It’s the End of FVT&GE as We Know It

ED’s new accountability proposal replaces FVT&GE with a statute-first, earnings-only framework

Author

Phil Hill
December 30, 2025

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The Department of Education (ED) has released its discussion draft for a new federal accountability framework, revising the existing Financial Value Transparency (FVT) and Gainful Employment (GE) regulations to align with statutory changes enacted in the One Big Beautiful Bill Act (OBBBA). While the underlying program-level data have not yet been released (expected later today), the rules text, especially the annotated version circulated ahead of negotiated rulemaking, makes ED’s priorities unusually clear. I’d like to share my initial observations.

This is not a technical tune-up. It is a deliberate simplification.

ED is proposing a single, statute-driven accountability framework for all postsecondary programs participating in the Title IV Direct Loan Program. Where prior rules layered multiple metrics, carve-outs, and special treatments, the new proposal strips those away in favor of uniform enforcement and straightforward implementation of congressional language. Furthermore, ED’s proposal rebrands the Financial Value Transparency regulations and related changes as a new Student Tuition and Transparency System (STATS).

In short: simplicity and statutory fidelity are being prioritized over nuance.

What ED is changing from FVT & GE - at a glance

The visual below captures the core shift.

DESCRIBING: A vertical color infographic with side-by-side comparison panels, icons, and section dividers. SYNOPSIS: This infographic visually compares two systems for evaluating higher education programs under federal financial aid regulations: the existing Financial Value Transparency (FVT) and Gainful Employment (GE) regulations, and a proposed new framework aligned to the One Big Beautiful Bill Act (OBBBA). Each system is broken down into five key elements using icons and summaries. The infographic then outlines the new accountability framework “at a glance” and implementation details using horizontal bands and symbols. IN-DEPTH DESCRIPTION: At the top, the title reads "Aligning Accountability: How New Federal Rules Reshape Higher Ed Program Evaluation," with a short paragraph explaining the Department of Education’s intent. Below, two colored panels convey a side-by-side comparison. The left panel (light blue) lists the old system’s components: Two different metrics (debt-to-earnings, earnings premium), represented by gears. A broader earnings cohort, depicted with a group of alumni figures. Harsher consequences for failure, shown with a shield and exclamation mark. Longer re-eligibility period, using a clock. Special treatment for certain graduate programs, symbolized by a graduation cap and shield. The right panel (gold) describes the new system: One simplified metric (only earnings premium), with a single gear. "Working-only" cohort, showing three professional silhouettes. Limited, harmonized consequences, using a checkmarked shield. Shorter ineligibility – two years, shown with a stopwatch. No special rules for any program, visualized by a certificate ribbon. A central arrow points from the two panels to the middle stating, “Proposed OBBBA Alignment to Create a Single, Simplified System.” Lower down, a “new accountability framework” section uses three blue icons: a flask (single test: earnings premium), scales (how the test works), and a house (consequences for failure). Simple explanations follow each icon. The final horizontal band features four icons and short explanations outlining how the OBBBA implementation would work, such as straight implementation, no regional adjustments, expanded cohorts, and streamlined reporting.

  • One accountability metric: Earnings Premium only

  • Debt-to-Earnings (D/E): Eliminated entirely

  • Who’s covered: All GE and eligible non-GE programs participating in Direct Loans (essentially folding in FVT & GE with OBBBA Do No Harm accountability)

  • Cohorts: “Working-only” graduates; non-working completers excluded

  • Failure standard: Fail the earnings premium test in 2 of any 3 years

  • Consequence: Loss of Direct Loan eligibility at the program level

  • Re-entry: Two-year ineligibility period

  • Geography: State or national benchmarks only - no metro, MSA, or cost-of-living adjustments

  • Graduate programs: No special timing or “qualifying graduate program” treatment

This framework is designed to be easier to explain, easier to administer, and consistent across sectors, even where that consistency introduces known distortions.

What the annotations reveal about ED’s intent

The annotated draft is particularly instructive. Throughout the document, ED repeatedly explains why it made certain choices, and why it declined to pursue others.

The annotations confirm that:

  • Eliminating D/E was a conscious tradeoff, not an oversight.

  • Consequences are intentionally limited to Direct Loans only, mirroring HEA §454(c).

  • Cohort expansion rules are designed to maximize coverage, even if that requires pooling across programs.

  • Regional earnings adjustments below the state level were effectively ruled out due to statutory framing and Census data limitations.

Taken together, the annotations make ED’s philosophy explicit:

Follow the statute closely, apply the rule uniformly, and avoid adding complexity that Congress did not require.

Two key distortions that remain: regional variation and the age-based comparison group

One distortion embedded in the draft, and one the Department clearly chose not to address, is the absence of any regional or sub-state income adjustment. This is an issue I have called out repeatedly. The earnings benchmarks rely on state-level or national medians only, with no use of metropolitan statistical areas (MSAs), commuting zones, county-level data, or cost-of-living adjustments. That choice matters in states with wide internal income variation, where graduates working in lower-wage regions are compared against statewide earnings that reflect much higher-cost metros. Importantly, this was not an oversight: the annotated draft makes clear that ED opted for a uniform, statute-aligned approach rather than introducing geographic nuance that Congress did not explicitly require.

What makes that decision more notable is that ED did allow for a form of regional adjustment in the Workforce Pell context, where value-added earnings and labor-market alignment require more localized benchmarks. In other words, ED has demonstrated it can operationalize regional labor-market variation (at least partially) when the statute and program design point in that direction. For accountability under OBBBA, however, the Department intentionally declined to do so, reinforcing that the guiding principle here is simplicity and uniform enforcement, even where that comes at the expense of precision.

Another design choice carried directly from statute deserves special attention: the comparison group remains fixed at ages 25–34.

That age band brings its own distortions. Most notably, undergraduate certificate programs continue to face a tougher benchmark than bachelor’s and graduate programs. Certificate completers are often earlier in their labor-market trajectories, while the comparison group reflects steadier early-career earnings. By contrast, four-year and graduate programs are compared against groups that more closely resemble their graduates’ expected earnings paths.

This asymmetry is not new; it existed under FVT&GE and was codified in OBBBBA. But the new framework amplifies its importance by making earnings premium the only accountability test.

What happens next

This discussion draft is the baseline document for negotiated rulemaking next week. Negotiators will be reacting to and negotiating changes to this text, not to an abstract idea of accountability.

That matters because the annotations strongly suggest where ED is flexible and where it is not. Structural changes (adding regional adjustments, reintroducing D/E, softening pass/fail mechanics) face both statutory and philosophical headwinds. Any changes that emerge are more likely to be clarifications than redesigns.

What’s coming next on On EdTech

The rules text tells us how ED intends to implement accountability. I will update with any corrections or clarifications I receive tomorrow. But more importantly, the missing piece is the data.

ED is expected to release the updated program-level data file soon. Once that happens, I’ll dig into:

  • Which programs are most exposed under the new framework;

  • How outcomes differ by credential level, field, and sector;

  • How cohort pooling changes results for small programs; and

  • Where the age-based and geographic assumptions matter most in practice.

Those data-driven analyses, with updated graphics and distributions, will follow in the premium On EdTech+.

Stay tuned, and keep reading On EdTech as this accountability framework moves from rules text to real-world impact.

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