have made a long-term commitment to offering postsecondary programs without the support of the Direct Loan program, such that in most cases the most recent cohort of students in the institution's programs graduated without the ability to borrow. The Department seeks to avoid the possibility of institutions temporarily suspending Direct Loan participation for the purpose of avoiding the consequences of the administrative capability penalty. We agree with the commenters that programs at institutions exclusively serving students with specific learning disabilities and related disabilities under Section 504 of the Rehabilitation Act of 1973 should be treated differently under this final rule. We believe that, without this change, the regulation could violate Section 504 of the Rehabilitation Act of 1973, which states that “no otherwise qualified individual with a disability in the United States . . . shall, solely by reason of her or his disability, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving federal financial assistance.” Therefore, we will exempt programs at such institutions from the program eligibility consequences of these regulations if they only enroll students with a Specific Learning Disability or Autism, as defined under the Department's Individuals with Disabilities Education Act, or IDEA regulations. Similar to the treatment of institutions not participating in the Direct Loan program, the Department would still calculate the metric for programs at these institutions, but the programs would not lose eligibility for any title IV, HEA program as a result of the earnings premium measure. For similar reasons, the Department notes that it already excludes from inclusion in the earnings premium measure, Comprehensive Transition and Postsecondary (CTP) programs that serve students with intellectual disabilities. These programs are approved by the Department to help students with intellectual disabilities continue their education, build independent living and career skills, and prepare for competitive employment. These final regulations do not change that exclusion. Changes: We have made two changes in response to the concerns described above. In 34 CFR 668.14(h) we added new paragraphs (3) and (4). In paragraph (3), we specify that a low-earning outcome program at an institution that is not participating in the Direct Loan program and that has not participated in the Direct Loan program for at least the five most recently completed award years shall not be subject to an automatic loss of title IV, HEA program eligibility. Additionally, we provided in that paragraph that a similar exception applies if the institution agrees not to permit students to borrow Direct Loan funds in that program under the provisions in 34 CFR 685.203(m)(2). In paragraph (4) we explain the conditions for such agreement, where an institution is required to agree within 120 days of the Secretary's determination that the program has failed for the first time, to add an amendment to the institution's program participation agreement disallowing borrowing in the program for at least five award years prospectively. The paragraph also explains that the exception will remain in effect for as long as the institution agrees to prevent Direct Loan borrowing in the program. We also added a new paragraph (b) to § 668.601 that exempts institutions from the program eligibility consequences of 34 CFR Subpart S if they only enroll individuals with documented Specific Learning Disability or Autism, as defined under 34 CFR 300.8. Master Calendar and Effective Dates Comments: Some commenters argued that the July 1, 2026, effective date of the final rule violates the HEA's master calendar requirements, due to the fact that the final rule was not published by November 1, 2025. Several of these commenters stated that, insofar as the WFTCA provides an implied waiver of the HEA's master calendar requirements, that this waiver does not extend to portions of the rule that impose the earnings accountability framework on certificate programs below the graduate level, as such programs were not addressed in the WFTCA. Discussion: As discussed fully in the “Authority for this Regulatory Action” section, above, the WFTCA implicitly provides a limited waiver of the HEA's master calendar requirement, so far as it is necessary to promulgate regulations that give effect to provisions of the WFTCA that must take effect on July 1, 2026. See Dorsey, 567 U.S. 260, 274 (stating that an agency's compliance with an existing statute “cannot justify a disregard of the will of Congress as manifested either expressly or by necessary implication in a subsequent enactment” (quoting Great Northern R. Co., 208 U.S. 452, 465). The WFTCA was enacted on July 4, 2025, and directs the Department to implement roughly a dozen provisions by July 1, 2026. Many of these provisions are not self-executing and could not be implemented absent the Department promulgating regulations to provide details for institutions on how to comply with the WFTCA. Congress gave the Secretary discretion