📊 The Rise of Earnings-Based Accountability in Higher Education

In recent years, conversations around the return on investment for college degrees have intensified, driven by concerns over student debt, taxpayer-funded aid, and workforce outcomes. The core idea is straightforward: higher education programs should prepare graduates for careers that offer financial stability above what they might achieve with just a high school diploma. This principle underpins both a new federal earnings test and a state-level bill in Indiana, Senate Bill 199 (SB 199), which together could reshape program offerings at colleges across the country.

The federal earnings test, emerging from the Accountability in Higher Education and Access through Demand-driven Workforce Pell (AHEAD) negotiated rulemaking process, applies to virtually all postsecondary programs. It requires that the median earnings of program completers exceed those of working adults aged 25-34 with only a high school diploma for undergraduate levels, or with a bachelor's degree for graduate programs. Data for this evaluation comes from institution-reported student-level information cross-referenced with earnings records, likely from sources like the Internal Revenue Service or Social Security Administration.

Programs that fail this benchmark in two out of three consecutive years face severe consequences: ineligibility for federal Direct Loans for students enrolled in them. If failing programs represent 50% or more of an institution's Title IV aid recipients or funds, access to Pell Grants could also be cut off. Institutions must begin reporting detailed data annually starting in 2026, with the first potential aid losses not occurring until July 2028 at the earliest. Early analyses suggest about 6% of all programs—enrolling roughly 650,000 students—might fail, with undergraduate certificates hit hardest at 29% failure rate.

Indiana's SB 199 builds directly on this federal framework. Passed by both chambers and enrolled in February 2026, the bill mandates that state educational institutions—public universities and community colleges—with programs classified as "low earning outcome programs" under federal law must seek approval from the Indiana Commission for Higher Education to continue offering them. The threshold in Indiana hovers around $33,000 annually, mirroring high school graduate medians in the state. This provision, tucked into a broader education omnibus bill, reflects a growing state trend to align funding with economic outcomes.

🎓 Breaking Down the Federal Earnings Test Mechanics

To fully grasp the federal earnings test, consider its step-by-step operation. First, institutions submit program- and student-level data by October each year, including credentials awarded and completer identifiers. The U.S. Department of Education then matches this against wage records to compute median earnings, typically three years post-completion to allow time for job market entry.

For an undergraduate program to pass, its graduates' median must surpass the national or state high school benchmark—around $38,000 nationally but varying by location. Graduate programs face a higher bar: exceeding bachelor's holders' medians, often $60,000+. Failure isn't immediate; it's a three-year rolling window. Programs passing at least two years stay eligible indefinitely, but repeated shortfalls trigger reviews.

This test expands on prior gainful employment rules, which targeted for-profits and certificates, now encompassing public and nonprofit degrees alike under the One Big Beautiful Bill Act (OBBBA). Proponents argue it protects students from debt traps and safeguards billions in aid—nearly $3 billion went to low-earning programs in 2024-25 alone. Critics, however, warn it overlooks delayed career payoffs, part-time work, or fields like teaching where societal value trumps salary.

🏛️ Indiana SB 199: A State Response to Federal Pressure

Indiana's approach via SB 199 is proactive, forcing public institutions to justify continuance of federally flagged programs. Sponsored by Senators Jeff Raatz and Linda Rogers, it passed the Senate overwhelmingly and the House 67-28 before conference reconciliation. While not mandating outright cuts, the approval process could lead to consolidations or closures, echoing 2025's House Enrolled Act 1001, which prompted over 400 low-enrollment program trims statewide.

The bill defines low-earning using federal metrics, sparing immediate action but requiring commission oversight. Universities like Indiana University (IU), Ball State, and Ivy Tech now scrutinize offerings. For instance, IU Bloomington's Bachelor of Music program, with medians around $42,250, teeters near thresholds, as do folklore studies (recently merged) and parks/recreation degrees facing seasonal wage dips.

To illustrate potential impacts:

• Associate Degrees: Ivy Tech's Teacher Education transfers and medical assisting variants risk flags despite transfer intent.
• Bachelor's: Ball State's Dance, Purdue Northwest's English and software applications, IU's Music.
• Master's: Counseling-related at Southern Indiana, legal studies at Purdue Global.

Stakeholders diverge: Lawmakers like Rep. Robert Behning emphasize avoiding taxpayer waste on non-ROI paths, while faculty like IU's Brian Forist decry it as commodifying education, ignoring fulfillment in fields like outdoor recreation.

🔍 Programs at Risk Nationwide and in Indiana

Beyond Indiana, federal data highlights vulnerabilities in arts (music, dance, graphic design), humanities (English, liberal arts), religion, cosmetology, and some education tracks. Associate programs fail at 7%, bachelor's at 2%. Nationally, for-profits bear 50% of at-risk enrollment, but nonprofits like community colleges feel the pinch too.Read the full Indiana SB 199 text here.

These aren't fringe offerings; music degrees foster creativity vital to industries like media, while education programs address teacher shortages despite modest starts. Yet, with student debt exceeding $1.7 trillion, focusing on outcomes resonates. Institutions eyeing faculty positions in viable programs will prioritize alignment.

Consider actionable steps for at-risk programs:

• Enhance career services with alumni tracking and internships.
• Integrate stackable credentials boosting employability.
• Partner with employers for apprenticeships in fields like recreation.

⚖️ Stakeholder Perspectives: Pros, Cons, and Debates

Supporters, including taxpayer advocates, hail the test as overdue accountability. Negotiator Preston Cooper noted it shields 2% of students and $1 billion in Pell funds yearly. Employers may favor credentials signaling earnings potential, pressuring low-ROI paths.

Opponents, from civil rights groups to faculty, argue earnings ignore equity—women and minorities cluster in lower-pay fields like social work. Urban Institute warns it diverts from meaningful careers like nonprofit work. Abstaining negotiator Tamar Hoffman called measures insufficient without debt ratios.Inside Higher Ed details negotiator views.

Balanced solutions emerge: Hybrid metrics blending earnings, completion, and equity; transitional aid for reforms; or expanded workforce Pell for short-term training. For students, tools like professor salaries data or SAT calculators aid informed choices.

💡 Strategies for Institutions, Students, and Policymakers

Colleges can adapt by auditing programs via College Scorecard data, bolstering advising on academic CVs, and diversifying offerings. Students: Research ROI early, consider scholarships for high-demand fields, or hybrids like business + arts minors.Chalkbeat lists Indiana at-risk programs.

Policymakers might refine thresholds regionally or add appeals for proven value-adds. Indiana's model offers lessons: Commission approvals could preserve gems like folklore amid mergers.

Photo by H Liu on Unsplash

🔮 Looking Ahead: Implications and Opportunities

As 2026 unfolds, expect data releases shaping 2027 lists. Indiana universities gear for commission reviews, while national shifts spur innovation—perhaps more online hybrids or employer-tied degrees. This accountability wave underscores higher ed's evolution toward value-driven models.

Ultimately, it prompts vital questions on education's purpose: economic ladder or holistic growth? Explore rate my professor for insights, search higher ed jobs, or check career advice. Weigh in below—your experiences shape the debate. For faculty openings, visit university jobs; employers, post a job.

Related reads: UK defunds low-value degrees.