Last year’s budget reconciliation legislation, more commonly known as the One Big Beautiful Bill Act (OBBB), marked a turning point in federal higher education policy. For the first time, Congress attached real consequences to poor program performance by embedding an earnings-based “do no economic harm” standard into federal law. As a result of this standard, undergraduate programs whose graduates consistently earn less than comparable high school graduates risk losing access to federal student loans—a consequence that fundamentally changes institutional incentives.
But the most ambitious developments in outcomes-based accountability may now be happening in the states.
In March 2025, Utah lawmakers passed H.B. 265, directing public institutions to redirect funding toward areas aligned with state workforce needs. The legislation emphasized strengthening programs that feed high-demand fields and contribute to Utah’s economic growth. By the end of the year, the University of Utah announced it would eliminate 81 programs as part of that realignment. While some affected programs had low enrollment, the central objective was workforce alignment—shifting public resources toward programs more clearly tied to professional opportunity.
Indiana is now considering going further. Legislation introduced this session would require public institutions to eliminate programs that fail the federal “do no economic harm” earnings threshold. Recent data suggests about a dozen programs will fail this standard—not a huge number, but not a trivial one either.
Indiana’s proposal explicitly builds on the accountability framework embedded in last year’s federal reform. Utah’s model reflects a different emphasis, prioritizing workforce demand and strategic economic alignment. Neither approach is necessarily the final blueprint. That is precisely why they matter.
For two decades, policymakers have been moving toward outcomes-based accountability. The 2006 Spellings Commission elevated performance and transparency as national priorities. The Obama administration’s College Scorecard and gainful employment regulations introduced earnings and debt metrics into federal oversight.
OBBB codified those principles with a clear consequence: Programs that repeatedly fail the “do no economic harm” test risk losing access to federal loans.
Earlier state efforts, particularly performance-based funding formulas, were important but modest. They typically placed only a small share of institutional funding at risk. Research suggests such systems often produce limited improvements when incentives are weak.
Utah and Indiana represent a different level of seriousness. These reforms do not simply adjust funding formulas at the margins; they shutter programs that fail to meet the bar.
These policies will not be without costs. Some professors will lose their jobs. Departments will contract. Students will have to change majors. These tradeoffs are real and deserve acknowledgment.
But maintaining programs that consistently fail to align with workforce demand or generate viable labor market outcomes is also costly. Public higher education is heavily subsidized via loans, grants, and research funding. Therefore, when programs leave graduates unable to support themselves or repay their debts, the costs are socialized.
Critics will say this requirement reduces education to wages. It does not. Earnings are not the only measure of value. But they are a necessary safeguard in a publicly financed system. Institutions should not offer programs that systematically leave students financially worse off than if they had never enrolled.
OBBB ended the era of unlimited subsidy without performance expectations. States like Utah and Indiana are not merely echoing that principle—they are operationalizing it. If more states follow with their own variations, the country will gain evidence about how to align higher education with student success.
The next phase of reform will not be written solely in Washington. It will be shaped by the states willing to test what accountability with consequences actually looks like.
Students and taxpayers deserve nothing less.
