The U.S. Department of Education has proposed a new “earnings test” that would strip federal student loan eligibility from undergraduate programs whose graduates do not earn more than the typical high school graduate. The rule would also require graduate programs to show higher earnings than undergraduate programs in comparable fields. The Department framed the proposal as a “hard reset” aimed at reducing student debt harms and regulatory uncertainty. The framework follows a January rulemaking session that reached consensus among federal, state, college, and accreditation stakeholders under the One Big Beautiful Bill. If finalized, it would trigger a warning cycle: programs failing in year one would face alerts, year-two failure could classify the program as low-earning and remove direct loan eligibility, and broader eligibility losses could follow in subsequent years for qualifying institutions. NASFAA said the proposed rule could take effect as early as July, while a 30-day public comment period will influence the final regulation. Institutions and accreditors will need to monitor program-level earnings metrics closely to avoid Title IV eligibility disruptions.