Education Secretary Linda McMahon gave a speech at Arizona State last week, and one number in it should get every enrollment and career services leader's attention. Since the FAFSA started showing students an earnings indicator, she said, 25% of students who were applying to a college flagged for "low earnings" took that college off their list. Inside Higher Ed reported the speech on October 26.
What is the FAFSA earnings indicator? The FAFSA earnings indicator is a tool the U.S. Department of Education added to the Free Application for Federal Student Aid. For each college a student lists, it shows the average earnings of that college's alumni shortly after graduation and compares them with the average earnings of a high school graduate in the same state. Colleges that come out poorly are flagged for low earnings.
The federal earnings test with real penalties starts reporting results next year. The FAFSA flag has no penalty attached at all, and students are already acting on it. That tells me outcomes data has moved from a compliance file into the enrollment funnel.
The Numbers
- 25% walked away. One in four students applying to a college with a low-earnings flag removed it from their list, according to McMahon.
- 76% national premium. A new HEA Group dashboard finds the median undergraduate credential earner makes 76% more than the median high school graduate four years after graduation.
- The premium swings by state. Colorado's is 55%, 49th in the country. Alaska's is 28%, the lowest, partly because its high school graduates earn the most.
- 38,100 programs. The federal data behind the dashboard covers nearly three million graduates across about 38,100 college programs.
Enrollment Feels It First
Most of the conversation about earnings accountability has been about the federal test and the loan access a program could lose. That matters. But the FAFSA flag reaches students at the moment they are choosing where to apply, long before any penalty applies. A weak number on that screen costs a college applicants this cycle.
We saw the same pattern in the recent Gallup and Lumina data, where employers trust college far more than families do. Families can't see what a program leads to, so they discount it. Give them one earnings number on a federal form and many act on it right away.
For Enrollment, Institutional, and Career Services Leaders
Outcomes by program, for every graduate
Prentus tracks career outcomes for every graduate, not only the ones who answer a survey. Enrollment, leadership, and career services teams get placement, employers, and earnings by program in one record.
A Federal Average Is a Thin Story
The federal numbers have real limits. The HEA Group notes that its data looks at graduates from 2017-18 and 2018-19, measures pay four years out, and doesn't account for students who went on to graduate school. Fields where pay climbs later will look weaker than they are.
A college can complain about those limits, or it can put better data next to them. If your nursing graduates are working at three regional hospital systems and your business graduates double their pay by year six, an applicant should be able to see that. Most colleges can't show it today because they only hear back from the graduates who answer a survey.
What to Do Before the Next FAFSA Cycle
- Know what students see. Find out what the earnings indicator shows for your institution, and whether you carry a flag.
- Track every graduate by program. The earnings test works program by program. Your own data should too, and it should cover the whole class.
- Show employers and job titles. A single salary figure is easy to dismiss. Named employers and real roles give applicants something concrete.
- Put it where applicants decide. Program pages, admissions conversations, and financial aid counseling are where the FAFSA number is competing with yours.
Our OBBBA earnings readiness checklist covers what to collect for each program. The same data that prepares you for the federal test is what an applicant needs to see when the FAFSA shows them a flag.
If you want placement and pay by program for every graduate in one place, let's talk.
