New federal rule could cut off student loans for some Savannah-area college majors

SAVANNAH, Ga. (WTOC) - A new federal rule could cut off student loans for some college majors, including several offered in Savannah.

Under the Department of Education’s new Student Tuition and Transparency System, known as STATS, schools will have to prove their graduates are hitting certain financial benchmarks. If not, students may lose out on federal student loan eligibility.

Student loan eligibility will be determined school by school and program by program. If graduates don’t out-earn a set benchmark, that major could lose loan eligibility. Students would have to pay out of pocket or choose a different school.

One area of study at risk is the arts, leaving local students confused and frustrated.

“Like, why take our loans?” said William Yawson, a SCAD student.

What is STATS?

The Department of Education announced the final rule on June 29, 2026. It implements the accountability provisions of the Working Families Tax Cuts Act, often called the “Do No Harm” earnings standard. It also replaces the department’s existing Financial Value Transparency and Gainful Employment regulations.

The rule comes as the federal student loan portfolio tops $1.7 trillion nationwide.

Under STATS, every school and program is measured by the same earnings test, regardless of the institution’s tax status or credential level.

How the earnings test works

• Undergraduate programs must show their graduates earn more than people with only a high school diploma.
• Graduate programs must show their graduates earn more than people with only a bachelor’s degree.
• Earnings are measured four years after a student completes the program.
• Programs get two out of three years to pass the test. If they fail twice in that span, they lose eligibility for federal Direct Loans and are labeled a “low-earning outcome program.”

The rule also removes a separate debt-to-earnings test that was part of the old regulations. The department said new borrowing limits for graduate and professional programs, which started July 1, 2026, make that test unnecessary.

Earnings benchmarks

According to the U.S. Bureau of Labor Statistics, the average high school graduate made about $977 a week by mid-April 2026. That comes out to just over $50,000 a year.

Per the Department of Education, SCAD graduates make just under $48,000 a year on average, below that benchmark.

The department’s website also breaks down earnings by major. SCAD’s most common major, design and applied arts, has median graduate earnings of just under $46,000 a year, putting it at risk under the new rule.

Students can look up average earnings by school and program using the Department of Education’s College Scorecard.

“It’s just hard in general, and the fact that they are trying to take that away from a lot of art students because they think it’s not ‘financially stable’ or something like that, it’s weird,” Yawson said.

Student reaction

Art students in the Coastal Empire say the impact of the industry is too important to limit access to up-and-coming artists.

“It is generally deplorable. I think that arts is something fundamental for humans to develop and communicate with each other, and with making it harder to access it just limits us being able to express ourselves as humans,” said Jordan Ulrich, a SCAD student.

Students say they see many of their peers relying on loans to attend college, and that the rule only limits access to education.

“Everything is already expensive, like tuition is expensive, having to get supplies can be expensive as well,” Yawson said. “It might even like, discourage some people from even trying to go to college.”

Other programs affected

It’s not just art programs at risk. According to the Department of Education’s website, Savannah State University and Savannah Technical College fall under the $50,000 average across all majors.

One of the most popular areas of study at Georgia Southern University, according to the website, is psychology, with the average salary for GSU graduates coming in at $48,000.

What happens if a program fails

• First failure: The department sends the school a warning. Schools must also notify current and prospective students that the program could become ineligible for federal aid.
• After a warning, schools have three choices: voluntarily pull the program from the Direct Loan program for at least five years, begin an orderly shutdown of the program, or take no action and let the program face the test again.
• Second failure within three years: The program loses access to federal Direct Loans and is labeled a “low-earning outcome program.”
• Losing all federal aid: A school can lose all Title IV aid, including Pell Grants, if more than half of its federal aid recipients — or more than half of its federal aid dollars — are tied to low-earning outcome programs.
• Appeals: Schools have 30 days to appeal after a program is told it will lose loan eligibility. The appeal must show an error in how earnings were calculated.
• Getting back in: A closed or ineligible program cannot be reopened under the same or a similar name for at least two years, and it must pass the earnings test to regain eligibility.

The rule also delays these consequences for one year for programs tied to jobs that typically earn tips, such as cosmetology, barbering and massage therapy. The department said this gives time for a related new tax policy on tips to show up in the earnings data.

Department’s perspective

Under Secretary of Education Nicholas Kent said in a press release that the Trump administration is “hitting the hard reset button on higher education and implementing commonsense reforms.” Kent said the changes will lower college costs and hold schools accountable.

The department said too many college programs leave graduates financially worse off than if they had never enrolled, and that low earnings paired with high costs can make college a poor investment for students, families and taxpayers.

The rule was developed with input from a committee of colleges, students, employers and taxpayer groups, which reached agreement on the rule’s language before it was finalized.

Timeline

• July 2026: Final rule filed.
• Oct. 1, 2026: Schools must begin submitting data to the department each year under the new system.
• Early 2027: The first earnings tests are calculated.
• 2028-2029 school year: Programs that fail the test in both 2027 and 2028 could lose loan eligibility.