25,000 Signatures and Counting: How Beauty Schools Can Prepare for Proposed Gainful Employment regulations
Student Debt is a hot topic in America right now. The next generation of barbers has the potential to be impacted by proposed regulations from the Department of Education. It has sparked a petition that has gained almost 25,00 signatures (organized by TheCut). If approved, it will affect individuals who need Financial Aid. There won’t be as much money to go around depending on the barber school that they are applying to.
“The proposal would create the strongest-ever Gainful Employment (GE) rule, which would terminate access to Federal financial aid for career training programs that routinely leave graduates with unaffordable debt burdens or with earnings that are no higher than workers without any education beyond high school.” (Source)
Under the Gainful Employment rule, career training programs (like beauty and barber schools) have to meet specific criteria related to the debt-to-earnings ratios of their graduates. For example, if you received financial aid to go to Barber School, you will likely graduate with debt. The DOE will track your debt-to-earnings ratio to see if your education actually helped you gain a valuable career.
You are in $20,000 debt, but how much money did you make? If you made $20,000 then it would be a 1:1 ratio. If you made $80,000 it would be 4:1.
Predicting the Impact
Beauty and Barber Schools failing to meet these debt-to-earnings ratios could face consequences such as losing access to federal student aid funding, which is often crucial for their students to finance barber school. In short, they may not have enough students attending their school to keep their doors open.
The impact of the proposed regulations to Gainful Employment may vary. The rule primarily targets programs that are not providing adequate value or outcomes for their students in terms of employment and earnings. When you consider the amount of money a barber can make, this shouldn’t be a problem though right? Well, think again. Are barbers reporting their actual earnings?
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It’s Complicated
When you Google Barber Salary, you’ll see a number around $33,000. What do you think about that number? Is that accurate? With all the 6-figure barber talk, this doesn’t feel right. Our history of hiding from Uncle Sam might be coming to bite us. The US Government thinks that barbers make $33,000 and when you compare that to the debt of barber school, it isn’t all that impressive.
Then there’s the student who signed up for barber school, but dropped out. They have debt and didn’t even end up in the career they are in debt for. That doesn’t look great either. Regardless of these proposed regulations, I hope this is a wake up call for our industry to see how others view us. There are consequences for hiding from Uncle Sam. The powers-at-be think we don’t make enough earnings compared to our debt.
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Our Data Tells a Bad Story
On the other hand, Beauty and Barber Schools can be on the offense here. If they don’t want to be affected, they need to take advantage of the opportunity to demonstrate that their graduates have achieved satisfactory levels of employment and income after graduation. These programs will be evaluated based on the earnings of their graduates compared to their loan repayment amounts.
But let’s be real, has your barber school followed up with you after graduation? Did they even follow up with you after you took your barber exam? Don’t get me wrong, there are many amazing beauty and barber schools. But there are also some…I’ll let you fill in the blank.
The DOE provided public data to show the receipts on their proposal. Yes, I analyzed it for our industry. Here is what I found.
1505 Programs were categorized as Cosmetology and Related Personal Grooming Services
9% - 133 would Fail Both Requirements
34% - 515 would Fail the Earnings Premium Requirement
56% - 844 do not have sufficient data to compute
1% - 13 would pass
43% would fail a requirement and 56% would be asked for more data. That is 99% of the industry…we have a data problem. They don’t think we earn enough and over half of our programs have insufficient data to be properly evaluated. Yikes.
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A Simple & Practical Strategy
It all comes down to data and the story it tells. You have the power to control your program’s story. If you are a Beauty and Barber School Director and you want to tell a better story to prevent your program from a failing score, here is 1 simple strategy that you can implement right now that can help.
Honestly, I think you should do this regardless. And for the record, I am speaking as someone who has not received one email from my barber school and I graduated 4 years ago.
Create an email list of every graduate from your school including: first name and last name, email address and graduation date.
Write a 3 question survey.
What level are you working in the industry? Full-time, part-time, none.
What is your employment status? Booth rent, commission, W2
What is your average annual salary? $20k-$39k, $40k-$59k, $60k-$80k, $80k+
Send the survey to each student every year on their graduation date. It can be a ‘Happy 1 year anniversary!’ Congratulate them and also ask them to fill out the survey.
Organize your survey responses
You now have data to show the estimated earnings of your students. This can help you tell a better story of the value of your program. They want to see the value, so show them! Will every graduate fill out the survey? No way. But that’s okay, some will. The worst thing you can do right now is nothing. Signing a petition is great, but in California people also signed a petition to prevent the elimination of the practical exam and well, it got eliminated anyways.
This whole conversation is complex. How about we end with the classic reminder of what happens when you point the finger. You point 1 finger and then you get 3 pointing back at you. I think it’s time we pick up our own hand mirror and look at our line up on this one.
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Written by Matthew Mendoza
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