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Starting this month, prospective students considering any of 132 California colleges, including cosmetology schools, a music conservatory, and even Barstow Community College, will see a new warning label about alumni earnings when they apply for federal financial aid.
The notification cautions that those colleges are among 1,365 nationwide where the typical graduate four years after completing their studies earned less than a student who only finished high school. The U.S. Department of Education’s new “lower earnings” alerts primarily flag for-profit institutions, including beauty and trade schools that offer credentials other than bachelor’s degrees.
In California, the 132 schools that triggered the “lower earnings” label enrolled more than 80,000 students, an analysis of federal data found, and received $277 million in Pell Grants and $314 million in direct loans during the 2024-25 award year. Officials from some of those schools — which offer varied training in medical billing, welding, massage therapy, arts and other fields — contend that boiling down their value to a single metric isn’t fair.
The earnings indicator announced Dec. 8 is meant to help students make informed decisions without limiting their choices, U.S. Under Secretary of Education Nicholas Kent said in a blog post. The disclosure — which compares students who completed their college or trade school degree or certificate to workers who just have a high school diploma — does not prevent students from using federal aid at schools and colleges even if the institutions are tagged with the “lower earnings” alert. The label compares the median earnings of graduates to either an in-state or nationwide benchmark for employed high school-only graduates between the ages of 25 and 34. For most California colleges, that means beating the in-state median of $36,710.
While the alert itself does not carry any immediate penalties, it foreshadows a new law poised to remove federal loan eligibility from academic majors or credentials that can’t prove they are increasing graduates’ earnings starting next summer.
In California, 122 for-profit institutions fell short of earnings benchmarks. Only five public institutions raised the same alert; most were adult and career education programs. Five private nonprofits in California — two seminaries, a music conservatory, a drama school and the Hypnosis Motivation Institute in Tarzana — also received the lower earnings tag.
For-profit beauty and trade schools dominate the list — with exceptions
Among the handful of public institutions to gain the “lower earnings” indicator is Barstow Community College, which serves a Mojave Desert community halfway between Los Angeles and Las Vegas. Isolated from major urban job markets and a punishingly long commute to the nearest four-year university, many locals find their career prospects limited to lower-paid service, logistics or retail jobs, college officials said.
In a community where roughly 23% of residents live below the poverty line, most Barstow Community College students rely on federal financial aid to help pay for their education. More than half of the community college’s students receive Pell Grants to defray the annual cost of in-state fees, books and supplies, totaling $2,469. Federal data shows the median graduate earned $35,468, narrowly missing the statewide benchmark.
“Helping families earn a sustainable wage is the number one priority,” said Eva Bagg, the college’s superintendent-president. The college also “provides hope,” helping students to navigate challenges that are all too prevalent in their city, like addiction and domestic violence, she said. “That’s a huge value that we provide to this community.”
Starting this month, students planning to attend Barstow Community College and the others on the list will see a “lower earnings” disclosure on the Free Application for Federal Student Aid, which students nationwide use to apply for the Pell Grant and federally subsidized student loans. After submitting the FAFSA, first-year undergraduates will see earnings data for each institution they’ve listed on the form, drawing from information that’s already publicly available through the U.S. Department of Education’s College Scorecard.
Federal data released Dec. 8, alongside the “lower earnings” announcement, shows that only about 2% of students nationwide attend an institution that failed to meet the high school-only earnings benchmark. The new indicator is not a “normative judgment on what institutions are worthy of attendance, or the expected return on investment of attending a particular institution,” a department announcement said. The dataset omits the earnings of 960 postsecondary institutions nationwide, including 159 in California, due to inapplicable or unavailable data.
But Bagg, nonetheless, fears the new flag could discourage would-be students from enrolling at Barstow Community College. She said the metric fails to capture the college’s most recent efforts to develop new career education programs that prepare students for higher-earning fields — and that it doesn’t reflect local economic realities.
“This is unfortunate. It’s worrisome,” Bagg said of the earnings indicator. “It’s just another thing that we need to work extra hard to explain to our students what it really means and instill what the value is.”
Barstow is the rare public institution flagged by the “lower earnings” test. The flag is more often raised at for-profit institutions like Paul Mitchell beauty schools, a franchise that trains students in skills like manicuring and barbering.
Yasmin Niru, the owner of a Paul Mitchell location in Modesto, where federal data suggests the typical graduate earns $23,477 compared to the statewide median of $36,710 for high school graduates, said the threshold is “not really fair” because it doesn’t account for tips and the fact that many graduates are young mothers.
“They’re working part time; they’re not working full time,” Niru said. “It’s not a career. It’s their backup income for the majority of them.”
The school charges $9,400 in tuition and fees, plus $2,540 for books and supplies, according to federal data. College Scorecard data shows the median borrower who attended the Modesto school has $6,211 in debt after graduation.
Trump tries a new twist on college transparency
The lower earnings indicator is the latest in vacillating federal efforts to prevent abuse in the student aid system. The Obama administration was first to enact a “gainful employment” rule that would have cut mainly career and certificate programs’ access to federal student aid if graduates’ debt-to-income ratios rose above a certain level. The first Trump administration rescinded that standard, but then the Biden administration authorized new earnings and debt tests for certificate and for-profit degree programs to be eligible for federal aid.
Most recently, under this summer’s federal budget-reconciliation law, a different accountability benchmark makes many programs ineligible for federal loans — but not Pell Grants — if they don’t result in higher earnings than high school graduates. Those measures, sometimes dubbed the “do no harm” standard, are due to take effect in July. First, federal officials and education leaders are scheduled to review the “do no harm” implementation rules and the older Biden regulations in January, Politico reported.
A career education chain labeled ‘lower earnings’
The list of institutions landing below the “lower earnings” threshold included 13 California locations of the for-profit vocational school chain UEI College. They together serve more than 25,000 students around the state, training students to work as medical assistants, automotive technicians and other trades. Depending on the market, the proprietary college charges California students a sticker price of $19,900 or $21,500, before any discounts provided by grants and loans, federal data show.
A student who lists the UEI College location in Ontario on their federal student aid application will now receive a notification informing them that a typical graduate earns $33,043 four years after they finish the program. That is compared to $35,490 median earnings among high school-only graduates nationwide, a statistic used since the chain also has some campuses in other states.
UEI College did not respond to requests seeking comment for this story.
Colleges, trade and beauty schools are pushing back
The new earnings indicator drew concerns from some college trade associations, who said they were blindsided by the announcement and that emphasizing poor outcomes obscures evidence that most college degrees have a positive return on investment.
Some criticism echoes arguments used by a trade association representing cosmetology schools in a legal challenge to the Biden-era gainful employment rules. A federal district judge in October sided with the U.S. Education Department in that dispute.
Gary Yasuda, the president and CEO of a chain of beauty and career education schools called the Milan Institute, which includes six California schools, that was flagged for low earnings, said the federal announcement caught him by surprise. “Candidly, for me, they made this decision without having participation and discussion,” he said.
Yasuda said the beauty school sector had expected an opportunity for more input through negotiated rulemaking, the process by which the federal Department of Education usually reaches an agreement with stakeholders like schools, accreditors and states about financial aid regulations.
Now, Milan Institute locations in California appear on the FAFSA with what Yasuda called a “yellow flag,” the result of federal data showing the median graduates of its California programs earn as little as $20,955 and at most $34,318.
As it stands, Yasuda thinks the earnings data doesn’t accurately compare Milan Institute graduates to other workers on an apples-to-apples basis. He said the indicator will “push students who wanted a career in cosmetology away from doing that.”
