WASHINGTON, D.C. — The U.S. Department of Education moved aggressively in December to overhaul how students pay for college, evaluate its value, and protect federal aid from abuse, unveiling a series of actions that signal a sharp reset in federal higher education policy under the Trump Administration.
On December 8, the Department launched a new earnings indicator within the Free Application for Federal Student Aid process, designed to give students and families clearer insight into whether a college degree is likely to pay off. Using existing federal data, the FAFSA will now display post-graduation earnings information for schools applicants select. If a school’s graduates earn less, on average, than a high school graduate, the form will flag the institution with a “lower earnings” disclosure.
Education Secretary Linda McMahon said the change responds to mounting skepticism about the value of higher education as outstanding student loan debt approaches $1.7 trillion. She said the indicator is meant to empower families to make informed, data-driven decisions before taking on debt. Department data show that more than 2 percent of undergraduates attend institutions where graduates earn less than high school completers, schools that collectively receive more than $2 billion annually in federal student aid.
A day later, on December 9, the Department announced a proposed joint settlement with the State of Missouri that would formally end the Biden Administration’s Saving on a Valuable Education, or SAVE, Plan. The plan, described by the Department as an illegal attempt at mass student loan forgiveness without congressional approval, had been repeatedly blocked by federal courts.
Under the proposed settlement, the Department will stop enrolling new borrowers in SAVE, deny pending applications, and move all current participants into legally authorized repayment plans. If approved by the court, the agreement would resolve uncertainty for more than 7 million borrowers whose loans were placed in administrative forbearance after court injunctions halted the program.
Under Secretary of Education Nicholas Kent said the SAVE Plan misled borrowers with promises of near-zero payments and rapid forgiveness, while shifting costs onto taxpayers who either never attended college or already repaid their loans. Missouri Attorney General Catherine Hanaway said the settlement restores the rule of law and respects congressional authority over federal spending.
The Department said borrowers affected by the settlement will receive direct outreach and guidance on selecting compliant repayment plans, with tools available through Federal Student Aid to estimate payments and eligibility.
On December 10, the Department turned its attention to oversight of higher education itself, issuing a Request for Information seeking public input on how to modernize the Accreditation Handbook. Officials said the current system has become overly bureaucratic, contributing to higher tuition, administrative bloat, and ideology-driven priorities. The handbook, last updated in February 2022, guides accreditors who serve as gatekeepers for more than $100 billion in annual federal student aid.
Assistant Secretary for Postsecondary Education David Barker said the Department is evaluating the entire accreditor recognition process to ensure accountability, improve transparency, and reduce burdens on institutions, while holding accreditors responsible for ensuring educational quality and compliance with federal law.
On December 11, the Department announced it had prevented $1 billion in federal student aid fraud since January, following the rollout of enhanced identity verification requirements for certain first-time applicants. Officials said sophisticated fraud rings, including international operations and AI-driven bots posing as students, had exploited lax controls under the prior administration.
McMahon said requiring identification to access federal aid is a basic safeguard, noting that nearly $90 million had already been fraudulently disbursed earlier this year, including funds sent to deceased individuals and fake student accounts. The Department said a new fraud detection team within Federal Student Aid is being built to expand these efforts.
That same day, the Department awarded more than $208 million in new grants to expand school-based mental health services, directing funds to 65 recipients with a focus on rural and high-need areas. Officials said the new awards follow the non-continuation of more than 200 prior grants that emphasized ideological criteria over credentialed, evidence-based care. More than $120 million of the new funding will support rural communities.
On December 12, the Department concluded the first session of negotiated rulemaking for the new Workforce Pell Grant program, reaching consensus on a framework that will allow students in short-term credential programs to access federal Pell Grants beginning in July 2026. Eligible programs include fields such as emergency medical services and automotive repair, aimed at addressing labor shortages and expanding pathways beyond traditional four-year degrees.
Education and Labor Department officials said the Workforce Pell program is intended to strengthen the talent pipeline, fill hundreds of thousands of open skilled trades jobs, and create greater accountability by linking aid eligibility to employment and earnings outcomes.
Taken together, the December actions reflect an ambitious effort to reshape federal higher education policy — tightening oversight, expanding workforce-focused aid, increasing transparency for families, and aggressively policing fraud — as the Department seeks to realign student aid with earnings, accountability, and taxpayer protection.
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