Potential Impact of Federal Loan Rule on Cosmetology Programs
A new federal regulation could drastically affect the accessibility of federal student loans for students pursuing cosmetology programs statewide. The proposed rule stipulates that postgraduate programs risk losing Federal Direct Loan eligibility if their graduates, four years post-graduation, earn less than individuals with only a high school diploma in the same region.
Ryan Fewins-Bliss, executive director of the Michigan College Access Network, explained, “Functionally, they’re trying to make sure that the degree that you’re paying for and they’re using student loans and federal and state aid to pay for it is actually valuable to you in the long run.” To become ineligible, these programs must fail the earnings test in two of three consecutive years, with the review period commencing on July 1.
While public and private non-profit colleges in Michigan express confidence in their programs, cosmetology schools face significant challenges. According to federal projections, 92.5% of cosmetology programs could potentially fail the test.
Angela Sharp, owner of Sharp’s Academy of hairstyling in Grand Blanc, argues that a uniform approach to educational accountability is unjust for cosmetology schools. She notes that these programs often cater to vulnerable students who cannot commit to extended degree programs, saying, “Well, if you’re a person that’s economically depressed or a single mom, a year and a half in itself is a big commitment.” She emphasizes the role such programs play in providing opportunities for these populations, mainly women, to receive post-secondary training.
The earnings test intends to prevent programs from leaving students worse off financially than if they had not attended. Advocates believe the policy could compel cosmetology schools to enhance their operations, reduce costs, and offer better returns on investment for students. More insights are available from advocates and in this commentary.
The rule evaluates earnings data four years post-graduation, a challenging metric for many cosmetology graduates who often work part-time or take years to build a lucrative clientele. Sharp stresses, “It’s important that people have the opportunity to enter a career that they’re excited about… they gain employment and they stick with it because it’s something that they enjoy doing.”
If over half of a school’s students or revenue come from failing programs, the institution could lose all federal student aid, including Pell Grants. Many programs depend heavily on tuition from students using Federal Direct Loans. Fewins-Bliss warns, “Eventually, if the federal government rules that a program can’t take student loan dollars, it will functionally shut down.” He notes the lack of infrastructure and financial resources to sustain such programs without federal aid.
Federal officials are soliciting public comments on the proposed rule until May 20 before making a final decision.
