Trump to ban federal student loans for worthless college degrees

The Trump administration has introduced a new rule that will cut off federal loans for college students looking to earn degrees that do not pay well in the job market. The new rule was finalized this month by the Education Department, and boils down to a simple test: do you earn more after graduating from college with your degree than if you had never gone in the first place?

The move expands the gainful employment rule, and if college programs cannot clear that bar, then the program loses access to federal student loans and Pell Grants. Degrees in the humanities, social work, and the arts are set to be hit hardest by the rule change.

The rule is part of a larger effort to cut back on federal spending where there has been a national crisis of student debt and loan defaults. It also serves as a way to make sure that graduates can actually earn an income instead of ending up in debt to underwater student loans that they can't afford to pay.

According to the LA Times, data for standards set by the Department of Education surrounding the rule has not yet been gathered. Only about 3 percent of advanced degree programs, nonprofit and public schools are expected to fail the rule test. However, about 33 percent of programs at for-profit colleges are expected not to clear that bar.

4.2 percent of students that receive federal aid are expected to be impacted by the new benchmark. “For the first time in a very long time... institutions and college leaders are going to held accountable,” president of the education research organization HEA Group Michael Itzkowitz said. “They are going to start looking and paying more attention to economic outcomes than they ever have before.”

The data will be gathered using the IRS and the Education Department will measure the median income of students four years out from their programs and then track that against if they had just gotten a high school diploma.