Understanding the FAFSA Lower Earnings Indicator

What Is the FAFSA Lower Earnings Indicator?

The FAFSA “Lower Earnings Indicator” is a data-driven warning created under the FAFSA Simplification Act. It appears on the College Scorecard and in federal reporting to help students identify college programs where graduates tend to earn less than expected. This indicator is not a penalty and does not affect your financial aid eligibility—it simply provides transparency about the potential return on investment (ROI) for certain degree programs.

What the Lower Earnings Indicator Measures

The Lower Earnings Indicator flags programs when graduates, on average, earn less than the typical earnings of high school graduates in the same state. In simple terms, if completing a college program results in lower early-career earnings than not attending college at all, the program may receive this flag.

CollegeWhale Tip: The Lower Earnings Indicator is not a judgment of program quality. It is an informational tool designed to help you compare outcomes before taking on student debt.

What the Indicator Means for Students

The Lower Earnings Indicator does not impact any form of financial aid. You will still have access to:

• Federal Pell Grants
• Work-study programs
• Federal Direct Loans
• State grants and scholarships

It does not:

• Remove FAFSA eligibility
• Reduce grant amounts
• Limit borrowing options
• Block you from enrolling

For a full walkthrough of the FAFSA form, timelines, and what to expect, see our step-by-step overview on FAFSA and Financial Aid.

Its sole purpose is to inform students and families about potential low earnings compared to program cost.

Why the Lower Earnings Indicator Exists

The indicator is part of a federal effort to increase accountability and transparency around college program outcomes. It was created to help students avoid taking on high levels of debt for programs with low early-career earnings. It is especially aimed at highlighting:

• Programs with historically low wages
• Degrees that produce high debt but low earnings
• For-profit programs with poor student outcomes

The goal is simple: to help students make informed decisions and avoid low-value educational programs.

What Triggers the Indicator

A program may be flagged if:

• There are enough graduates to report reliable earnings data
• Median earnings 1–2 years after completion fall below the median earnings of high school graduates in that state
• This low-earnings pattern occurs for multiple reporting cycles

This metric may apply to:

• Bachelor’s degree programs
• Associate degree programs
• Certificates and trade programs
• Graduate programs (in some cases)

Where You Will See the Indicator

Students may encounter the Lower Earnings Indicator in several places:

• On the College Scorecard program page
• Within FAFSA-linked college comparison tools
• In school-provided financial aid documents
• In transparency reports related to college program outcomes

Its function is informational—not regulatory.

Do Lower Earnings Programs Always Mean Low Quality?

Not at all. Many programs with a Lower Earnings flag lead to meaningful careers that simply begin with lower wages. Programs commonly flagged include:

• Creative arts fields
• Psychology (BA level)
• Social work
• Early childhood education
• Culinary, cosmetology, massage therapy
• Certain health-technology certificates

These fields often have strong long-term potential or offer intrinsic benefits unrelated to earnings.

Programs rarely flagged include:

• Engineering
• Nursing
• IT and cybersecurity
• Accounting and finance
• Electrician, HVAC, welding, and other skilled trades
• Business and STEM majors

Real-Life Example: How the Indicator Works in Practice

The Lower Earnings Indicator can be easier to understand through an example. Consider two programs at the same community college:

• The Early Childhood Education certificate is flagged because graduates typically earn around the same or slightly less than the median high school graduate in that state. Tuition is low, but wages early in the career are lower.
• The Nursing associate degree is not flagged. Graduates immediately enter a field with higher earnings and strong job demand.

Both programs serve important roles, but one has stronger financial returns early on. The indicator helps students understand these differences before borrowing for school.

Why FAFSA Includes This Indicator

The indicator supports smarter financial decision-making. Many students borrow tens of thousands of dollars for programs where early-career salaries range from $28,000 to $35,000. FAFSA uses this indicator to encourage comparisons such as:

• Cost vs. expected salary
• Debt vs. earnings power
• ROI compared to lower-cost alternatives
• Whether a trade school or community college path may offer better value

How Students Should Use This Information

The Lower Earnings Indicator is not meant to scare students away from certain careers. Instead, it should be used as part of a broader decision-making process:

• Compare programs across different schools. A flagged program at one college may not be flagged at another.
• Review tuition and net price. Low earnings matter more when tuition is high.
• Check job placement rates. Some programs lead to secure employment even if early earnings are modest.
• Explore alternatives. Community colleges, apprenticeships, and trade schools may provide stronger short-term ROI.

CollegeWhale Tip: A flagged program is not automatically a poor choice—just make sure the cost of attendance aligns with your expected earnings and financial goals.

FAFSA Lower Earnings Indicator: Quick Facts

Frequently Asked Questions

• Does the Lower Earnings Indicator affect my Pell Grant? No. Your financial aid eligibility remains unchanged.
• Are private colleges included? Yes, the indicator can apply to public, private nonprofit, and for-profit institutions.
• Should I avoid programs that are flagged? Not necessarily—just make sure the cost aligns with realistic earnings.
• Can a program lose or gain the indicator over time? Yes. As earnings change, programs can move on or off the list.
• Does this apply to graduate programs? In some cases, yes, depending on available earnings data.