Federal Student Aid has introduced a new feature on the Free Application for Federal Student Aid (FAFSA) form designed to give students more information about potential post-graduation earnings. Effective December 7, 2025, the system will now display a "lower earnings indicator" for certain colleges and universities.
This new informational tool flags institutions where the median earnings of graduates are lower than those of a typical high school graduate in the same state. The goal is to provide greater transparency and help students make more informed decisions about their higher education choices.
Key Takeaways
- A new "lower earnings indicator" is now part of the FAFSA process for first-year undergraduate students.
- It identifies schools where graduates' median earnings are below the state's typical high school graduate earnings.
- The notice appears on the FAFSA Submission Summary after the form is processed and is for informational purposes only.
- This indicator does not affect a student's financial aid eligibility or a school's participation in federal aid programs.
How the New Earnings Indicator Works
The lower earnings indicator functions as an informational alert that appears after a student has completed and submitted their FAFSA. It is not a barrier to applying for aid or selecting a particular school.
When a first-year undergraduate student lists one or more schools that meet the low-earnings criteria, a notice will appear on their FAFSA Submission Summary. Clicking this notice reveals a comparison of earnings data for all the schools the student selected, allowing them to see the information side-by-side.
Students will have the option to update their list of selected schools after reviewing the data. However, making a change is not required. Officials have clarified that the timing of this notice—after the FAFSA is processed—is designed to ensure it does not interfere with application completion rates.
Data Driven by the College Scorecard
The information used for this new indicator is sourced directly from the College Scorecard, a public tool managed by the Department of Education. The earnings data is adjusted for inflation to June 2025 dollars to provide a more current comparison. The full methodology and data sets are available for public review on the Federal Student Aid Data Center website.
A Tool for Transparency, Not a Judgment
Federal Student Aid officials emphasize that the indicator is intended to empower students and their families, not to pass judgment on the value of any specific institution or degree.
"The lower earnings indicator provides students greater transparency in how different postsecondary education choices translate into real-world earnings," an official announcement stated. This supports the broader goal of helping students make well-informed decisions about one of the most significant financial investments of their lives.
The information is presented as one of many factors to consider. Students and families are still encouraged to use all available resources, including conversations with school counselors and mentors, when choosing a college.
"Past post-graduation success of graduates at an institution is not necessarily predictive of the likely earnings of any individual borrowers," the agency noted, highlighting the need for a holistic approach to college selection.
Understanding the Limitations of the Data
While the new feature provides a useful data point, it is important for students and families to understand its limitations. The earnings data is calculated at the institutional level, meaning it represents an average for all graduates of that school.
This approach has some significant caveats:
- It does not account for specific programs. A university's engineering program may have very high graduate earnings, while its fine arts program may have lower earnings. The indicator provides a single average that combines both.
- Earnings vary by degree type. The data does not differentiate between associate, bachelor's, or other undergraduate credentials offered by the institution.
- Individual outcomes will differ. The median earnings figure is not a guarantee of what any single student will earn after graduation.
Informational Use Only
The presence of a lower earnings indicator for a selected school has no impact on a student's Title IV financial aid eligibility, their Student Aid Index (SAI) calculation, or the processing of their aid application. It is a disclosure tool and does not affect federal reporting requirements for institutions.
What This Means for Students and Colleges
For students, this new indicator serves as a prompt to conduct deeper research. If a college they are interested in is flagged, it might encourage them to ask more specific questions about job placement rates and average starting salaries for their intended major.
Steps for Students to Consider:
- Review the Data: Take a moment to look at the earnings information provided on the FAFSA Submission Summary.
- Visit the College Scorecard: Use the government's College Scorecard website to explore more detailed data on costs, graduation rates, and earnings.
- Contact Admissions and Career Services: Reach out to the colleges on your list and ask for program-specific career outcome data.
- Consult with Counselors: Discuss your career goals and college choices with high school counselors or other trusted advisors.
For colleges, particularly those identified by the indicator, this change may increase pressure to track and publicize the career outcomes of their graduates more effectively. It could also lead to a greater focus on strengthening career services and ensuring academic programs are aligned with workforce demands.
As the system is implemented, its long-term effects on student choice and institutional behavior will be closely watched by educators and policymakers alike.
