HICKORY — A federal rule that can take student loans away from a college program whose graduates earn less than people with only a high school diploma will not, on the numbers now public, cut off loans for students at the early college that Catawba County Schools, Hickory Public Schools and Newton-Conover City Schools share.
Challenger Early College High School is on the Catawba Valley Community College campus and serves students from all three districts. They graduate in four years with a high school diploma and an associate degree, and most transfer as juniors to finish a bachelor’s degree, according to the Catawba County Schools 2025-26 curriculum guide. In 2023-24 that college awarded federal student loans to none of its degree-seeking undergraduates.
The rule can still matter to these districts one step later, when a Challenger graduate, or a student who started in a tuition-free teacher-preparation class, borrows to finish a four-year teaching degree. As of publication, the U.S. Department of Education has not published a pass or fail for any program at Catawba Valley Community College, or for any university program these districts hire from.
The school the three districts already share
The county curriculum guide, in a section dated for the 2025-26 year, describes Challenger as a cooperative innovative high school housed on the college campus. It “serves students in Catawba County Schools, Hickory Public Schools, and Newton-Conover City Schools.” Students leave with a high school diploma and an associate degree. “Most of these students will transfer into a four-year college or university as a junior to pursue their Bachelor’s Degree,” the guide says.
The same guide says the county system partners with the college, and that many county students will graduate with as many as 32 semester hours of tuition-free college credit. Career and College Promise, the state’s dual-enrollment program, is tuition-free. The guide also says the college charges a $40 fee and an $80 textbook fee each semester for high school students in those classes.
The college’s own 2025-26 list of high school advisors names Bandys, Bunker Hill, Challenger Early College, Fred T. Foard, Maiden and St. Stephens; Hickory High and Hickory Career & Arts Magnet; and Newton-Conover and Discovery. Hickory City Schools’ website lists Hickory High and Hickory Career & Arts Magnet as its high schools. The state report cited below lists that district as Hickory City Schools.
Separate from Challenger, the college offers an Associate in Arts in Teacher Preparation and an Associate in Science in Teacher Preparation. The college says the arts pathway is for students who want to become licensed teachers in elementary, middle or high school or in special education, and that a graduate with a C or better in each course and at least a 2.7 grade-point average can transfer with junior status under the state’s articulation agreement. Qualified juniors and seniors can start that pathway while still in high school if they have an unweighted grade-point average of 2.8 or qualifying test scores.
What the rule actually does
The Department of Education published the rule in the Federal Register on July 1, 2026. It takes effect July 1, 2027, except for two technical instructions that take effect Aug. 31, 2026. It carries out an earnings test Congress put in the Higher Education Act in the Working Families Tax Cuts Act, signed July 4, 2025.
The test is program by program, not college by college. For an undergraduate program, the department compares the median earnings of people who completed it with the median earnings of working adults ages 25 to 34 who have only a high school diploma or its equivalent, were working, and were not enrolled in college that year. The comparison group is in the state where the college is located, or nationwide if fewer than half the college’s students that year are from that state. Graduate programs are compared with working adults in that same age range who have only a bachelor’s degree. Earnings are matched through a federal agency that holds earnings data. The standard group of completers is the award year four years before the year of that earnings data. If fewer than 30 completers are in that year, the department adds earlier years.
A program that comes out behind in two out of any three consecutive award years for which the measure is calculated becomes what the rule calls a low-earning outcome program. Its participation in the federal Direct Loan program then ends, after notice, unless the college wins an appeal limited to a calculation error.
That is a loan sanction, not an automatic grant sanction. Pell Grants at those programs are cut off only if the college later fails a separate test: it must show that low-earning outcome programs are not the source of more than half of its federal student-aid recipients and not more than half of its federal student-aid dollars. A college that fails that test in two out of three award years is placed on provisional status, and its low-earning outcome programs lose eligibility for all federal student aid, Pell included.
A local graphic put the first possible loss of loans at July 1, 2028, and a North Carolina pay bar at $29,344. The rule text does not set July 1, 2028 as a cutoff date. It sets the effective date at July 1, 2027 and requires two failing years out of three before loans end. The $29,344 figure is real, but it is not a new bar for this rule. It is the high-school earnings threshold the department published for North Carolina for calculation year 2024, in a Dec. 31, 2024 notice under the older earnings-premium rules. The department has not published a new North Carolina dollar amount for the July 2026 rule. As of publication, $29,344 has not been applied to any program at this college.
