What is STATS?

Increased economic opportunities are consistently a principal factor in choosing to go to college. In 2015, 85% of college freshmen rated getting a better job as “very important” to their decision to go to college. In 2019, the majority of survey respondents identified two and four-year degrees as “very useful” in opening doors to job opportunities. However, degrees are not mere gateways to higher income. College tuition has more than doubled in the 21st century, costing students an average of $38,270 per year and leaving many to wonder whether higher education is worth its steep price tag. 

The Student Tuition and Transparency System (STATS) is a proposed rule by the United States Department of Education (ED) amending regulations for higher education institutions’ eligibility for federal aid. STATS uses graduates’ earnings to limit which institutions are eligible for the William D. Ford Direct Loan Program (“Direct Loan”), the largest source of federal financial aid for students’ higher education. This provision, also known as the earnings accountability measure, would make higher education institutions responsible for being clear about the cost and projected benefits of their programs. Doing so is meant to reduce federal student loan debt by limiting loans awarded to “low value” degrees and give prospective students more information they can use to decide which program they will enroll in. STATS is projected to become effective in July 2026.

STATS and Student Data

Although increased college transparency is a bipartisan issue, it is illegal for the federal government to collect and disaggregate student-level data including projected academic and economic outcomes. This policy protects students’ privacy and security while still allowing aggregate data to be shared across college cost assessment platforms like College Scorecard and the National Student Loan Data System. However, these databases are incomplete, resulting in incorrectly reported graduation rates or exclusions for demographics like part-time and veteran students. STATS attempts to increase  transparency in higher education by expanding what information institutions must report to ED. 

These reports, alongside data from federal agencies and administrative systems, will be used to calculate a set of metrics which includes median post-college earnings and median loan debt. In turn, these metrics will be made publicly available and used to evaluate higher education programs through an earnings test which requires degree-holders to earn more than the median earnings of similarly aged adults without a comparable degree. Programs that fail the earnings test for two out of any three consecutive years will be designated “low-earning outcome programs” and excluded from Direct Loan eligibility. Institutions supporting “low-earning” programs with more than half of their Title IV funding may lose Title IV eligibility altogether. ED estimates that 7000 higher education programs–around 3% of all Title IV degree programs in the United States–will fail the earnings test if implemented. 

Why Do Advocates Support STATS?

Increased Student Support

STATS requires higher education institutions to give prospective students extensive information about their programs, including costs, future employment outcomes, and whether a program is at risk of failing the earnings test. This may be especially beneficial for students relying on federal loans or Pell Grants to fund their degree. STATS mandates that institutions must notify Pell Grant-eligible students of how their grant is impacted by “low-earning” programs so they can make more informed decisions about using limited Pell resources. As noted by a coalition of educational organizations in its letter to Secretary of Education Linda McMahon, access to this information would improve institutional policymaking and let students reap greater benefits from their egress.

Increased Transparency for Higher Education Institutions

By the end of the third quarter of the 2024 fiscal year, 37.5 million people had outstanding loans from the Direct Loan program which amounted to $1.4 trillion dollars. These loans are often taken out because rising postsecondary education costs and ambiguous financial aid systems make it difficult for students to tell how much their program costs or where their tuition money is going. As a result, higher education institutions are faced with declining trust from community members and calls to reform tuition costs. Proponents of STATS argue that increasing transparency on costs by providing clear, precise information will increase institutional trust and make students more capable of managing their finances. Using Title IV eligibility to increase accountability measures for these institutions may also prevent from unduly raising tuition without cause. 

Increased Efficiency in Use of Federal Funds

Some STATS supporters also argue that federal student loans, which are funded by taxes, should not subsidize programs that minimize graduates’ financial opportunities. In their view, “low-earning” degrees disadvantage students at the beginning of their careers by giving them debt without the proportional income increase which would allow them to compensate. This perspective is supported by the Trump administration’s “Do No Harm” standard, which views education as an economic investment and considers degrees “inadequate” if they do not provide graduates with higher earnings. Publication of degree success rates would give the government greater latitude to decide whether it should invest in a given university, preventing administrators from relying on federal loans and forcing them to consider the financial impacts their programs have.

Why Do Opponents Critique STATS?

Creates Obstacles for Student Support

While both parties support increased transparency within higher education, some politicians worry that STATS’s provisions may hurt students’ ability to make informed decisions about their education. Among STATS’s reforms is the removal of the debt-to-earnings metric, a common way for students to calculate what percentage of their future income will be dedicated to paying back student loans. Without this number, an undergraduate program can pass the STATS benchmark by producing earnings that technically exceed a high school graduate’s median income while burying degree-holders in unmanageable student loan debt. The omission of financial aid representatives from STATS’s development also creates a risk that the system would lead to rules which harm students using aid to pay for their education. 

Disproportionately Threatens Essential but Low-Earning Professions

STATS’s use of the earning test as a metric for awarding funds is expected to impose heavy penalties on essential but low-paying public service fields such as early childhood education, counseling, social workers, and media specialists, while subjecting others to a 100% failure rate across all Title IV institutions. Though many of these programs have high societal value and require rigorous training, wages for members of those fields are chronically suppressed–potentially deterring students from enrolling without federal aid or costly private loan alternatives. 

Additionally, the limitations of the earnings test cause many higher education institutions to worry that STATS would primarily defund arts and humanities programs. Creative industries often have lower earnings that do not reflect the value of their contributions to the national economy and cultural enrichment. Humanities programs also cultivate skills like critical thinking and communication which help graduates in their professional and personal lives even if this is not reflected in their wages.

Targets Programs with Fewer Resources

Because STATS does not adjust its earnings thresholds to regional, urban, or rural costs-of-living, negotiators warn that it would unfairly disadvantage programs and institutions where expected wages are inherently lower than national or state averages. As a result, institutions with fewer resources

may be disproportionately punished when evaluated under rigid guidelines and create wider difficulties. Rural colleges are critical to local economies, acting as “hubs” for students and employees to circulate money through local businesses or raise property values. Without Direct Loan, these colleges may face unique challenges in compensating the losses of federal aid and the economic activity generated by student enrollment. Restricting the federal aid given to institutions in low-wage regions also risks decreasing the number of accessible colleges and universities as well as the likelihood that residents of these areas will obtain higher education degrees. 

Conclusion

The proposed Student Tuition and Transparency System (STATS) aims to reform higher education accountability by making federal aid eligibility contingent on post-graduation earnings. Supporters argue that the policy would improve institutional transparency, provide students with better information, and ensure federal resources are invested in degrees that generate measurable economic returns. However, critics contend that the policy relies on ineffective, rigid measures that cannot adequately evaluate the value of educational programs. They warn that STATS may overlook factors such as debt-to-earnings ratios, regional economic differences, and societal contributions of lower-paying careers. Ultimately, while STATS seeks to address shared concerns regarding college affordability and accountability, its effectiveness is yet to be seen. 

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