By Kanishka Singh
WASHINGTON, June 29 (Reuters) - The U.S. Education Department said on Monday it was finalizing new federal student loan rules that would tie schools' federal loan access to the earning power of graduates, marking the Trump administration's latest pressure on colleges and universities.
"Under the new Student Tuition and Transparency System (STATS) and Earnings Accountability rule, undergraduate programs will be required to demonstrate that their graduates earn more than the typical high school diploma holder, and graduate programs will be required to demonstrate that their graduates earn more than the typical bachelor's degree holder," the Education Department said in a statement.
"If a program fails to show at least this modest financial return on investment for its graduates in two out of three consecutive award years, it will lose eligibility to participate in the federal Direct Loan program," it said.
The final rule will be published on July 1, the Education Department said, adding that 2027 will be the first year that schools will be held responsible for meeting the earnings thresholds.
"After three years of consistently failing the earnings premium measure, the Department could also terminate eligibility for Title IV of the Higher Education Act (HEA), including Pell Grant eligibility, for all of an institution's low-earning outcome programs," the Education Department said.
The finalization of the new set of lending requirements was reported earlier by The Wall Street Journal.
President Donald Trump has cracked down on top educational institutions and attempted to freeze federal funding for universities and colleges over a range of issues.
These include pro-Palestinian protests against U.S. ally Israel's assault on Gaza, transgender policies, climate initiatives and diversity programs.
Trump particularly alleges pro-Palestinian protests at universities were antisemitic and supported extremist groups.
Protesters, including some Jewish groups, say the government wrongly conflates criticism of Israel's assault on Gaza and its occupation of Palestinian territories with antisemitism and advocacy for Palestinian rights with support for extremism.
Rights advocates have raised concerns about free speech, academic freedom and due process as some colleges have cut down on programs, imposed restrictions on protesters and laid off workers. Judges have in some cases ordered the Trump administration to restore frozen federal funds for universities.
Trump has also gutted the Education Department by reducing its staffing while shifting many of its roles to other agencies.
(Reporting by Kanishka Singh in Washington; Editing by Raju Gopalakrishnan)
