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When the term "earnings premium" comes up, many people tend to think of the Trump Administration's One Big Beautiful Bill (OBBB) and its Do No Harm institutional accountability. A new regulatory regime that tens of thousands of academic programs now face to keep access to federal financial aid.

That view would be wrong, and also parochial.

Omar Khan of the Transforming Access and Student Outcomes in Higher Education organization (TASO) published a piece at Wonkhe this week arguing that UK policy on graduate earnings contradicts itself. The government wants the graduate earnings premium to rise (i.e., postsecondary graduates to increase their earnings over non-graduates). It also wants parity of esteem for young people who don't go to university. Khan calls out the problem: "no amount of rhetorical flourish can make both graduates and non-graduates earn more than the other in their monthly payslips." A premium is a comparison. Somebody has to be on the wrong end of it.

Khan is describing a different regulator than the US Department of Education (ED), a different dataset, and a different country than the OBBB Do No Harm provisions. He is also describing the US, however, which has its own version of the contradiction.

The Trump Administration has been emphatic that not everyone needs a degree and that alternative pathways deserve real standing. Meanwhile the accountability framework it finalized in July runs an earnings premium test with the same metrics for all undergraduate credentials, ignoring the differences. Undergraduate certificates—the shortest, cheapest, most obvious alternative credential on the board were left out by Congress in the OBBB statute, but ED swept these certificates back in under gainful employment authority and folded both into a single earnings premium metric.

Based on the latest ED data, 29.0% of undergraduate certificate programs and 6.6% of associate degree programs would fail the earnings premium rules, while just 1.2% of bachelor degree programs would fail. The actual policy is about to put a massive constraint on non-degree student programs.

So which is it? Are we building short-form pathways or auditing them out of existence? The UK can't decide whether it wants the premium up or the gap closed. The US can't decide whether it is promoting the alternatives or testing them to death.

The earnings premium is not solely an American idea being argued in American terms. Not only is the earnings premium idea bipartisan in the US, it is international and may be growing in scope.

The Khan article's setup is that two claims circulate in UK policy debate simultaneously, often from the same people. The first: too many graduates earn too little, meaning that the earnings premium should be higher, and courses that don't deliver should shrink. The second: non-degree pathways are undervalued and deserve parity of esteem.

Khan's move is to take the first claim seriously and follow it. If the test for whether higher education is worth it is that graduates must out-earn non-graduates, then a policy success means non-graduates fall further behind. You cannot campaign for a wider gap and equal standing at the same time.

Then he adds in the demographic effects. Drawing on TASO's own linked-administrative-data work, he notes that students from free school meal (FSM, how England classifies low-income students) backgrounds earn less at every qualification level—but they still gain from every additional qualification they obtain.

Khan's conclusion is not that the earnings premium metric is unusable. It's that the public debate is incoherent, and that "learners are ill-served by a contradictory public debate and policy context." To make the point that there needs to be a balanced set of policies that are not unidimensional, he lays out the theoretical earnings of graduates and non-graduates, asking which is the appropriate level of overlap. Having two policies where one argues for more overlap and another that argues for less overlap is not coherent.

It is important to point out that Khan and others (like myself) that are arguing for more coherent policies are not in fact arguing against any accountability or standards for alternative pathways. Trying to force fit all of education into one set of metrics and not recognizing the tradeoffs involved is the problem—using the earnings premium as currently constructed might make sense for bachelor degree or graduate degree programs, but using it for short-duration undergraduate certificates or associate degree programs is problematic.

One big transatlantic difference is that England has never attached a funding consequence to a graduate earnings threshold. To date there has been no institutional accountability attached to earnings premiums.

But that may be about to change, at least in England. The Office for Students (OfS) consultation that closed in December proposes adding "a benchmarked salary measure derived from the Longitudinal Education Outcomes dataset," looking at salaries three years after graduation, as one of three student-outcome indicators. A second consultation on implementation is scheduled to take place in the fall.

A few things worth noting, which I'll develop further over time.

England put a Longitudinal Education Outcomes (LEO)-derived earnings metric into a regulatory instrument in October 2017—the Teaching Excellence Framework (TEF) specification included the share of graduates earning above the median salary for 25-to-29-year-olds. That was five years before the first draft elements of the US's updated gainful employment rule (through negotiated rulemaking) that added an earnings premium test. But England then dropped it while the US kept theirs and expanded it to essentially all of higher education.

A lot of the issues around earnings premium arise from whether data sources are used appropriately, and last year the UK's statistics watchdog told the Department for Education (DfE) that its "graduate premium" framing "could potentially be misleading for users, especially when presented in isolation from prior academic attainment." DfE retired the term and rebuilt the series to control for prior GCSE attainment.

The US and UK moves towards earnings premiums have not happened in separate vacuums even if there is no apparent straight line of influence—the documented citation trail between the two systems is thin, and I've spent enough time in it now to be careful. But people move, conferences overlap, terminology and concepts migrate, and the former head of OfS and an architect of the English student-outcomes regime spent the last two years at Harvard writing about American accountability regulation. There's more here than coincidence and less than a conspiracy, and it's worth exploring in the future.

Along with Glenda Morgan and Ed Cramp from Duane Morris, I'll be taking up this thread—two decades of US metric-driven accountability, and what the rest of the world might reasonably learn from it—on a panel at OEB in Berlin, December 2–4. More on that session closer to the date.

In the meantime: read Khan's piece. He does an excellent job pointing out the incoherence of the earnings premium über alles debate (my term, not his), and it helps show how much ROIs and earnings premiums are becoming international subjects.

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