What a ‘low earning’ college is and how they could lose access to federal student loans

By Jaylen Beaner-Walker, Staff Writer

The U.S. Department of Education announced the launch of a new “low earning” indicator for colleges in late 2025. The indicator tells students applying for federal aid whether a university’s graduates earn on average less than a person with a high school diploma in the same state, and colleges that have the “low earning” distinction for several years could lose access to federal funding.

This indicator appears on the Free Application for Federal Student Aid form, known as FAFSA, for incoming first-year undergraduates who are filling out the form for the first time. Of the 5,900 schools within the DOE’s database, 23% have received a “low earning” designation. Those colleges enroll less than 3% of undergraduates in the country.

The “big, beautiful bill” President Donald Trump signed in July 2025 uses the low earning metric. Programs with graduates that earn less than workers with a high school diploma four years after graduation could see a reduction in student loans received. 

The provision is part of the Trump administration’s overhaul of student loans. Programs that fail the “low earning” test within two of the three consecutive years could lose their ability to receive loans that fund students’ education in these programs. 

Towson University is not in the “low earning” designation. According to the Education Department, Towson graduates earned $65,539 on average in 2025, and while workers with a high school diploma in Maryland earned $38,020 that year.

The Education Department said the new indicator was implemented to guide students and their families through the decision making process for improved financial outcomes after graduation. 

“Not only will this new FAFSA feature make public earnings data more accessible, but it will empower prospective students to make data-driven decisions before they are saddled with debt,” U.S Secretary of Education Linda McMahon said in a press release. 

Towson Department of Finance Professor Mark Donnelly said that the indicator itself can be both beneficial and restrictive for students when it comes to deciding what school to attend.

“It’s good to know what the likely outcomes are for a program, especially when you’re taking out loans and at some point, you need to pay them back,” Donnelly said.

Most degree programs are safe as only 2% of associate and bachelor’s degree programs are at risk, according to the Education Department’s accountability data. About 8% of studio and art programs are at risk of losing aid, and 3% of design and applied art programs are at risk of losing aid.

The indicator may also create a dilemma for students wanting to attend college for a specific career field that pays less compared to others post graduation, Donnelly said. 

“It might push people away from professions where they really want to be, but they’re not going to make much money, and they may know that going in, but then they may not be able to get funding to help them, getting into that profession that they want to be in,” he said.

For students within any low earning field, having career ready and transferable skills could lead these students to more promising financial outcomes within their careers, Rosemary F. Riel, Associate Director of Career Education and Equity at Towson, said.

External factors like a narrow job market and the rise of AI in certain career fields can also be attributed to post grad career troubles. Riel said articulating to employers transferable skills can help take students into different industries. 

“You’re going to need that adaptability between jobs,” Riel said. “Even if you’re at one institution or one organization for a really long time.”