In Apr. 2026, the Department of Education proposed a new rule making student loan eligibility dependent on the payoff of a student’s chosen major; by July, it was finalized and passed.
Originally part of the One Big Beautiful Bill Act, this new law, known as the Student Tuition and Transparency System and Earnings Accountability rule, is set to integrate an earnings-based accountability framework into Lyndon B. Johnson’s Higher Education Act and create new guidelines for determining which college degree programs will be eligible for student loans.
The rule has gained newfound traction online after the Los Angeles Times released a report stating that an estimated three percent of all bachelor’s degree programs at public and nonprofit institutions will fail the test, along with roughly one-third of programs at for-profit colleges. The Department of Education and the Trump Administration are using this new framework to determine which degrees will lose access to federal loans through an “earnings test” that will take place in 2027 and 2028.
With the rule taking effect on Jul. 1, 2027, there are no immediate consequences following the passage of the Student Tuition and Transparency System and Earnings Accountability rule. However, once the three-year window for the earnings tests passes, any program that receives two failures within that time will face penalties for the 2028-2029 school year. This includes loss of federal direct student loans and potential loss of all federal student aid (including Pell Grants).
Although Michigan Tech is predominantly a STEM school, its humanities students are at risk. A study done by the Education Data Initiative in May of 2026 found that majors in the STEM disciplines had the highest return on investment overall. Those with the highest average lifetime earnings (based on a 40-year career) were Electrical Engineering at 9.7 million dollars, Chemical Engineering at 9.1 million dollars, and Statistics at 9.09 million dollars. However, degrees in the Social Sciences and Humanities projected negative return on investment.
Up until this year, MTU reported under the Financial Value Transparency and Gainful Employment regulations, which required information on tuition, cost of attendance, and financial aid. According to Darren Bausano, the Director of Financial Aid at Michigan Tech, “This year, reporting transitioned to the Student Tuition and Transparency Systems framework, which requires similar information.” Bausano also commented that at this time, the financial aid office does “not anticipate that any Michigan Tech programs will lose eligibility.”
The goal of this shift in regulations is to “hold institutions accountable for programs of study they offer that don’t leave students financially better off than if they had never attended the program,” according to the National Association of Student Financial Aid Administrators. “Federal student loans are not a welfare program for failing college programs. American students deserve education and training pathways that prepare them for the workforce – and transparency about programs that will never pay off,” the Department of Education wrote on X.
