The US Department of Education (ED) is proposing a set of rules that would establish a new accountability standard for higher education programs with low earnings outcomes. The proposed rules, if formalized, will make a higher education program ineligible for Title IV Higher Education Act (HEA) funds if the program fails a do-no-harm test that sets an earnings standard for its graduates. While all postsecondary institutions will face the repercussions from these rules if passed, schools in the wellness, somatic, and beauty professions could see significant impacts.
The do-no-harm test weighs whether a graduate of a postsecondary program earns more than an adult with no degree beyond a high school diploma. The intent is to ensure students are not financially worse off after completing a program of study than they would have been without it. A program fails the earnings premium measure if the median annual earnings of the students who completed the program are less than the earnings threshold, which is calculated with data from the US Census Bureau. Two of the most common undergraduate certificate programs that fail the test are:
- Cosmetology and related personal grooming services: 92.5 percent of students will not meet the standard
- Somatic bodywork and related therapeutic services: 89.0 percent of students will not meet the standard
If a program fails the earnings test for two out of any three consecutive award years, the institution will be placed on provisional status, and the program will not be eligible to participate in the Direct Loan program for two years. Institutions must be able to demonstrate that at least half of the institution’s recipients of title IV HEA funds and half the institution’s total title IV HEA funds are not from low-earning outcome professions as defined by this provision.
There are several problems with how these measures are calculated—flaws that will disproportionately harm schools in the beauty and wellness professions because of how these professions are structured.
- The median earnings are compared to other professions without being adjusted for wage differences due to gender disparity, age disparity, or racial disparity.
- They do not account for unreported income, like tips, which make up a large part of income in these professions.
- They don’t account for regional variation within states (a cosmetologist in Chicago, Illinois, for example, probably is not making the same as one in Woodstock, Illinois).
- They do not account for wage differences between part-time work and full-time work, meaning if the average massage therapist or cosmetologist works 25 hours a week, for example, they are compared to the average high school graduate in another profession who works 40-plus hours a week. This is a huge problem in the beauty and wellness professions, where most professionals work part-time.
This formula will unfairly cause most non-community-college programs in the beauty and wellness professions to fail this earnings test, meaning they will lose a critical stream of federal funding for their students.
We cannot allow this to happen. We urge you to contact your congressional representative to let them know your school needs help. Ask for an exemption for the beauty and wellness professions or for the formula to be changed to account for all the disparities mentioned above.
Learn More
Read the Interpretation
NASFAA Summary of Consensus on Accountability Language from Last Week’s AHEAD Negotiated Rulemaking Committee