Washington Watch: FAFSA feature will flag lower earnings for prospective students
On Monday, the U.S. Department of Education (ED) announced that the 2026-27 Free Application for Federal Student Aid (FAFSA) will now display information to prospective students on whether the graduates of their selected schools earn more than a comparable cohort of high school graduates.
The details
According to the new Office of Federal Student Aid (FSA) Electronic Announcement (EA), the new “lower earnings indicator” will utilize College Scorecard data to identify institutions whose graduates’ median earnings are lower than those of a typical high school graduate in the state.
After completing the FAFSA, a student may see a flag on their FAFSA Submission Summary that states “Some of Your Selected Schools Show Lower Earnings.” FAFSA completers can then click to learn more. The next screen presents information on the median earnings of all schools who will receive the student’s FAFSA, including any that generate lower graduate earnings compared to the high school graduate standard.
Importantly, this disclosure takes place after a student has submitted their FAFSA and after Institutional Student Information Records (ISIRs) have been submitted. To remove a low-earning school from their FAFSA, a student will have to submit a FAFSA correction.
There are no institutional disclosure requirements nor must students acknowledge receipt of the information. There are no sanctions attached to this indicator.
The low earnings indicator will only be available to first-year undergraduate students filling out the FAFSA. It will not be displayed to returning students or to transferring students.
The data
The Scorecard data used to generate the lower earnings indicator measures the median earnings of undergraduate completers, four years after graduation, who are working and are not currently enrolled in a higher education program. Because there is a lag in collecting earnings data, these numbers are adjusted for inflation to equal 2025 dollars. These institution-level earnings are then compared to the median earnings of working adults in the state with a high school diploma or less, ages 25 to 34.
This comparison is extremely similar to the earnings-based accountability measure enacted as part of the One Big Beautiful Bill Act (OBBBA) and set to go into effect in July 2026. However, that accountability scheme will be looking at program-level earnings and will carry sanctions (losing the ability to offer federal loans) if programs fail.
For community colleges
Alongside the EA, the Department has released the full list of earnings data for all undergraduate institutions, including a flag for which schools are currently designated as lower earnings. According to preliminary analyses by the American Association of Community Colleges (AACC), around 1.5% of community colleges – or less than 20 community colleges – will be subject to the new lower earnings indicator. AACC defines community colleges as regionally accredited institutions where the associate’s degree is the predominant credential awarded. Most failing schools are concentrated in the for-profit sector.
All community colleges are encouraged to look through the data to see how their median earnings compare to the median earnings of high school graduates in the state. For colleges that will have a lower earnings indicator for the current award year, campuses may choose to create a communications plan to contextualize earnings information for prospective students. This could include providing additional information on earnings by program, job placement and career trajectories, transfer and degree pathways, and why earnings in their service area may differ from the state median.
AACC will work with ED to ensure that transparency efforts provide students with a clear picture of college costs and expected outcomes. To that end, AACC will be recommending that the new lower-earnings disclosures acknowledge variable earnings based on field of study and direct students to the College Scorecard for information on program-level earnings.
