A new law holds colleges accountable if graduates don’t earn more than $36,000 a year

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With just a high school diploma and no additional training or education, the average Californian is currently expected to earn about $18 an hour, or $36,000 a year, just above the state’s minimum wage.

Starting this month, all universities, colleges and short-term certificate programs in the United States will have to demonstrate that their graduates earn at least the median salary of a person with only a high school diploma in their state. Otherwise, your students will soon become ineligible for federal loans.

That’s a very low bar, said Michael Itzkowitz, president of the HEA Group, an organization that researches higher education policy. “If you go to college, you expect to make at least minimum wage, and probably more.”

In places like the Bay Area, $36,000 a year is barely enough to cover housing, let alone other expenses.

Of the nearly 3,000 California graduate programs evaluated by the U.S. Department of Education, about 90 percent of graduates earned at least that amount, according to analysis from Itskovits. However, graduates of about 300 programs in California, particularly those in cosmetology, health care, arts and theater, failed to earn $36,000 four years after graduation, according to their analysis.

Most of the failed programs are in for-profit educational institutions, sometimes known as vocational schools or technical institutes, that have been targeted checking for decades sometimes by the legislators due to the bad results and high tuition costs. However, programs of study at community colleges and four-year universities also failed, including theater and fine arts programs at eight California State University campuses and three UC campuses.

Educational institutions still have at least two years to prove to the federal government that graduates of these programs meet the new income standard. If the trend in low-performing programs continues, their students could lose access to loans starting July 1, 2028.

CalMatters contacted more than 15 for-profit universities, community colleges and vocational schools to ask about the future of these programs with low-income graduates, but few institutions responded. Spokesmen for the UC and Cal State systems said they are reviewing the new law but they refused to answer most other questions. Cal State spokeswoman Amy Bentley-Smith said campuses are seeking “constructive solutions.”

One of the few schools to respond was the California Institute of the Arts, a private art school near Santa Clarita whose alumni include actor Don Cheadle, director and animator Tim Burton and comedian Paul Reubens, also known as Pee-wee Herman. Graduates of its fine arts, film and photography programs have some of the lowest earnings of any major bachelor’s degree program in the state, just $30,000 four years after graduation.

In an interview, university officials offered several explanations, citing problems with the data and differences between artistic careers and more conventional ones. According to Ranu Mukherjee, dean of the university’s film and video faculty, careers in the arts can take longer to establish and many graduates are deliberately turning away from more lucrative corporate opportunities.

Just over 30 fine arts, music, theater, film and photography programs in California fail the new revenue test.

Mukherjee said the school has no plans to close any of the affected programs, although he stressed the importance of informing students of possible future consequences. “It’s hard to imagine CalArts without an undergraduate arts or film program,” he said. “It’s in our name.”

About 100 other fine arts, music, theater, film and photography programs in California meet the new income requirements, according to updated data from the Department of Education. Among them are the film program at UC Berkeley and the fine arts programs at San Diego City College and the University of Southern California, where workers report earning more than $70,000 four years after graduation.

“Ping pong regulator”

Over the years, the federal government has tried and often failed to regulate college programs that offer a low return on investment.

In 1989, the US Department of Education prohibited colleges from awarding certain forms of federal aid if a high percentage of their students had defaulted on their student loans in the past. The rule was effective at first, closing down numerous underperforming institutions, but loopholes appeared over time.

“Institutions have learned to game the system,” Itzkowitz said, adding that many schools encourage low-income students to apply for suspension or deferment of their loans, which delays repayment. “No one fails.”

The Obama administration has proposed another rule that ties access to federal financial aid to the debt-to-income ratio of certain university programs, which meant that institutions whose graduates had high levels of debt and low incomes would suffer the consequences. The Trump administration rescinded those rules before they were implemented. Another related policy pushed by the Biden administration suffered the same fate in 2025 when Trump took office for the second time.

“We played regulation ping-pong,” Itzkowitz said. “The Department of Education was saying, ‘We’re going to do this, we’re not going to do that.’ Now this law carries more weight because it was written by Congress and signed into law.” This law, known as the Big Comprehensive Act (HR 1), was signed into law on July 4 of last year and went into effect this month.

Itzkowitz’s analysis comes from the Department of Education, which released preliminary earnings data using the 2022 and 2023 tax returns of graduates from the 2017-18 and 2018-19 school years. Many schools that failed the new test criticized the figures, saying they were misleading.

That’s too broad a criteria, Angelica Muro, chair of the visual arts and music department at Cal State Monterey Bay, wrote in an email to CalMatters. The new income rule “undermines the social benefits of critical thinking and the enormous socio-cultural value of the arts,” he added.

According to federal data, the school’s fine arts graduates earned about $34,000 four years after graduation, but the Education Department does not measure the sector they work in or whether it is related to their field of study. The data also doesn’t account for geographic differences in California, such as lower creative economic activity in the largely rural coastal region around California’s Monterey Bay, Muro wrote.

Some of the fine arts programs with the highest-paying graduates are in the Bay Area, Los Angeles, and San Diego, where there are more creative jobs and higher salaries. But even some colleges in rural counties and high-poverty regions, such as Stanislaus State, Fresno State, Cal State Bakersfield and Chico State, have fine arts programs that meet the new income requirements.

Another legal loophole?

Of the roughly 300 programs in California that do not pass the new income test, more than a quarter are in cosmetology or personal care, such as manicures, hair salons or skin care. Numerous Studies have long documented the difficulties of studying cosmetology, including high levels of debt and low income.

For example, graduates of Shasta School of Cosmetology in Redding reported earning just over $12,000 four years after graduation, which is well below the state poverty line. CalMatters reached out to 10 of the mostly private, for-profit cosmetology schools whose graduates have the lowest incomes, but none responded.

While the Education Department finalizes its interpretation of the new law, cosmetology schools have argued that the income figures are unfair because they do not account for the fact that many barbers and salon owners run their own businesses and may not report their tips on their taxes. The department gave those programs an extra year to comply, meaning graduates could lose access to loans no earlier than July 1, 2029.

The cosmetology schools’ arguments are based on “the flimsiest of reasons” and provide another loophole that allows schools to avoid accountability, said Christopher Madaio, senior adviser for federal and state accountability at the Institute for College Access and Success, which advocates for affordable higher education.

However, he confirmed that he supports the new wage law as a first step. “It wasn’t ambitious enough and it wasn’t written perfectly,” he said. “But yeah, I’m glad to see it implemented.”