What Does “Low-Earning Outcomes” Mean?

You may have noticed (hopefully so) that there is a great deal of buzz these days about an apparently well-intentioned little piece of new federal law somewhat buried in the “One Big Beautiful Bill Act.”  (It is BIG – the Senate version of the bill was 887 pages!)

Section 84001 of this huge, far-reaching legislation has a provision known as the “Do No Harm” codicil.  This provision is an amendment to the Higher Education Act of 1965 and stands to jeopardize federal student aid eligibility for students working on degrees in ministry-related fields.  Ministry is different!  It is interesting that earnings in an altruistic field should be compared to the “world’s marketplace.”

At its core, this new “stipulation” mandates the U.S. Department of Education to analyze (test) IRS income data (on a program-by-program basis) for students four years after graduation to determine whether those graduates earn more thanthe average salary of 24-to-32 year olds in their state of residence/work.  (Note that “IRS income data” likely would not include amounts for a “minister’s housing allowance.”)

If an institution fails this annual “earnings test” for two consecutive years, students in that degree path would no longer qualify for federal loans.  Even more ominous, the rules say that if more than 50% of an institution’s programs are classified as failing, the entire school could lose eligibility for Title IV federal funding.

The Department of Education has done preliminary estimates and found that over 53% of Title IV students enrolled in religion/religious studies bachelor’s degree programs would be considered to be in “failing programs” currently under their formula.  Even worse, about 90% of those in similar master’s degree programs would appear to fail.  Ouch!

There has been hope of a “religious exemption” from this restrictive and - let’s call it what it is – discriminatory legislation.  However, that is not in place currently and does not appear to be a possibility at this point in time.

The current plan is for the Department of Education to notify schools of failing programs by January 1, 2027. Programs that fail a second consecutive year – apparently notified in early 2028 - would lose access to federal loan funding at that point – less than two years from now.

A comment period on the legislation ends May 20, 2026.  Although time is short, many stakeholders and institutions’ leadership teams are providing comments.  Theological education is different as we look toward ministry service rather than maximized earnings.

The Bottom Line is that if your school is dependent on Federal Student Aid, it is time – nee past time – to prayerfully consider the cost and strategize for overcoming this potentially crippling loss of revenue.

Written byDavid C. Moja, CPA www.mojacompany.com The information provided herein presents general information and should not be relied on as accounting, tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel about the facts and laws that apply.