Since December 7, 2025, first-year students completing the FAFSA may see a yellow warning box that reads "Some of Your Selected Schools Show Lower Earnings." The flag appears when a school's graduates earn less than typical high school graduates in the same state. According to the U.S. Department of Education, 25% of students who saw the flag removed that school from their FAFSA. Here's exactly what the warning means — and what it doesn't.

When you finish your FAFSA and see a yellow warning on your submission summary, it's natural to panic. Does this mean the school is bad? That the degree isn't worth the debt? That you should cross it off your list?

Not necessarily. But the flag is worth understanding before you decide.

What the Earnings Indicator Actually Shows

The U.S. Department of Education launched what it calls the "lower earnings indicator" on December 7, 2025, as part of the 2026–27 FAFSA cycle.1

The warning appears on your FAFSA Submission Summary after you complete the form. It shows up as a yellow text box reading "Some of Your Selected Schools Show Lower Earnings." From there, you can click "See These Schools" to see a comparison of median earnings for every school on your list — with a yellow flag on schools that triggered the warning.1

The flag is triggered when a school's graduates' median earnings are lower than those of typical high school graduates in the same state. For schools that serve primarily out-of-state students, the comparison uses national high school graduate earnings instead of a state figure.2

What Data Powers the Flag

The earnings data comes from the College Scorecard — the federal government's database of institution-level outcomes. The earnings figures are adjusted for inflation to June 2025 dollars and will be updated as more recent data becomes available.2

One important limitation: the indicator is based on institution-level data, not program-level data.2 That means a flag on a particular school doesn't tell you whether your major at that school leads to low earnings. A school flagged for low earnings overall might still have strong outcomes in nursing, computer science, or education — while pulling down its average in other fields.

This distinction matters. A large public university with a mix of high-earning STEM graduates and lower-earning humanities graduates might show lower median earnings than you'd expect from its best programs.

The earnings flag only appears for first-year undergraduate students. Returning students and transfer students will not see it on their FAFSA. If you're completing the form as a transfer student, you'll need to research earnings data independently using the College Scorecard at collegescorecard.ed.gov.

Why This Flag Was Created

The Department of Education framed the indicator as a transparency measure — giving students information about post-graduation outcomes at the moment they're selecting schools for financial aid.1

This connects to a broader policy push: the federal government has increasingly tied school quality to post-graduation earnings. The FAFSA earnings flag is a consumer-facing version of that data. If a school's graduates typically earn less than a person who skipped college entirely, that's a meaningful signal worth putting in front of students before they borrow money.

The 25% removal rate suggests the flag is having a real effect on student decisions.1

What to Do If Your School Has a Flag

A flag doesn't mean automatic disqualification. Here's how to think about it:

Step 1: Look up the specific earnings data. Go to collegescorecard.ed.gov and search for the school. You can filter earnings by specific field of study, not just institution-wide averages. If your intended major has strong outcomes, the overall flag may not apply to you.

Step 2: Compare the cost. A flagged school isn't necessarily a bad choice if the net price is low enough. A degree with median earnings of $38,000 might still make sense if you're borrowing $10,000 total. The same degree makes far less sense if you're borrowing $60,000. Use the school's net price calculator to understand what you'd actually pay.

Step 3: Check whether the flag reflects your path. If you're planning to be a social worker, a school with low average earnings might be fine — social work pays modestly nationally. If you're planning to go into engineering, a low-earnings flag at an engineering school would be a more serious signal.

Step 4: Look at the financial aid package itself. Once you receive your financial aid award letter, calculate what you'd actually borrow versus what you'd earn. Our guide to how much student loan debt is too much can help you run those numbers.

The best use of the FAFSA earnings flag isn't as a red-light/green-light signal. It's as a starting point for a more specific question: "Given my intended major and expected costs at this school, do the numbers work?" The College Scorecard lets you drill into earnings by field of study, which is far more useful than the institution-wide figure the FAFSA shows.

Connecting the Flag to Your Full Decision

The earnings indicator arrives at the same moment you're thinking about financial aid — which is exactly where it should land. Choosing a school based on enthusiasm without understanding what its graduates typically earn is how students end up with debt that doesn't match their income.

If you haven't already, use our step-by-step FAFSA guide to make sure your application is complete and accurate before the state deadline that applies to you. Some state deadlines are in the next few weeks.

And once aid letters arrive, don't just look at the scholarship amount — look at what colleges with the best financial aid packages actually do differently. Price and outcomes together tell the story.

Next Steps

  • Check the College Scorecard (collegescorecard.ed.gov) for earnings by field of study at any flagged schools
  • Calculate your net price using each school's official net price calculator
  • Compare aid packages side by side once letters arrive — our financial aid award letter guide explains what each line means
  • Don't remove a school immediately based on the flag alone — research the specific outcomes for your intended field first

Footnotes

  1. U.S. Department of Education. (2025). U.S. Department of Education Launches New Earnings Indicator to Support Students and Families in Making Informed College Decisions. https://www.ed.gov/about/news/press-release/us-department-of-education-launches-new-earnings-indicator-support-students-and-families-making-informed-college-decisions ↩ ↩2 ↩3 ↩4

  2. National Association of Student Financial Aid Administrators. (2025). ED Adds New Low Earnings Indicator to 2026-27 FAFSA. https://www.nasfaa.org/news-item/37805/ED_Adds_New_Low_Earnings_Indicator_to_2026-27_FAFSA ↩ ↩2 ↩3