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S 5021

Protecting Students from Worthless Degrees Act

119th Congress Introduced by Richard Blumenthal and 2 co-sponsors

The bill adds debt-to-earnings standards to determine which higher-education programs are eligible for federal funds, tying prosperity to earnings and barring funding for underperf

Introduced in Senate
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Bill Summary · S 5021

Summary: Protecting Students from Worthless Degrees Act (S. 5021, 119th Congress)

  • Purpose and intent

    • Establishes consumer protections for students by increasing accountability for higher education programs, particularly those tied to gainful employment and state licensing prerequisites.
    • Aims to curb funding for programs deemed low-earning or not meeting debt-to-earnings standards, and tighten certification, licensure, and state-authorization requirements for distance education and gainful-employment programs.

  • Key definitions and scope

    • Federal education assistance funds: aligns with existing Higher Education Act definitions.
    • Freely Associated States: includes Marshall Islands, Micronesia, Palau.
    • Institution of higher education: any postsecondary institution receiving federal funds.
    • State: broader definition including Puerto Rico, DC, territories, and freely associated states.
    • Gainful employment program: programs that aim to prepare students for occupations requiring licensing or other entry pre-requisites and offered by eligible institutions.

  • Major provisions and changes
    1) Protections for occupations requiring state licensure

    • Institutions cannot receive federal funds for any program (including degree, certificate, or distance/online offerings) designed to prepare students for entry into a licensed occupation unless within one year:
      • The program, as advertised, would enable students to meet entry requirements (exams, licensure) in the state of residence and any other state described.
      • The institution provides timely placement for required pre-licensing experiences (clinical placements, internships, apprenticeships).

2) Strengthening protections for gainful employment programs and overall student protection
- Adds debt-to-earnings standards to several program types:
- Public and proprietary institutions’ programs that qualify as gainful employment programs must meet debt-to-earnings standards.
- Definitions extended to include undergraduate and graduate programs, certificate and diploma programs, and certain professional pathways.
- Establishes a new 498C section: Debt-to-Earnings
- Defines annual debt-to-earnings rate, annual loan payment, cohort period, discretionary debt-to-earnings rate, and discretionary earnings.
- Establishes calculations based on loan debt, median earnings, and appropriate amortization periods (10, 15, 20 years depending on credential level).
- Introduces median annual earnings, median loan debt, and calculation methods using cohort data.
- Identifies qualifying graduate programs and “outlier earnings growth” for certain graduate fields (e.g., medicine, dentistry, psychology, counseling, social work), to determine eligibility.
- Sets thresholds for failing: discretionary debt-to-earnings rate ≥ 20% and annual debt-to-earnings rate ≥ 8% for a cohort in any 2-year or 4-year period.

3) Data matching, transparency, and enforcement
- Requires annual data matching between earnings data (SSA/IRS and other agencies) and Department of Education data to compute program-level median earnings.
- The Secretary must publish discretionary and annual debt-to-earnings rates for each eligible program each award year.
- The Secretary must issue timely determinations within 45 days of data matching, including:
- Final debt-to-earnings rates for programs.
- Whether programs meet or fail the debt-to-earnings standards.
- Whether warnings must be given to current and prospective students.
- Whether institutions must cease providing funds for ineligible programs.
- Establishes processes to verify annual warnings to students and to deny funds to programs not meeting standards.

4) Consequences for programs not meeting standards
- Institutions may not disburse Title IV funds for enrollment in ineligible programs.
- Reestablishment of eligibility for a non-compliant program is barred for at least three years after a notice of determination.

5) Equity and implementation guidelines
- Applies earnings requirements equally to all programs, including tipped professions; prohibits delaying or adjusting deadlines unless expressly authorized.
- Regulations must be issued within one year of enactment (subject to limited exemptions from typical regulatory requirements).

6) State authorization for distance education
- Institutions offering distance education must be legally authorized in each state where enrolled students reside.
- Reciprocating state authorization agreements (SARA-like) permitted, with requirements to ensure complaint processes and public reporting of complaints in each state.

7) Additional institutional participation requirements
- Institutions must certify, by a set deadline after enactment, that each eligible gainful employment program meets the act’s requirements and explain how programs are not substantially similar to disqualified or discontinued programs.
- Institutions must update certification promptly if approvals change.

  • What would be affected

    • Institutions of higher education that rely on federal student aid funding.
    • Programs designed to prepare students for licensed occupations or gainful employment.
    • Distance education providers and programs offered to students located in multiple states.
    • Prospective and current students enrolled in gainful employment or licensure-focused programs.
    • Federal program administrators responsible for HEA-based funding and program integrity.

  • Procedural and timeline aspects

    • Enactment triggers regulatory development: Secretary must issue regulations within 1 year post-enactment.
    • Data matching and determinations occur on an annual calendar-year basis.
    • For ineligible programs, disbursement restrictions take effect, with a minimum 3-year eligibility-reestablishment cooling-off period after a notice of determination.
    • State authorization rules specify timelines for distance-education compliance and reciprocity agreements.

  • Overall impact and intent

    • Enhances accountability for programs with regards to how much debt students incur versus what they earn after completion.
    • Tries to prevent federal funds from supporting programs with poor earnings outcomes or weak licensure pathways.
    • Increases transparency for students and policymakers about program outcomes and potential financial risk.
    • Seeks to align accreditation, licensure prerequisites, and earnings data to protect students from pursuing low-value credentials.

Compiled from official sources — confirm details with the bill’s official record.

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