Imagine you’re seventeen, filling out college applications, dreaming big. Then a government form pops up with a warning: “Hey, kids who went here ten years ago are earning less than people who never went to college at all.” That’s not dystopian fiction anymore – that’s the new FAFSA, starting right now.
I’ve been writing about money and education for years, and honestly? This feels like one of the biggest transparency moments we’ve ever had in higher education. It’s raw, it’s uncomfortable, and it’s long overdue.
The Change That Nobody Saw Coming
As of December 2025, the Free Application for Federal Student Aid now includes something called a lower earnings disclosure. When a first-time student adds a school to their FAFSA, the system checks the median earnings of that college’s graduates against a simple benchmark: the typical earnings of people in that state (or nationally, for schools that draw mostly out-of-state students) who only finished high school.
If the college grads earn less? Boom. Bright red flag. No sugarcoating.
The data comes straight from the College Scorecard, adjusted for inflation, looking at people who finished their programs roughly ten years ago. It’s not perfect – past performance isn’t destiny – but it’s the best broad picture we’ve ever had.
Why This Actually Matters More Than You Think
Let’s be brutally honest for a second. Most families still choose colleges the way people picked horses at the racetrack a hundred years ago – name recognition, pretty campus photos, where their friends are going. Earnings data barely entered the conversation.
That’s changing overnight.
A college degree still pays off for the majority of people – research consistently shows roughly 68% higher lifetime earnings on average – but the averages hide some ugly truths. Some programs, especially at certain for-profit institutions and specialized trade schools, have negative returns. Graduates literally make less than if they’d skipped college entirely and started working at eighteen.
This isn’t about shaming schools. It’s about giving teenagers the same kind of warning label we put on cigarettes.
The Schools That Trigger the Warning (And Why It’s Awkward)
The list is massive – we’re talking well over a thousand institutions right now. A huge chunk are for-profit cosmetology chains, art institutes, and specialty trade schools. Some are household names with dozens of campuses across the country.
Here’s the part that makes administrators sweat: many of these programs cost $20,000–$40,000 and leave graduates with debt but without the income to service it comfortably. Cosmetology is the poster child – studies have shown that 98% of programs nationwide don’t clear the “earn more than a high school graduate” bar.
Look, I’m not here to say beauty school is worthless. Passion matters. Creativity matters. But when the median graduate is still making $23,000 a decade later while carrying student debt? That’s a math problem no amount of passion solves.
How the Government Is Trying to Thread the Needle
The Department of Education has been extremely careful with the language. They repeat over and over that this is information, not judgment. They explicitly say a school being flagged doesn’t mean the Department thinks it’s “unworthy.”
Translation? They know this is political dynamite.
- The warning only shows to first-time undergraduates filing FAFSA
- Graduate programs and transfer students don’t see it
- Private loans (not federal aid) aren’t affected
- Schools can’t opt out or hide the flag
In my view, that last point is the real game-changer. For decades, some institutions marketed heavily to low-income and first-generation students, collected federal aid dollars, and delivered outcomes that ranged from mediocre to catastrophic. Now the mask is off – at the exact moment families are deciding where to send six figures of borrowed money.
What the Data Actually Shows (The Numbers Don’t Lie)
Let’s dig into the cold, hard figures that triggered all of this.
Right now the benchmark is roughly $32,000–$38,000 depending on the state (inflation-adjusted high school graduate earnings). If your school’s median graduate ten years out is below that line, the flag appears.
| Category | Typical Outcome |
| Selective private universities | $70k–$120k+ |
| Flagship state universities | $55k–$85k |
| Regional public colleges | $45k–$65k |
| Many for-profit chains | $25k–$35k |
| Cosmetology/art institutes | Often below $30k |
Those bottom two rows are where the warnings cluster. And remember – that’s the median. Half the graduates are doing even worse.
How Students and Parents Are Reacting
I’ve talked to guidance counselors in three states since the announcement dropped. The reactions fall into two camps:
- “Finally – someone is saying the quiet part out loud.”
- “This feels like the government telling my kid their dream is stupid.”
Both reactions are completely valid.
If your teenager wants to be a makeup artist or a game designer and has the talent to build a great career, the median doesn’t have to be their destiny. Talent plus hustle still beats everything. But most eighteen-year-olds (and most adults) dramatically overestimate how far in the top half they’ll land.
What Smart Families Should Do Right Now
If you have a high school junior or senior, here’s your action plan:
- Pull up the College Scorecard and look at earnings for every school on their list – don’t wait for FAFSA to tell you
- Compare the 6-year and 10-year earnings numbers (sometimes schools have early boosts that fade)
- Ask the financial aid office directly: “What percentage of your graduates earn above the state high-school benchmark?” If they dodge, that’s your answer
- Run the net price calculator and the loan repayment simulator on every campus
- Have the uncomfortable conversation: “We love that you’re passionate about X, but can we also have two or three backup schools where the numbers are stronger?”
Passion without a plan is a recipe for heartbreak – and debt you’ll still be paying when your own kids are applying to college.
The Bigger Picture for Retirement and Wealth Building
Here’s where this hits home for the audience of this blog: starting your career $15,000–$20,000 behind every single year compounds brutally over four decades.
Someone earning $35,000 at age 25 versus $55,000 isn’t just buying a worse car today. Thirty years later they have hundreds of thousands less in home equity, retirement accounts, and general financial breathing room. The new FAFSA warning is really a lifetime wealth warning in disguise.
I’ve seen too many forty-somethings stuck in dead-end jobs because their student loans from a low-value program ate every extra dollar they ever made. This change won’t fix everything, but it might spare the next generation that particular pain.
Look, nobody wants the government in the room when they’re dreaming about their future. But $1.7 trillion in student debt later, maybe a little reality check at the exact moment families are signing loan paperwork isn’t the worst idea in the world.
The FAFSA earnings flag won’t stop anyone from following their passion. It just makes sure they – and their parents – see the price tag attached to that passion with eyes wide open.
And honestly? In 2025, that feels like progress.
