According to a December 8 Electronic Announcement, students completing the FAFSA will now see a new disclosure flagging an institution as “lower earning” when that institution’s undergraduate completers’ median earnings are less than those of a high school graduate comparator group. The U.S. Department of Education (the “Department”) has published a spreadsheet, identifying the institutions that fall into the “lower earnings” category. Cosmetology schools, theological seminaries, music conservatories, and art and design schools appear among the institutions most frequently listed.
How does the Department determine whether an institution is lower earning?
An institution is labeled lower earning when its undergraduate completers’ median earnings (four years after graduation) are below the median earnings of high school graduates ages 25-34 in the same state. If an institution operates in multiple states or primarily enrolls first-year students from outside its home state, the Department compares the institution’s completers’ median earnings to the median earnings of high school graduates nationally, instead.
What are the consequences of the Department determining an institution is lower earning?
The Department states that the lower earnings indicator is for informational purposes only and will not impact Title IV eligibility or participation. In practice, the indicator may deter students from enrolling in an institution with the lower earnings label.
Which institutions are impacted by the lower earnings indicator?
The Department states the agency ran the calculations for all Title IV-participating institutions with the following exceptions: institutions located in certain U.S. territories; institutions that only offer graduate-level credentials; and institutions without sufficient earnings data.
Which students see the lower earnings indicator, and what does it look like?
The lower earnings indicator is shown only to first-year undergraduate students as part of the FAFSA Submission Summary. If the student selected one or more institutions flagged by the Department as lower earning, upon submission of the FAFSA, the interface shows a message that reads: “Some of Your Selected Schools Show Lower Earnings.” Students then have the option to view a list of their selected schools’ earnings. The list displays as charts comparing each selected institution’s completers’ median earnings to the relevant median high school graduate earnings, with institutions falling below the high school comparator group highlighted in red. A trashcan icon next to each lower earning institution chart allows students the option to remove those institutions from their list of FAFSA selected schools.
Where did the Department get the earnings data?
In a webpage describing the lower earnings data methodology, the Department states that the institution median earnings come from College Scorecard data for undergraduate completers during 2014–15 and 2015–16, with earnings measured in 2019 and 2020 and inflation-adjusted to June 2025 dollars. High school graduate median earnings are derived from the 2019 and 2020 American Community Survey 5-year estimates, also adjusted for inflation. The Department stated that the agency will continue to update the lower earnings indicator as more recent earnings data becomes available.
How does the lower earnings indicator interact with the Department’s other accountability frameworks?
The lower earnings indicator appears to be supplemental to similar accountability measures under the Financial Value Transparency and Gainful Employment Rule and the “Do No Harm” concept described in the One Big Beautiful Bill Act. The lower earnings indicator has several key differences that set it apart from other accountability frameworks, including the following:
- The lower earnings indicator is calculated at the institution level, not program by program.
- The lower earnings indicator does not apply to institutions that only offer graduate programming and is disclosed via the FAFSA only to first-year undergraduate students.
- The lower earnings indicator does not carry sanctions, like the potential loss of Title IV eligibility.
- The regulated community had no opportunity to comment on the lower earnings indicator prior to implementation, as the indicator, in its implemented form, was not considered as part of a negotiated rulemaking process.
* * * * *
Institutions with questions about the FAFSA lower earnings indicator are welcome to contact Aaron Lacey and Hope Watson for assistance. Aaron’s response may be delayed December 8-12, as he’s currently serving as a primary negotiator to the Accountability in Higher Education and Access through Demand-driven Workforce Pell (AHEAD) rulemaking committee.
