Washington Set the Bar for Your Degree: Beat a High School Diploma. About 825,000 Students Are in Programs That Don't.

If you’re signing loan paperwork for a certificate or a master’s this month, the federal government has finally written down the test your program has to pass.

It is not a demanding test. Graduates have to out-earn the people who never enrolled.

About 825,000 students were sitting in programs that miss it, based on department data from this past spring.

The rule, in one paragraph

The Education Department finalized it on June 29. Four years after students leave a program, the department checks what they make. Undergraduate programs have to beat the typical high school diploma holder. Graduate programs have to beat the typical bachelor’s holder. Miss twice in three consecutive award years and the program loses federal Direct Loans. Keep missing and the department can pull all Title IV money, Pell included.

Under Secretary Nicholas Kent’s framing was that programs which cannot show “a reasonable return on investment” shouldn’t be getting federal funding. Nearly 10,000 public comments came in. The test survived them.

Scope is close to everything. Public, private, for-profit. Certificate through PhD. The carve-outs are narrow: schools serving only students with documented disabilities, a few institutions with no recent Direct Loan history, and a one-year delay for programs feeding tipped occupations.

What it doesn’t do

It doesn’t refund anybody.

It cancels no loan, reimburses no tuition, and compensates nobody who already borrowed for a program that flunks. The penalty hits the school, two or three award cycles from now. Your money goes in this semester.

So stop reading it as protection. Read it as free homework somebody else already did.

And the homework is good. Preston Cooper at AEI ran the department’s own program performance data. Undergraduate certificates fail far more than anything else, with cosmetology certificates failing at 93%. Almost every bachelor’s degree passes. Roughly 4% of master’s programs fail, but among the large fields, mental and social health services fails more often than it passes.

Nearly 2,000 of America’s roughly 5,000 colleges have at least one failing program.

Read that again. This is not a for-profit story with a tidy villain.

The verdict: when a credential can’t beat the earnings of somebody who skipped it entirely, the credential isn’t what’s being sold to you. The loan is.

Do this before you sign

Pull up College Scorecard and find your exact program at your exact school. Not the school average. The program. A campus can post a healthy median while the certificate you enrolled in drags along the bottom of it.

Then compare that median against what a high school graduate earns in your state. If you’re looking at a graduate program, compare it against a bachelor’s holder instead, the same way the rule does.

Clears the bar with room? Borrow and get on with it. Clears it by a few hundred dollars? Cut how much you borrow, hard. Doesn’t clear it? That’s not a reason to skip school. It’s a reason to switch programs inside the same school, which usually costs one form and a conversation with an advisor.

Run the payment before you commit with our loan calculator, and the rest of the fall borrowing rules are in our education hub and our current education picks.

One caveat on the numbers. Earnings get measured four years out, so today’s figures describe people who enrolled seven or eight years ago. Fields move. Treat the data as a floor built from a program’s history, not a forecast of yours.

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