The aid students here actually use
College Navigator, using the college’s report to the National Center for Education Statistics for 2023-24, shows federal student loans awarded to 0 degree- or certificate-seeking undergraduates, totaling $0. Federal Pell Grants went to 1,061 of those students, 30 percent, totaling $9,456,346, an average of $8,913.
Among full-time students starting college for the first time that year, federal student loans were also $0 and 0 percent. Pell Grants went to 139 of them, 53 percent, averaging $8,967.
Navigator still lists the Federal Direct Loan program among the aid programs at the college. The new rule shields a low-earning program from an automatic loss of all federal student aid if the college is not in the Direct Loan program and has not been for the five most recently completed award years. Because the college is listed as offering those loans, that shield cannot be confirmed for Catawba Valley Community College as of publication. What the 2023-24 report does show is that a loan cutoff would not take away borrowing that degree-seeking students at this college were not using.
Why the three districts would feel a later cutoff
The districts do not run the college programs. They do depend on the people those programs send back as teachers.
In the state’s 2024-25 counts, Catawba County Schools had 1,014 teachers and 103 of them left the district, a 10.16 percent district loss. Newton-Conover City Schools had 178 teachers and 22 left, 12.36 percent. Hickory Public Schools, listed in that report as Hickory City Schools, had 247 teachers and 54 left, 21.86 percent. Statewide, 13,112 of 90,105 teachers left their district, 14.55 percent. The county and Newton-Conover rates were under the state figure. Hickory’s was well above it.
On the 40th day of the 2025-26 school year, Newton-Conover’s teacher vacancy rate was 0.58 percent, one of the five lowest in the state. The same table’s five highest and five lowest rates do not include Catawba County Schools or Hickory. The department’s definition counts a job as vacant when it is filled by a long-term substitute, a retired teacher, or a teacher on a temporary or provisional license, not only when a classroom has no adult in it.
None of those staffing figures was caused by this rule. The rule is not in effect until July 1, 2027, and no local program has a published result under it. The figure that ties the rule to these three districts is the one from the college they share: federal loans at $0, Pell Grants in wide use, and an early college whose students are expected to leave for a four-year degree, which is where federal student loans are actually borrowed.
As of publication, the department has not named a program serving Catawba County Schools, Hickory Public Schools or Newton-Conover City Schools that will lose loans or Pell Grants.
Source note
Federal Register, “Accountability in Higher Education and Access Through Demand-Driven Workforce Pell: Student Tuition and Transparency System (STATS) and Earnings Accountability,” 91 FR 40136, July 1, 2026, document 2026-13286, effective July 1, 2027 (federalregister.gov). Earnings-threshold definition, cohort period, low-earning outcome programs at 34 CFR 668.603, and the half-of-aid administrative-capability sanction are in that document. Federal Register notice, “Financial Value Transparency and Gainful Employment: Earnings Thresholds for Calculation Year 2024,” Dec. 31, 2024, document 2024-31271, North Carolina high-school threshold $29,344 (federalregister.gov). National Center for Education Statistics, College Navigator, Catawba Valley Community College, unit ID 198233, undergraduate student financial aid, 2023-24 (nces.ed.gov/collegenavigator). NCES IPEDS Data Feedback Report 2025 for the same unit, Student Financial Aid component, Winter 2024-25, showing 0 percent federal loans and 30 percent Pell among degree- or certificate-seeking undergraduates in 2023-24. Catawba County Schools, 2025-2026 Curriculum Guide, superintendent’s letter dated Feb. 1, 2025, and the Career and College Promise / Challenger section (2025-2026 Curriculum Guide). Catawba Valley Community College, Career and College Promise, including the 2025-26 scholar-advisor high school list (cvcc.edu). Catawba Valley Community College, Associate in Arts in Teacher Preparation (cvcc.edu). Hickory City Schools homepage, listing Hickory High School and Hickory Career & Arts Magnet High School (hickoryschools.net). N.C. Department of Public Instruction, “2024-2025 Report on the State of the Teaching and School Administration Professions in North Carolina,” vacancy section for 2025-26 (Table 9) and Appendix C, state attrition, mobility and district attrition for 2024-25 (dpi.nc.gov). Tip only, not a source for the facts above: Catawba Valley News & Weather, Facebook post, Sept. 29, 2026, 7:01 a.m. ET (Facebook).
Cover: File photo, not the site. A public high school classroom in Hayesville, Clay County, photographed in 2004. Not a Catawba Valley school. Photo: Harrison Keely, CC BY 4.0, via Wikimedia Commons.
