A proposed federal student loan rule might mean students could lose access to federal loans to attend cosmetology programs across the state.
Under the rule, postgraduate programs could lose Federal Direct Loan access if they fail the “earnings test,” meaning graduates, four years after graduation, make less than those with just a high school diploma in the same state.
“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,” said Ryan Fewins-Bliss, the executive director of the Michigan College Access Network.
To lose loan access, programs would need to fail the test in two out of three consecutive years during a review period set to begin July 1.
Leaders from the coordinating boards of Michigan’s public and private non-profit colleges and universities are not worried about the majority of the programs they offer. Cosmetology schools, however, are a different story: Federal projections suggest that 92.5% of such programs could fail the test.
Angela Sharp, who owns Sharp’s Academy of hairstyling in Grand Blanc, said a one-size-fits-all approach to accountability in higher education is not fair to cosmetology schools.
Sharp said cosmetology programs attract a self-selecting group of vulnerable students whose circumstances would not allow them to take on a longer degree program.
“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,” Sharp said. “So this program serves a really big purpose of helping primarily women, and if this program is eliminated, there's going to be a lot of people that maybe don't get to do any type of post-secondary training.”
The earnings test aims to ensure that programs do not leave students financially worse off than if they had never attended. Advocates for the policy say the change could be a reckoning for cosmetology schools, and that it could prompt them to operate more efficiently, charge less, and create more return on investment for students.
The comparison would use earnings data from four years after graduation. Sharp said that many cosmetology graduates work part time, while others take decades to build a high-paying clientele or start their own businesses.
“It's important that people have the opportunity to enter a career that they're excited about,” Sharp said. “I think that they gain employment and they stick with it because it's something that they enjoy doing, rather than a different type of job that might earn the same income, but they don't have a passion for."
Entire schools could lose access to federal loans and all federal student aid, including Pell Grants, if these failing programs comprise over 50% of an institution's total students or revenue.
Fewins-Bliss said many programs rely on tuition from students with Federal Direct Loans.
“Eventually, if the federal government rules that a program can't take student loan dollars, it will functionally shut down,” Fewins-Bliss said. “We just don't have the infrastructure, the financial wherewithal to hold those programs up. So those institutions are going to be doing everything they can to make sure those degrees are valuable.”
Before finalizing the rule, federal officials will review comments from a public comment period ending May 20.
