A new requirement for colleges: are your graduates earning enough?

from Adam EchelmanCalMatters

This story was originally published by CalMatters. Sign up for their newsletters.

With just a high school diploma in hand 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.

Effective this month, all colleges, universities and short-term certificate programs in the U.S. must prove that their graduates earn at least the average salary of someone in their state with just a high school diploma. Otherwise, their students will soon become ineligible for federal loans.

That’s a “low bar,” said Michael Itzkowitz, president of the HEA Group, which conducts higher education policy research. “If you’re going to college, you expect to make at least minimum wage, and probably more than that.”

In places like the Bay Area, $36,000 a year barely covers housing, let alone other expenses.

Of the nearly 3,000 higher education courses in California rated by the U.S. Department of Education, roughly 90 percent of graduates earned at least that much, according to Itzkowitz’s analysis. But graduates of about 300 programs in California — especially those in cosmetology, nursing, arts and theater — failed to earn $36,000 four years after graduation, his analysis found.

Most of the failing programs are at for-profit colleges, sometimes known as trade schools or career colleges, which face decades of scrutinyfrom time to time by the legislatorsend bad results and high tuition costs. But courses 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.

Schools have at least two more years to prove to the federal government that graduates of these programs meet the new income standard. If trends in low-performing programs continue, their students could lose access to loans as soon as July 1, 2028.

CalMatters contacted more than 15 universities, community colleges and for-profit trade schools asking about the future of these programs with low-income graduates, but few schools responded. Spokesmen for the UC and Cal State systems said they are reviewing the new law but declined 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, aka 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 under $30,000 four years after graduation.

In an interview, college officials offered a number of explanations, pointing to problems with the data and the ways in which careers in the arts differ from more mainstream ones. Building a career in the arts can take longer, and many graduates deliberately forgo more lucrative corporate opportunities, said Ranu Mukherjee, dean of the college’s film and video school.

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

Mukherjee said the school does not intend to close any of the affected programs, although he said it is important to communicate with students what might happen in the future. “It’s hard to imagine CalArts without an undergraduate film or arts program,” she said. “It’s in our name.”

About 100 other fine arts, music, theater, film and photography programs in California are passing the new revenue requirement, according to current Education Department figures. These include the film program at UC Berkeley and the fine arts programs at San Diego City College and the University of Southern California, where all workers reported earning more than $70,000 four years after graduation.

“Regulation Ping Pong”

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 large percentage of their students had defaulted on student loans in the past. The rule was effective at first, closing scores of low-performing schools, but loopholes appeared over time.

“Institutions have learned how to game the system,” Itzkowitz said, adding that many schools encourage low-income students to put their loans into forbearance or deferment status, which delays payment. “No one fails.”

The Obama administration proposed another rule that ties access to federal financial aid to certain college programs. debt-to-income ratiomeaning that institutions whose graduates have high levels of debt and low incomes will face consequences. The Trump administration ended the rules before they were ever implemented. Another related Biden administration policy faced a similar fate in 2025 when Trump took office for a second term.

“We played regulation ping-pong,” Itzkowitz said. “The Department of Education says, ‘We’re going to do this, we’re not going to do that.’ Now this has more teeth because it was actually written by Congress and enacted into law. This law, known as the One Big, Beautiful Bill Act or HR 1, was signed into law on July 4 of last year and went into effect this month.

Itzkowitz’s analysis comes from the education department, which released preliminary earnings data using the 2022 and 2023 tax returns for the 2017-18 and 2018-19 completed school years. Many schools that failed the new test criticized the numbers, saying they were misleading.

That’s “too broad a metric,” Angelica Muro, chair of the visual arts and music department at Cal State Monterey Bay, wrote in an email to CalMatters. The new profits rule “undermines the societal benefits of critical thinking and the enormous sociocultural value held in the arts,” she wrote.

The school’s fine arts graduates earned about $34,000 four years after graduation, according to federal data, but the education department doesn’t measure the industry a graduate works in or whether that’s related to their course of study. The data also doesn’t take into account any geographic differences in California, such as the “smaller creative economy” in the mostly rural coastal region around California’s Monterey Bay, Muro wrote.

Some of the fine arts programs with the highest-earning graduates are located 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 those in high-poverty regions, such as Stanislaus State, Fresno State, California State Bakersfield and Chico State, have fine arts programs that pass the new income test.

Another loophole?

Of the roughly 300 programs in California that fail the new income test, more than a quarter are for cosmetology or personal care, such as nail, hair or skin care. Numerous studies have long documented the challenges facing cosmetology education, including high levels of debt and low income.

Graduates of Shasta School of Cosmetology in Redding, for example, report earning just over $12,000 four years after graduation — 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 earnings figures are unfair because they don’t take into account 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 rationales” 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.

Still, he said he supports the new income law as a first step. “It didn’t go far enough and it wasn’t written perfectly,” he said. “But yeah, I’m happy to see it implemented.”

This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.