Protecting Students from Worthless Degrees Act
- Sponsor
- Rep. Krishnamoorthi, Raja [D-IL-8]
- Committees
- Education and Workforce Committee (primary)
- Last action
- Jul 16, 2026
Bottom line
The bill aims to protect students and taxpayers by holding higher education programs accountable for student outcomes related to employment and debt, and by ensuring proper state oversight for licensure and distance education.
What it actually does
This bill establishes new consumer protections for students by making institutions of higher education ineligible for federal education assistance funds if their programs fail to meet specific debt-to-earnings standards or do not fully qualify students for state licensure in their intended occupation and location. It also mandates state authorization for distance education programs and requires institutions to provide warnings to students about programs that do not meet licensure requirements.
Proponents argue
Proponents argue that the bill is a critical step to safeguard students from accumulating unmanageable debt for degrees that do not lead to gainful employment or professional licensure. They contend it protects federal taxpayer investments by ensuring accountability for institutions receiving federal funds and promotes transparency in higher education.
Opponents contend
Opponents may argue that the strict debt-to-earnings thresholds could disproportionately affect programs in fields with lower starting salaries but high social value, or limit educational access for non-traditional students. Concerns may also be raised about the administrative burden on institutions, particularly for tracking multi-state licensure requirements and managing complex data reporting.
The bill is moderately complex, requiring careful reading to understand the technical definitions and amendments, which may exceed the time typically allotted for quick legislative review.
Section 3
Enhanced Licensure Requirements for Federal Aid Eligibility
This provision makes institutions ineligible for federal education assistance funds if their programs, designed for occupations requiring state licensure, do not fully qualify students to take required examinations and obtain certification or licensure in the student's metropolitan area, state of residence, and any state where the institution advertises preparedness for work. It also requires institutions to provide timely placement for pre-licensure requirements like clinicals or internships.
Supporters argue
Supporters argue this provision prevents students from investing time and money in programs that ultimately do not enable them to practice their chosen profession, thereby protecting consumers and ensuring program quality.
Critics contend
Critics may contend that requiring institutions to track and comply with licensure requirements across all states where students reside or intend to work creates an undue administrative and financial burden, potentially limiting program offerings or access.
Tradeoffs
The provision balances the need for robust student protection and program quality assurance against the administrative complexities and potential costs for institutions operating across multiple jurisdictions.
Section 4(a)
Incorporating Debt-to-Earnings Standards into Gainful Employment Definitions
This section amends existing definitions in the Higher Education Act of 1965 to explicitly require that programs preparing students for 'gainful employment in a recognized occupation' must also meet the new debt-to-earnings (DTE) standards outlined in the bill's new Section 498C. This applies to proprietary institutions, postsecondary vocational institutions, and certain other eligible programs.
Section 4(b), adding Section 498C to HEA
Establishment of Debt-to-Earnings Standards for Federal Aid Eligibility
This section defines the specific 'annual debt-to-earnings rate' and 'discretionary debt-to-earnings rate' that programs must meet to remain eligible for federal education assistance funds. A program fails if its discretionary DTE rate is 20% or greater AND its annual DTE rate is 8% or greater for two out of three consecutive award years. Programs that fail become ineligible for federal funds for three years. It also details how median loan debt, annual earnings, and cohort periods are calculated, with specific amortization periods and interest rates for different degree levels.
Section 4(c), amending Section 487 of HEA
Institutional Certification and Programmatic Accreditation for Gainful Employment Programs
This provision requires institutions to annually certify to the Secretary of Education that their gainful employment programs meet specific criteria: they must be approved by an accrediting agency, programmatically accredited if required by federal or state entities, and satisfy educational prerequisites for professional licensure in relevant states. Institutions must also certify that programs are not substantially similar to ones that failed DTE standards or were discontinued in the prior three years. Furthermore, institutions must notify students if a program does not meet licensure requirements in their intended state of practice.
Section 5, amending Section 101 of HEA
State Authorization for Distance Education and Reciprocity Agreements
This section mandates that institutions offering postsecondary education through distance education or correspondence courses must be legally authorized in each state where their enrolled students are located. It allows participation in State authorization reciprocity agreements (SARAs), provided the agreement does not prevent any state from enforcing its own laws and the institution documents a state process for reviewing and making public student complaints.
Defines 'qualifying graduate program' as an eligible program with 'outlier earnings growth' in specific medical and counseling fields, allowing for a delayed earnings measurement (7-10 years post-completion) for debt-to-earnings calculations.
Section 4(b), new HEA Section 498C(a)(8)
Why it matters:This is standard legislative practice for defining technical terms and exceptions within a complex regulatory framework. The specific carve-out for certain graduate programs addresses a practical reality of their extended training periods.
Case for: Proponents argue that this exception is necessary to prevent valuable graduate programs in fields requiring extensive post-graduation training (like medical residencies) from being unfairly penalized by debt-to-earnings metrics that measure earnings too early in a professional's career.
Case against: Critics might argue that such specific carve-outs could create loopholes or lead to inconsistent application of accountability standards, potentially allowing some programs to avoid scrutiny even if their long-term outcomes are not truly exceptional.
Estimated impact: This provision directly impacts how debt-to-earnings rates are calculated for specific graduate programs in medicine, osteopathy, dentistry, and various counseling fields, potentially allowing them to pass where they might otherwise fail under standard timelines.
This provision explicitly nullifies a specific paragraph (3) of section 668.402(c) of title 34, Code of Federal Regulations, which was established by a Department of Education final rule and allowed for a delay in applying earnings accountability requirements to 'tipped professions.'
Section 4(e)(2)
Why it matters:This is a technical legislative override of a specific regulatory provision. It's phrased precisely to target and eliminate a particular regulatory carve-out.
Case for: Proponents argue that this ensures equal treatment of all programs and professions under the new debt-to-earnings standards, preventing special exemptions that could undermine the bill's overall goal of accountability and consumer protection.
Case against: Opponents of the DTE rule might argue that tipped professions have unique earnings structures (e.g., reliance on tips) that warrant different treatment or a delayed implementation to allow for more accurate data collection and tailored adjustments.
Estimated impact: This provision ensures that programs preparing students for 'tipped professions' will be subject to the new debt-to-earnings standards without any regulatory delay, effectively applying the accountability measures immediately to these fields.