within the WFTCA to implement the provisions impacting the title IV, HEA programs and knew that its commands were not self-executing when directing the Secretary to take action. Congress expected the Secretary to act via rulemaking before July 1, 2026, to enable these provisions to actually go into effect. Therefore, Congress's command to implement certain provisions of WFTCA by July 1, 2026, functions as an implicit waiver of the HEA's master calendar requirements for rulemaking actions taken to implement those provisions in regulation. The Department agrees with those commenters who stated that the WFTCA's implied waiver of the HEA's master calendar requirements does not extend to the regulations outside of those necessary to implement the provisions of WFTCA. Those provisions would normally take effect on July 1, 2027. However, the Secretary is designating such regulatory provisions as one that an entity subject to the provision may, in the entity's discretion, choose to implement prior to the July 1, 2027, effective date of such regulations. Changes: None. First Amendment and Religious Freedom Restoration Act Concerns Comments: Several commenters stated that they believe that the application of the earnings accountability framework to religious degree programs violates the requirements of the First Amendment and the Religious Freedom Restoration Act (RFRA), with such commenters alleging that the application of the earnings accountability framework to religious degree programs will substantially burden the exercise of students seeking to pursue careers in religious fields, but will not be the least restrictive means of furthering a compelling government interest. These commenters stated that the application of the earnings accountability framework to religious degree programs will substantially burden the religious exercise of individuals seeking to pursue careers in religious fields by potentially precluding their ability to receive title IV, HEA funds to attend the programs necessary to prepare for such careers. Several commenters suggested that this burden will be substantial because of the many religious occupations that are generally low-paying in nature. Some commenters further stated that the proposed requirement that as a component of administrative capability an institution must demonstrate that at least half of the institution's recipients of title IV, HEA funds and at least half of the institution's total title IV, HEA funds are not from low-earning outcome programs, constitutes an additional substantial burden on religious exercise. These commenters further state that, because of the low-paying nature of many religious occupations, institutions where a large percentage of students are enrolled in programs designed to prepare individuals for employment in religious occupations will be disproportionately likely to lose eligibility to participate in all title IV, HEA programs. These commenters stated that this will disincentivize institutions from offering programs that prepare individuals for employment in religious occupations, restrict the ability of individuals to obtain such employment, and harm religious organizations by reducing the number of individuals who are qualified to fill certain positions within those organizations. Several commenters further argued that the Department has not adequately demonstrated that application of the earnings accountability framework for religious programs is the least restrictive means of furthering a compelling government interest. One commenter stated that the NPRM lacked sufficient analysis of the burden being imposed on the exercise of religion, despite acknowledging the substantial impact on religious programs that the rule would have. This commenter and others stated that they believed that the Department failed to adequately consider alternative earnings accountability measures for religious programs that they contend would impose a less severe burden on religious exercise, such as allowing alternative earnings appeals for religious programs. Discussion: The Department has considered the impact the Rule will have on religious institutions and programs and on religious exercise. Congress provided broad protection for religious liberty from the federal government through RFRA. 42 U.S.C. 2000bb et seq.; see also Little Sisters of the Poor Saints Peter & Paul Home v. Pennsylvania , 591 U.S. 657, 680(2020). RFRA provides that the federal “Government shall not substantially burden a person's exercise of religion even if the burden results from a rule of general applicability” unless the burden is “in furtherance of a compelling governmental interest and is the least restrictive means of furthering” that interest.” 