Buried inside President Donald Trump’s One Big Beautiful Bill Act—signed on July 4, 2025—are two provisions that have gone mostly unnoticed, yet are already reshaping higher education in real time. Currently, colleges nationwide are conducting audits and reworking budgets to comply with these transformative new rules.
The first, Workforce Pell, extends Pell Grants to short-term workforce training programs, but only to those that lead to “high-skill, high-wage, in-demand” jobs. The federal government sets a floor of roughly 150 percent of the federal poverty line; state workforce boards decide which specific programs are in demand. The policy shift is already reshaping campus strategy—70 percent of college presidents, including more than half at four-year private nonprofits, told Inside Higher Ed they plan to add or expand short-term credential programs over the next three years, according to its 2026 survey.
The second is “Do No Harm.” This provision ends federal student loans for college programs whose graduates, four years after leaving school, earn no more than a typical high school graduate in the same state earns. The rule applies to two-year and four-year, public and private, for-profit and nonprofit, and to graduate programs, where the comparison is with bachelor’s degree holders. Do No Harm is the broadest and simplest accountability measure Washington has ever imposed on higher education: a single earnings test applied to every kind of institution at every level of credential.
The rule is the product of a three-quarters-of-a-century bipartisan effort to bring accountability to higher education. Its premise is simple and popular: If a credential can’t lift its graduates above an earnings benchmark, taxpayers should not pay students to enroll in it. For most programs, that’s a low bar. Human Development and Family Studies—the academic foundation for the early-childhood workforce—is virtually the only program at risk of failing both the “Do No Harm” measure and the Workforce Pell eligibility requirements. And the reason has nothing to do with skills or demand.
A bachelor’s degree in human development, family studies, and related services earns graduates equivalent to a sub-associate certificate in the same field. One year after leaving school, data show the three credential tracks clustering in a $24,000 to $34,000 band. The bachelor’s wage premium at year one is roughly zero. At year five, it is only about $900, based on the Census Bureau’s Post-Secondary Employment Outcomes file, which links academic records to state unemployment-insurance wage records to track what graduates earn.)
This is not a niche concern. Over 100,000 students completed a Human Development and Family Studies credential over the past five years at community colleges and four-year universities. Every state covered in the data shows those graduates earning below the living wage for a single adult with no kids. The shortfall runs about $14,000 to $36,000 a year, the smallest in Oklahoma and the largest in New York, where the median bachelor’s graduate earns just 43 percent of what’s needed to cover the cost of living.
Human Development, Family Studies, and Related Services programs are the academic foundation for the childcare workforce: They study how children develop, and they equip grads with the skills to care for young children outside a K–12 teaching license. The Center for the Study of Child Care Employment at the University of California, Berkeley reports that 98 percent of center-based early-childhood teaching staff are women. Including home-based providers, the early-childhood workforce is roughly 2.2 million people. Women’s work has long been priced this way, and the gap has rarely been about skill, demand, value, or credentials.
Why credentials don’t pay
Childcare work is one of the lowest-paid occupations in the U.S. The median salary is around $32,000 a year, according to the BLS’s wage survey. A preschool teacher earns about $39,000. Similar developmental work, performed by a kindergarten teacher on a public K-12 payroll, pays about $63,000. The jump is not a skill jump. It is a payer jump. K-12 is publicly funded through mandatory state and local revenue streams. Early childhood is paid for, mostly, out of what parents can afford. In most states, center-based childcare already costs working families more than in-state college tuition. Providers cannot raise tuition, because parents cannot pay more. That is why a bachelor’s degree holder in the field earns no more than a certificate holder.
What the earnings screen measures
A high wage acts as a proxy for high demand, since in a working market demand drives wages up. For childcare that proxy fails. On one side, demand is through the roof—and some of it is latent, because when care costs as much as college tuition, families who would use it if the cost fit their budget, decide not to enter the market at all. On the other side, labor supply is choked by what parents can pay, which caps wages, which constrains how many people choose the field in the first place. Both sides need each other, and if they could meet, society would gain enormously, but conditions in most states don’t allow it.
The earnings screen, meant to flag high-value jobs, misreads this market because of the structural failure described above, which is present in most states. Anyone who has cared for young children knows the work is deeply rewarding and just as physically and mentally demanding. Yet we pay for it as if it were the least useful thing in the economy, even though no one else can get to work without it.
