On July 1, 2026, the Department of Education published a final rule in the Federal Register that will require college programs to meet an earnings test or lose access to federal student loans. By the Department's own estimate, 53% of bachelor's programs in religion and religious studies would fail the test — the highest failure rate of any field. A partial relief provision protects Pell Grant access for schools that don't participate in the Direct Loan program. But many faith-based colleges that do offer federal loans are still exposed, and as of July 6 they are raising new concerns.

When the Department of Education released its final earnings accountability rule on July 1, most of the attention went to journalism programs, social work degrees, and graduate nursing schools. But the numbers buried inside the rule's analysis tell a different story about who faces the most acute risk: faith-based colleges.

What the Final Rule Does

The final rule — formally titled "Accountability in Higher Education and Access Through Demand-Driven Workforce Pell: Student Tuition and Transparency System (STATS) and Earnings Accountability" — was published July 1, 2026 in the Federal Register.1 It implements statutory requirements in the Working Families Tax Cuts Act signed into law in July 2025.

The earnings test works like this:

  • Undergraduate programs must show that the typical graduate earns more than a typical adult with only a high school diploma in the same state. Programs that fail lose eligibility for federal Direct Loans.
  • Graduate programs must show that the typical graduate earns more than a typical adult with a bachelor's degree. Programs that fail also lose Direct Loan access.
  • Persistent failures — defined as failing the test in 2 of 3 consecutive measurement years — can trigger loss of Pell Grant eligibility as well.

No program will actually lose eligibility before 2028. Institutions must begin data-collection procedures by August 30, 2026. The first official calculations are released July 1, 2027. Any enforcement action comes later still.

Why Religious Colleges Are in the Crosshairs

Religion majors don't tend to enter high-earning careers. Ministers, chaplains, seminary instructors, and nonprofit leaders typically earn well below the state median for college graduates. That's not a bug — it's the choice many of these graduates are actively making.

The numbers in the DOE's analysis are stark. Fifty-three percent of bachelor's programs in religion and religious studies would fail the earnings test. For master's programs in religious studies, 90% of students don't meet the graduate-program benchmark.

For comparison, that failure rate is dramatically higher than fields like business, computer science, or healthcare. Even journalism and social work — programs that critics of the rule have consistently highlighted — don't face a projected failure rate this severe at the master's level.

If you plan to study theology, ministry, or religious studies, ask your financial aid office whether your institution participates in the federal Direct Loan program. The answer determines which parts of this rule apply to you.

The Relief Provision — and Its Limits

In the final rule, the Department acknowledged concerns raised during the public comment period by faith-based institutions. Many religious colleges don't participate in the Direct Loan program and rely primarily on Pell Grants.

The relief provision: institutions that have not participated in the Direct Loan program for the five most recently completed award years won't lose Pell Grant access even if their programs fail the earnings test. The Department wrote that "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."1

That sounds like a clean fix. It isn't, for two reasons.

First, the relief only protects Pell Grant access — the most severe penalty. It doesn't protect Direct Loan access. If your school offers federal loans and a program fails the test, students in that program lose loan eligibility even if the school has been Pell-only for years.

Second, many faith-based institutions do participate in the loan program. For those schools, the protection doesn't apply at all. As of July 6, Inside Higher Ed reported that religious colleges remain concerned about the final rule, with advocates saying the partial relief doesn't address their full exposure.2

The relief provision for religious colleges protects Pell Grant access — not Direct Loan access. Students at faith-based schools that offer federal loans should check whether any of their intended programs are at risk before enrolling.

Three Things Most Coverage Is Missing

The rule doesn't threaten students already enrolled. This is a future-looking measurement system. No current student loses aid eligibility because of this rule. Programs that fail will be notified in 2027, and enforcement can't start before 2028. If you're enrolled now, your federal aid status is unchanged.

The 53% figure is a projection, not a verdict. The Department used aggregate earnings data to estimate program outcomes. Individual program graduates may earn significantly more or less than the average. Programs that believe the projected failure rate doesn't reflect their actual outcomes will have a formal challenge process before any eligibility is cut.

Income doesn't capture every outcome for religion graduates. A minister who earns $38,000 a year may have made exactly the career they intended. The earnings test doesn't distinguish between a graduate who couldn't find good work and one who chose meaningful work that pays less. Critics of the rule argue this conflates program quality with graduate values — a point DOE has not fully addressed.

What Students and Families Should Do Now

If you plan to attend a faith-based institution or pursue a degree in theology, social work, divinity, or religious education:

  1. Ask about loan program participation. Find out whether your intended school participates in the federal Direct Loan program. If it doesn't, the Pell Grant relief provision applies.
  2. Look up the earnings data. Use the net price calculator at your target school and research graduate earnings for the specific program — not the field generally.
  3. Check your aid mix. If you're depending on federal student loans as part of your financing plan, understand that loan eligibility could change for specific programs at certain schools starting in 2028.
  4. Explore alternatives. Scholarships, institutional grants, and work-study programs don't depend on program-level earnings data.

Understanding how to compare financial aid offers matters more now that program-level risk is a real variable. And if you're weighing college degree ROI by major as part of your decision, note that this rule uses a different earnings threshold than most ROI calculators — make sure you're comparing the right benchmarks.

The final rule is now in effect. But for most students choosing a college this fall, the practical impact is still more than a year away. The clock is running — and religious colleges are watching it closely.

Footnotes

  1. U.S. Department of Education. (2026, July 1). Accountability in Higher Education and Access Through Demand-Driven Workforce Pell: Student Tuition and Transparency System (STATS) and Earnings Accountability. Federal Register, Document 2026-13286. https://www.federalregister.gov/documents/2026/07/01/2026-13286/accountability-in-higher-education-and-access-through-demand--driven-workforce-pell-student-tuition ↩ ↩2

  2. Inside Higher Ed. (2026, July 6). Religious Colleges Still Concerned About New Earnings Test. https://www.insidehighered.com/news/government/student-aid-policy/2026/07/06/religious-colleges-still-concerned-about-new-earnings ↩