42 U.S.C. 2000bb-1(a)-(b). A general rule of general applicability “substantially burdens” religious exercise when it forces someone to act in a way that violates his religious beliefs or denies him “`rights, benefits, and privileges enjoyed by other citizens'—even if `the challenged Government action would interfere significantly with private persons' ability to pursue spiritual fulfillment according to their own religious beliefs.” Real Alternatives, Inc. v. Sec'y Dep't of Health & Hum. Servs. , 867 F.3d 338, 357 (3d Cir. 2017) (quoting Lyng v. Nw. Indian Cemetery Protective Ass'n , 485 U.S. 439, 449 (1988)); accord Hobby Lobby Stores, Inc. v. Sebelius , 723 F.3d 1114, 1138 (10th Cir. 2013) (the law substantially burdens religious exercise if it “(1) requires participation in an activity prohibited by a sincerely held religious belief, (2) prevents participation in conduct motivated by a sincerely held religious belief, or (3) places substantial pressure on an adherent . . . to engage in conduct contrary to a sincerely held religious belief.” (internal quotation marks omitted, alteration in original)), aff'd sub nom. Burwell v. Hobby Lobby Stores, Inc. , 573 U.S. 682 (2014)). The Department does not believe the Rule substantially burdens religious exercise. Applying the low earning outcome test to religious programs that accept Direct Loans does not require anyone to participate in an activity that violates or places substantial pressure on his or her religious beliefs. While many commenters pointed out that students who graduate from religious programs take jobs that often have lower salaries, none alleged it would violate a religious belief to accept a higher salary. And even if “[t]raining [ ] to lead a congregation is an essentially religious endeavor,” Locke v. Davey , 540 U.S. 712, 721 (2004), the government does not have to fund that training, see id. at 725. While the final rule may cause a small number of programs to become ineligible to receive federal student assistance—thus potentially making it more difficult or costly for some to enter these programs—it will not prevent students who are motived by religious belief to enter into religious programs from doing so. Students will be able to use Pell Grants to participate in many programs even if some lose Direct Loan eligibility. To the extent that this could constitute a substantial burden on religious practice, the Department believes it is justified by a compelling governmental interest. As discussed, the federal government has a strong interest in ensuring that federal student aid goes to programs that result in students earning more than they would have without having attended the program. This is true regardless of the subject matter of the program or the religious or non-religious affiliation of the school. Finally, the rule is narrowly tailored because it only applies to programs that accept Direct Loans, which as stated, many religious programs do not. This ensures that these programs can continue to operate as they have been, with accepting Pell Grant funds, while also ensuring that those programs that receive Direct Loans lead to higher earnings for their students. Commenters did not demonstrate that all religious programs would fail the accountability framework in the regulation. The Department's analysis suggests that fewer than 4 percent of undergraduate students in religious/theology programs will be impacted by our regulation, and this represents a large reduction in impact relative to the current regulation (3.9 percent vs. 7.8 percent) (Table 5.18). While the Department does acknowledge that graduate students in religious/theology programs will be slightly more impacted under this rule relative to the current baseline, only approximately 1 percent of such students are estimated to attend failing religious/theology graduate programs (Table 5.18) under the final rule. The Department also considered the First Amendment implications of the rule on religious programs and institutions and does not believe the rule violates religious liberty. The First Amendment provides “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.” U.S. Const. amend. 1. This amendment offers a more limited protection than RFRA. As discussed above, the Department does not believe the rule violates RFRA because it does not substantially burden religious exercise, and, even if it did, the rule advances a compelling government interest and is narrowly tailored to meet that interest. The First Amendment does not require the Department to provide funding for devotional programs or religious degrees for ministry. Locke v. Davey , 540 U.S. 712, 725 (2004). Rather, it prohibits the Department from denying funds to religious programs or institutions solely because of their religious nature. Trinity Lutheran Church of Columbia, Inc. v. Comer , 582 U.S. 449, 462-63 (2017). Religious programs and institutions should be allowed to “compete on an equal footing” for a government benefit. Id. at 463. That is exactly what the Rule allows. Religious and non-religious programs and institutions alike are eligible to participate in the title IV Program. All programs and institutions that participate in the title IV program are subject to the low-earnings test. Should a program fail the test and lose Federal student aid eligibility, it will not be because of its religious nature. It will be because the earnings of program graduates fail