What it would take to move the wages
Oklahoma took the first real steps toward addressing it. In 1998, the state legislature folded universal pre-K into the K–12 school funding system—mandating free preschool for every four-year-old, requiring lead teachers to hold a bachelor’s degree and an early childhood credential, and paying them on the K–12 teacher salary scale. Because funding is through a per-pupil formula, not annual appropriations, it has weathered recessions; because the wage is pegged to K–12, it does not bend to what parents can pay. That is why Oklahoma’s Pre-K teachers come closest to a living wage and why early-childhood reformers laud the state.
But Oklahoma’s model only reaches four-year-olds in publicly funded pre-K—not the rest of the early-childhood workforce caring for infants, toddlers, and three-year-olds, who still rely on parental payment. New Mexico is the first state to apply the same logic across the field. Thanks to state’s sustained investment in wages, subsidies, and the early childhood workforce, both pay and supply have increased.
From 2019 to 2024, New Mexico led the nation in median annual childcare wage growth, rising 64.6 percent against 32.3 percent nationally. Over the same period, the state’s childcare workforce grew by 64 percent, while the national childcare workforce shrank by 7.4 percent. In November 2025, New Mexico became the first state to offer no-cost universal childcare for every child under five. Supply, demand, and wages all move up together when the state sets the conditions for a functioning market.
What makes the system work? First, there is a stable funding stream—primarily from oil and gas leases on state-owned land—which New Mexico secured through a constitutional amendment. It shields early-childhood spending from annual budget fights and gives providers multi-year planning horizons. The funding source for this program is state-specific, but the principle—carving out a dedicated, recurring revenue stream—is transferable. Second, New Mexico uses cost-based reimbursement, which prices subsidies against the cost of delivering quality care, not what families can pay. Third, workforce compensation targets are benchmarked to public-school elementary pay scales. These anchor early-childhood educators’ wages instead of leaving them to the market that produced the flat ladder.
The thing is, in New Mexico, Human Development programs will easily meet the federal earnings screens because graduates’ skills command higher wages. Oklahoma comes closest, but its wage premium is concentrated among public pre-K teachers. Elsewhere, it depends on the credential level and the state. The federal earnings test for Workforce Pell sets a relatively low bar, and most programs clear it; the real question for short-term early-childhood credentials is whether state workforce boards designate the field as “high-skill, high-wage, in-demand.” Because “high wage” is not how one would describe early childhood care, that designation depends on whether boards choose to advocate for the field based on necessity, skill content, and labor demand. Do No Harm, meanwhile, will pull federal loan eligibility from associate’s, bachelor’s, and graduate programs whose graduates earn no more than the relevant comparison group, and in human development, where all three credential tracks cluster in the same earnings band, the rule’s likely effect is to push students toward adjacent credentials like elementary education and reduce the number who pursue higher degrees in the field at all. Soften the rule to spare the field, and you produce debt-burdened graduates whose wages can’t carry their loans. Hold the line, and you shrink an already-thin early-childhood workforce. It looks like a tradeoff. It doesn’t have to be.
What no accountability rule can fix on its own is the market failure of the early-childhood labor market. It does not function like a normal one: parents cannot pay what the work is worth, and the value it creates accrues largely off the books, to the employers whose workers can show up, to a tax base built on those workers, to the future shaped by children who develop well. None of those beneficiaries pay the people doing the work.
Do No Harm is already acting as a catalyst, shifting focus from the symptom of low post-graduate earnings to its cause. Now that institutions are being held accountable for what their graduates earn, they have both the obligation and the standing to advocate for graduates whose training and labor produce real social value and ought to command a living wage. The structural changes that raise early-childhood educators’ wages are where this accountability pressure belongs. The right response, then, is not to tailor the rule to spare Human Development programs, and certainly not to repeal yet another hard-won higher-education accountability standard. It falls to state and local lawmakers, workforce boards, early-childhood advocates, policy institutes, and the institutions that train this workforce to figure out, together, how to do what New Mexico did: build the state-specific funding architecture (dedicated revenue, cost-based reimbursement, wage-parity benchmarks) that finally lets the value of the work performed match the value it provides, and gives the dignity of a living wage to the workforce behind the workforce.
