New PEER Analysis Shows Gainful Employment Standards Could Keep Students from Overpaying for Cosmetology Career Programs

August 22, 2022


New PEER Analysis Shows Gainful Employment Standards Could Keep Students from Overpaying for Cosmetology Career Programs
The report debunks claims that gainful employment regulations would thwart students’ access to cosmetology programs

Cosmetology schools that participate in federal student aid programs charge students more than those that do not participate without providing better outcomes, according to a new report from the Postsecondary Equity & Economics Research (PEER) Project — a joint initiative between academics at George Washington University and Columbia University and attorneys at Student Defense.

Cosmetology Schools Everywhere, published by Stephanie Cellini and Bianca Onwukwe, examines the costs of completing certain cosmetology programs in Texas. The analysis found that programs eligible for Title IV federal student aid on average cost students more than non-Title IV programs, even though their completion and certification rates are about the same. The report discredits arguments that implementing gainful employment regulations would limit students’ ability to attend and pay for cosmetology training.

“Our analysis refutes arguments suggesting that newly-proposed GE regulations would leave students without options for cosmetology training,” the report says. “It is clear that many options for cosmetology and barber training exist outside of the federal student aid system and these schools typically charge lower tuition than Title IV programs.”

Only 14% of all Texas cosmetology programs are eligible to participate in federal student aid programs, according to the report. However, these schools charge more for tuition and fees on average than schools that don’t participate in federal aid programs. If Title IV and non-Title IV schools are of similar quality, students may benefit from attending non-Title IV institutions. Given the small percentage of schools that participate in Title IV and would be subject to gainful employment regulations, the report concludes that gainful employment regulations would not severely limit students’ ability to access. Instead, students would continue to have access to more than 700 non-Title IV institutions spread throughout the state.

Lobbyists for the for-profit college industry allege the gainful employment rule would “do irrefutable harm” to cosmetology programs. But this report finds that gainful employment may actually protect students from overpaying for these career training programs. A July 2022 study showed that 98% of cosmetology programs that are subject to debt-to-earnings and earnings threshold tests would fail to meet proposed gainful employment standards, meaning the cost of these programs does not provide an adequate return for students to be able to pay back their student debt after completion.

“It’s clear that enacting gainful employment regulations would not have a chilling effect on access to cosmetology career programs,” said PEER Project Co-Director Stephanie Cellini. “These regulations would, however, shield students from being saddled with unnecessary debt and help ensure educational programs are a launching point for economic mobility. Students deserve to enroll in programs that will provide them with a meaningful return on their investment.”

A full copy of the report can be found on the PEER Project website.