A new federal accountability measure is putting hundreds of California college and certificate programs on notice, warning that graduates who don’t out-earn workers with only a high school diploma could jeopardize their schools’ access to federal student loans.
Under the rule, which took effect this month, colleges, universities and shorter certificate programs nationwide must demonstrate that their graduates earn at least as much as the typical high school graduate in their state. In California, that threshold sits at roughly $36,000 a year, or about $18 an hour — a figure only slightly above the state minimum wage.
Higher education analyst Michael Itzkowitz, who leads the HEA Group, a research organization focused on college policy, called the benchmark modest. “If you’re going to college, you expect to be earning at least minimum wage, and probably even more than that,” he said. In expensive regions like the Bay Area, he noted, $36,000 barely covers rent, let alone other living costs.
Itzkowitz examined nearly 3,000 California programs using U.S. Department of Education data and found that about 90% of them clear the new bar. But roughly 300 programs fall short, with cosmetology, medical assisting, and various arts and theater programs showing up disproportionately among the low earners.
Most of the underperforming programs are housed at for-profit trade schools, institutions that have drawn scrutiny for years over high costs and disappointing job outcomes. But the list also includes theater and fine arts programs at eight California State University campuses and three University of California campuses, showing that the issue isn’t confined to for-profit institutions.
Schools have at least two more years to show regulators that their graduates are hitting the income threshold. If current patterns hold, students in the weakest-performing programs could lose eligibility for federal loans starting July 1, 2028.
CalMatters contacted more than 15 colleges, universities and trade schools for this story, but most did not respond. Representatives for both the UC and CSU systems said they are reviewing the new requirements but offered little additional comment. CSU spokesperson Amy Bentley-Smith said campuses are looking for “constructive solutions.”
One school that did engage was the California Institute of the Arts, the private Santa Clarita-area school whose famous alumni include actor Don Cheadle, filmmaker Tim Burton and comedian Paul Reubens. Graduates of its fine arts, film and photography programs earn just under $30,000 four years after finishing — among the lowest figures for any large bachelor’s degree program in the state.
Ranu Mukherjee, dean of the school’s film and video program, said the earnings data doesn’t capture the realities of creative careers, which often take longer to gain traction and where graduates frequently choose artistic fulfillment over higher corporate salaries. She said CalArts has no plans to shut down any affected programs but wants to keep students informed about what the future could hold. “It’s hard to imagine CalArts without an undergraduate film or arts program,” she said. “It’s in our name.”
Statewide, just over 30 arts-related programs — spanning fine arts, music, theater, film and photography — fail the new earnings test, while roughly 100 others pass, including programs at UC Berkeley, San Diego City College and the University of Southern California, where graduates report earning more than $70,000 four years out.
This isn’t the federal government’s first attempt to hold underperforming college programs accountable, and previous efforts have had mixed results. A 1989 rule targeting schools with high student loan default rates initially forced closures but eventually allowed institutions to sidestep consequences by pushing struggling borrowers into forbearance or deferment. “Institutions have learned how to game the system,” Itzkowitz said. “No one fails.”
Later attempts by the Obama and Biden administrations to link federal aid to debt-to-income ratios were rolled back under the Trump administration before ever taking full effect. “We’ve been playing regulatory ping pong,” Itzkowitz said, noting that the current rule carries more weight because it was written into law by Congress rather than issued as an administrative regulation. The measure is part of the sweeping tax and spending package known as the One Big Beautiful Bill Act, signed into law on July 4 of last year.
The earnings data driving the new rule comes from 2022 and 2023 tax returns for students who graduated in the 2017-18 and 2018-19 school years — figures that some schools argue paint an incomplete picture. Angelica Muro, who chairs the visual arts and music department at Cal State Monterey Bay, called the standard “an overly broad benchmark” that fails to capture “the immense sociocultural value held within the arts.” Her program’s fine arts graduates earn about $34,000 four years after finishing school, according to federal figures, but Muro noted the data doesn’t track whether graduates work in fields related to their major, nor does it reflect regional economic differences, such as the more limited creative job market surrounding her largely rural, coastal campus.
Not all rural or lower-income regions saw their arts programs fail, however. Fine arts programs at Stanislaus State, Fresno State, Cal State Bakersfield and Chico State all met the earnings threshold, even as some Bay Area, Los Angeles and San Diego programs — which tend to benefit from larger creative job markets — posted some of the strongest results.
Cosmetology programs make up more than a quarter of all California programs that failed to meet the new standard, continuing a long-documented pattern of high debt and low post-graduation earnings in the field. Graduates of the Shasta School of Cosmetology in Redding, for example, reported earning just over $12,000 annually four years after finishing their training — well below the state poverty line. None of the 10 lowest-performing cosmetology schools contacted by CalMatters responded to requests for comment.
Cosmetology industry representatives have pushed back on the earnings data, arguing it fails to account for self-employed stylists and salon owners who may not report tips or other income fully on their taxes. In response, the Department of Education granted these programs an extra year to comply, pushing their potential loss of loan eligibility back to July 1, 2029, at the earliest.
Christopher Madaio, a senior advisor with the Institute for College Access and Success, a nonprofit that advocates for affordable higher education, said the cosmetology industry’s argument rests on “the flimsiest of rationale” and amounts to yet another way for underperforming programs to dodge accountability. Still, he said he views the broader law as a meaningful step forward. “It didn’t go far enough, and it’s not written perfectly,” Madaio said. “But yes, I’m happy to see that it’s being implemented.”
Original source: CalMatters
