A new federal regulation approved by the U.S. Department of Education could eliminate financial aid for students pursuing degrees in lower-paying fields, including theology and religious studies, prompting concern among Catholic educators.

The Student Tuition and Transparency System (STATS) and Earnings Accountability rule will require undergraduate programs to demonstrate that their graduates earn more than high-school graduates in their state. Graduate programs, meanwhile, must show that their graduates earn more than the typical bachelor’s-degree holder in the same field of study.

Under the regulation, which was approved June 29, programs that fail the administration's earnings measure in two of three consecutive award years would lose access to the Federal Direct Loan Program. If an institution's low-earning programs continue to fail the earnings test for three consecutive years, the department could also revoke their eligibility for Pell Grants.

“The Trump Administration is hitting the hard reset button on higher education and implementing commonsense reforms that will drive down the cost of higher education and hold all institutions, regardless of sector, accountable for low earnings outcomes,” said Under Secretary of Education Nicholas Kent. 

“If a program cannot show that it leaves its graduates financially better off than if they had never enrolled, it should not be underwritten by federal taxpayers,” the statement said, noting rising rates of default and delinquency in the $1.7-trillion federal student-loan portfolio.

The new regulatory system replaces the Obama-era “gainful employment” rule that was designed to prevent predatory for-profit career-training programs from taking advantage of students. Now, all post-secondary institutions will be held accountable and subject to losing financial aid, not just for-profit or programs that award career certificates.

Catholic educators argue that the earnings metric could disproportionately affect programs that prepare students for ministry and other service-oriented careers, which often require extensive education but traditionally lead to lower-paying professions.

“Some of our most notable alumni achievements are not measured in compensation but rather through service, charity and compassion,” a spokesperson for The Catholic University of America told the Register.

“Catholic University is concerned that implementation of the rule as currently drafted may substantially burden the ability of students to pursue programs that traditionally produce lower income earners, but still add tremendous value to our nation, and our society," the spokesperson said. 

Religious studies programs are not the only ones expected to be adversely affected by the new regulation. The Department of Education’s impact report predicted that in addition to religious studies, graduate programs expected to fail the earning test would include alternative and complementary medicine (98.1% failure rate), mental and social health (64.3% failure rate), fine and studio arts (44.1% failure rate) and music (41.8% failure rate). Catholic University’s statement also noted the potential impact on the university’s performing arts program. 

“Performing arts pay less early in a career due to a highly saturated labor pool, intense competition for roles and positions, and the need to build a specialized professional network. That does not mean that there is no value in the tremendous contributions the performing arts have made to society,” the statement from Catholic University reads.

During the public comment period, the Association of Jesuit Colleges and Universities also raised concerns about the proposed earnings standard.

“Volunteerism, vocation, service to faith communities, public interest careers, teaching, nonprofit leadership, and engagement with marginalized communities all generally result in lower pay yet bear no relationship to the quality of academic preparation that students receive to undertake this mission-centered work. Indeed, these professions are often among the most essential to the health of communities and democratic society,” the association wrote in a statement to the Department of Education. 

Initially, the Department of Education published a regulatory impact analysis finding that 53.3% of undergraduate programs in religion and religious studies would fail the earnings test, and 89.4% of graduate programs in the same field would also fail, rendering them ineligible for federal financial aid.

However, in response to comments from faith-based educational institutions, many of which said they do not participate in federal student-loan programs, the final rule allows institutions that have not participated in the Federal Direct Loan Program for at least five years to continue to receive Pell Grants even if they fail to meet the earnings test.

“Ultimately, the final rule is expected to benefit the religious sector, as fewer students in religious programs will be negatively impacted by the final rule relative to the current baseline,” the Department of Education wrote in its explanation of the final regulations.

The Department of Education’s new accountability rules for colleges go fully into effect on July 1, 2027, although institutions must begin to implement data-collection procedures by Aug. 30, 2026. The earliest a program could be penalized for having failed the earnings test for two years would be July 2, 2028.