US college programmes pass earnings test, but affordability lags

Most undergraduate programmes in the United States meet the federal government’s new earnings benchmark, but a significantly smaller share delivers sufficient financial value when the cost of education is taken into account, according to a new analysis by the Institute for Higher Education Policy (IHEP).

The analysis examined around 40,000 undergraduate programmes and found that 93% passed the federal earnings test, while 82% met Threshold 0, a separate measure designed to assess whether graduates earn enough to justify the cost of their education.

The findings highlight a gap between earning more than someone with only a high school diploma and securing a financial return substantial enough to cover the cost of a college degree.

The federal earnings test, introduced under the One Big Beautiful Bill Act of 2025, compares graduates’ earnings with those of adults whose highest qualification is a high school diploma. Threshold 0, developed by the Postsecondary Value Commission, goes further by assessing whether graduates earn above the median for high school graduates and can repay the net cost of their programme within 10 years.

The difference is particularly evident in education programmes, which prepare students for careers such as teaching and other public service roles.

While all bachelor’s-level education programmes in the analysis passed the federal earnings test, only 65% met Threshold 0. The results suggest that meeting the minimum earnings benchmark does not necessarily mean graduates receive sufficient financial returns relative to the cost of their education.

Daniella Paradise, a research analyst at IHEP, said the lower pass rates under the two measures point to an affordability problem that policymakers must address.

“An affordability issue, and that is where I think we need to turn our attention to next,” Paradise said.

The report also examined the broader value of higher education, recognising that earnings alone cannot fully capture the benefits of a college qualification. Researchers considered factors such as access to employer-provided benefits, including health insurance, and graduates’ satisfaction with their compensation.

Students working in public service fields reported greater access to employment benefits than those in other sectors. However, only slightly more than half of students in education programmes said they were satisfied with their compensation.

Paradise cautioned that workplace benefits cannot fully compensate for lower earnings, particularly when graduates face rising living costs and the financial burden of paying for their education.

“Access to benefits is not going to pay the rent, and it's not really enough to fully offset the fact that these folks are earning less than others,” she said.

To improve college affordability, IHEP urged policymakers to increase Pell Grant funding and called on states to invest more in higher education. The organisation also recommended that the US Department of Education reinstate and expand longitudinal studies that track the broader, non-financial benefits of higher education.

Such research, it argued, would help policymakers and students better understand the long-term outcomes of earning a college degree, beyond salary figures alone.

As the federal government prepares to release more data from its earnings test in the coming years, Paradise said the focus should extend beyond identifying programmes that pass or fail. Policymakers and institutions must also examine how programmes can improve their outcomes and deliver stronger value for students.

“The central thing that we want people to take away from this report is the fact that the … threshold is just a start,” she said. “It is not a finish line.”