in the same way as a secular program that fails. Changes: None. Comments: Some commenters who raised religious liberty concerns (both under the First Amendment and RFRA) urged the Department to apply an alternate appeals process for religious institutions. They suggested that using ministry-related CIP codes and Bureau of Labor Statistics (BLS) wage data would more accurately and equitable reflect ministry programs while being consistent with Congressional intent and administratively feasible for the Department. Discussion: The Department declines to apply an alternate earnings appeal for religious programs or institutions. As discussed above, the Department includes a provision that will exempt any program that has not accepted Federal direct loans for at least five award years prior to the enactment of the WFTCA. The Department's analysis indicates that this will exempt approximately 600 religious programs from the earnings test, making an alternative appeals process unnecessary for many such programs. The Department also declines to create an alternative appeals process for the remaining programs for many of the reasons already discussed. Changes: None. Loper Bright Concerns Comments: One commenter argues that the Department lacks statutory authority to apply the earnings accountability framework to all credential levels. The commenter states that the only statutory outcome requirements GE programs are completion and placement rates set forth in HEA Sec. 481(b) applicable to those short-term programs and that the WFTCA only explicitly applied the earnings accountability framework to for undergraduate degrees, graduate degrees, professional degrees, and graduate certificates and only intended for such programs to lose eligibility to participate in the Direct Loan Program. Therefore, the commenter asserts that the proposed regulations are in conflict with the Supreme Court's ruling in Loper Bright and are not entitled to deference by a reviewing court. Discussion: The Department disagrees with the commenter's contention that the Department lacks statutory authority to extend the earnings accountability framework to all sectors and credential levels, including undergraduate nondegree programs. The Department has clearly identified its statutory authority for the proposed regulations, more fully discussed in the “Authority for This Regulatory Action” section of this rule. The Department further disagrees with the commenter's contention that the proposed regulations violate the standard established by Loper Bright. While the Department agrees that Section 454(c) of the HEA, as added by the WFTCA, only explicitly applied the earnings accountability framework to undergraduate degrees, graduate degrees, professional degrees, and graduate certificates, the Department does not believe that this precludes the implementation of a universal earnings accountability framework across all credential levels, because it possesses separate statutory authority to apply this framework to programs that “lead to gainful employment in a recognized profession.” As previously discussed, in challenge the Department's previous FVT/GE rule, a post- Loper Bright court stated that, through the HEA, the Congress had clearly granted the Secretary to promulgate rules necessary for the administration of the title IV, HEA programs: “the Supreme Court in Loper Bright recognized that Congress may `delegate[ ] particular discretionary authority to an agency' by leaving it with `flexibility' through terms `such as `appropriate' or `reasonable' ” and that the HEA confers such authority [on the Secretary] by including the additional specific direction to `prescribe such regulations as may be necessary to provide for . . . any matter the Secretary deems necessary to the sound administration of the financial aid programs[.]' ” American Assoc. of Cosmetology Sch. *6 (citing 20 U.S.C. 1094(c)(1)(B); 1099c). Section 481(b) of the HEA provides that certain non-degree programs are eligible for title IV, HEA program funds if they “prepare students for gainful employment in a recognized profession.” However, nowhere in the HEA is the term “gainful employment” defined. In Loper Bright the Supreme Court held that when the “best reading of the statute is that it delegates discretionary authority to an agency,” then “the role of the reviewing court” is to “recogniz[e] constitutional delegations, fix[ ] the boundaries of the delegated authority, and ensur[e] the agency has engaged in `reasoned decision making' within those boundaries.” Loper Bright at 371. Because the term “gainful employment” is undefined, and because courts have found that the HEA confers upon the Secretary authority to promulgate regulations that Secretary deems necessary to the sound administration of the financial aid programs, the Department believes that the “best reading' of the HEA is that Congress intended to grant the Secretary discretion to promulgate regulations which interpret what “gainful [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2026-13286. Public record. Not legal advice.