Colleges with Low-Earning Grads Risk Losing Federal Student Loans Under 'Do No Harm' Provision

What Is the 'Do No Harm' Provision?

The 'Do No Harm' provision represents a major shift in how the federal government oversees higher education funding. Enacted as part of the One Big Beautiful Bill Act (OBBBA) in 2025, this rule aims to ensure that college programs provide real economic value to students. Specifically, it ties access to federal student loans to the post-graduation earnings of a program's graduates. If a program's alumni do not earn enough compared to certain benchmarks, the program could lose eligibility for federal Direct Loans, though other aid like Pell Grants might still be available.

This accountability measure stems from long-standing concerns about student debt levels and the return on investment for degrees. For years, reports have highlighted programs where graduates struggle financially, sometimes earning less than those with just a high school diploma. The provision, often called the 'Do No Harm' standard, enforces a simple principle: federal loans should not support education that leaves students worse off economically than if they had entered the workforce directly after high school.

In essence, it applies the Hippocratic Oath's 'do no harm' ethos to higher education policy. Lawmakers argued that taxpayers deserve protection from subsidizing low-value programs, while students need better guidance on program quality. The U.S. Department of Education is tasked with implementing this through data from the Internal Revenue Service on graduate earnings and American Community Survey benchmarks.

🎓 How the Earnings Test Works

The core of the 'Do No Harm' provision is an earnings premium test. For undergraduate programs like associate and bachelor's degrees, the median earnings of graduates—measured four years after completion—must exceed the median earnings of high school graduates aged 25 to 34 who are working and not enrolled in school. This benchmark is typically state-specific if most students reside there; otherwise, it's national. In 2019-adjusted dollars, these thresholds range from around $21,600 in lower-wage states like Mississippi to $31,961 in higher ones like North Dakota, with a national median near $26,000.

For graduate programs, including master's and doctoral degrees, the comparison shifts to the median earnings of bachelor's degree holders in the same state or field, using the lowest applicable benchmark for fairness. Programs fail if they miss the threshold in two out of three consecutive years, triggering a two-year loss of federal loan eligibility. Small programs face aggregation rules, combining data from recent cohorts to ensure reliable samples, often requiring at least 30 completers.

This test harmonizes with existing rules like Gainful Employment for certificates and Financial Value Transparency for disclosures, creating a unified framework. Colleges must notify students if a program fails once, giving time for adjustments. Appeals are possible for data errors, but the focus remains on verified outcomes.

📊 Programs Most at Risk and Key Statistics

Analyses reveal that while most programs pass comfortably, a notable minority teeters on the edge. According to research from the HEA Group, only about 2% of the roughly 32,500 associate and bachelor's degree-granting programs—around 804 programs—currently fail the test, impacting approximately 40,000 students. Other estimates suggest up to 5% of programs could be affected when including graduate levels, involving over 600,000 students and billions in loans.

The riskiest fields include:

• Fine arts and studio programs (about 8% at four-year colleges fail).
• Design and applied arts (roughly 3% at four-year institutions).
• Religion and theology degrees.
• Liberal arts like English (1% of programs).
• Health and medical administrative services at the associate level.
• Mental and social health services at the master's level.
• Trade areas like cosmetology (though many are certificates exempt from this test).

For-profits and small two-year colleges bear the brunt, with public and nonprofit four-year schools largely unaffected—over 90% have minimal exposure. High performers, conversely, boast graduates earning $50,000 more than benchmarks, highlighting the divide between strong and weak programs.

Impacts on Colleges, Students, and the Higher Education Landscape

For colleges, failing the test means scrambling for alternatives like private loans or state aid, potentially forcing program closures or mergers. Small institutions in rural areas or those serving underserved populations worry about survival, as even strong programs can falter due to local economies. Students in at-risk programs might transfer mid-degree, face higher private loan costs, or pivot to passing alternatives, disrupting education paths.

Proponents see upsides: it pressures institutions to prioritize employable skills, weeds out dead-end degrees, and saves taxpayers from bad loans. Critics fear it undervalues fields like arts or public service, where intrinsic value transcends salary, and disadvantages low-income or minority-serving schools with delayed earnings trajectories. Territories like Puerto Rico face unique data challenges, possibly needing exemptions.

Explore current professor salaries and university salaries to gauge institutional health amid these changes.

Photo by Bernard Hermant on Unsplash

Stakeholder Reactions: Support, Concerns, and Debates

Reactions span the spectrum. Taxpayer advocates hail it as a 'win,' with experts like Preston Cooper noting, 'Cutting these programs off from federal loans is a significant win for taxpayers.' Higher education groups applaud accountability but urge safeguards for small programs. Urban Institute researchers highlight risks of diverting students from meaningful careers in arts or counseling, calling for better aggregation and appeals.

Student advocates worry about access, especially for first-generation attendees. Colleges push for leniency in benchmarks. Recent negotiated rulemaking in January 2026 achieved consensus on a single test, balancing rigor with feasibility. For deeper policy insights, check the Urban Institute's implementation guide or the HEA Group's data analysis.

Implementation Timeline and Next Steps

The OBBBA provision took effect in July 2025, but full earnings testing ramps up in 2027 after rulemaking. The Department of Education's AHEAD committee finalized rules in early 2026, mandating disclosures and tests starting soon. Programs get warnings after one failure year. Institutions must monitor College Scorecard data and IRS wage info annually.

Related reforms, like loan caps at $100,000 lifetime, compound pressures. See discussions on higher ed accreditation reforms for context.

Strategies for Institutions to Adapt and Thrive

Colleges can act now:

• Audit programs using public datasets to identify risks early.
• Enhance career services, internships, and employer partnerships for better outcomes.
• Consider program redesigns, like stacking credentials with high-demand skills.
• Leverage data analytics for recruitment into strong programs.
• Advocate via associations for equitable benchmarks.

Faculty and administrators might explore higher ed career advice or faculty jobs to align with evolving demands. For broader opportunities, visit higher ed jobs.

Actionable Advice for Students and Families

Prospective students should:

• Research program outcomes on College Scorecard before enrolling.
• Prioritize fields with proven earnings premiums, balancing passion with practicality.
• Seek internships and certifications to boost employability.
• Rate your professors and courses on Rate My Professor to inform peers.
• Consider community colleges or community college jobs for affordable starts.

Parents, compare options against university rankings and salary data.

Photo by Nimble Made on Unsplash

Looking Ahead: Reshaping Higher Education for Value

The 'Do No Harm' provision could catalyze a value-driven era in higher education, pushing innovation in curriculum and outcomes. While challenges loom for vulnerable programs, opportunities arise for those delivering results. Institutions adapting proactively will attract talent; students choosing wisely will thrive.

Stay informed via AcademicJobs.com resources: share experiences on Rate My Professor, search higher ed jobs, access career advice, browse university jobs, or post openings at recruitment. For related reading, explore stagnant state funding impacts and Brookings' OBBBA analysis.

This change underscores the need for transparency. Have your say in the comments below—what do you think of the 'Do No Harm' rule?