The Final Rule will become effective July 1, 2027, with the exception of provisions at 34 CFR Part 685, which simply require institutions to agree to be subject to the earnings accountability framework established in the Final Rule. Certain aspects of the Final Rule will be delayed for programs preparing students for tip-based professions, including cosmetology, barbering, and certain wellness programs (detailed below).
Under the Final Rule, institutions have the choice of reporting data to ED according to the requirements of the Financial Value Transparency and Gainful Employment (FVT/GE) Rule, which remains on the books, or of reporting data under the reduced requirements of the Final Rule. If an institution reports under the FVT/GE Rule, the Department will presume the institution has forgone the optional early implementation of the Final Rule. This means the institution’s GE programs would be subject to the FVT/GE Rule prior to July 1, 2027, including sanctions under that framework. Reporting under either the FVT/GE Rule or the Final Rule is due to the Department no later than October 1, 2026.
Yes. The Final Rule will apply the earnings accountability framework to nondegree programs, using the Higher Education Act’s “gainful employment” language as statutory justification, even though OB3 specifically excluded nondegree programs.
The earnings accountability provisions of the Final Rule will have at least a one-year delayed implementation for programs that prepare students for employment in tip-based professions, including most cosmetology, barbering, and wellness programs. This delay is intended for earnings from such programs to be measured using data from the 2026 tax year or later, allowing for OB3 “No Tax on Tips” policy to be reflected in the Earnings Premium calculation. Programs subject to the tip-based delay are listed in Table 5.22 of the Final Rule (see page 459).
Yes. Programs subject to the tip-based delay will not be designated as “passing” or “failing” the Earnings Premium test, nor will such programs be subject to sanctions under the Final Rule. That being said, during the delay, ED will continue to publish earnings data for these programs for informational purposes.
In the preamble to the Final Rule, the Department acknowledges that the “No Tax on Tips” policy is currently set to expire after tax year 2028. ED believes that Congress will likely extend the provision or make it permanent. However, in the event the policy does expire, the Department stated it would continue to apply the accountability framework to programs subject to the tip-based delay and will “revisit the issue of data quality” at that time.
In general, ED states the Earnings Premium test will first be calculated in early 2027, applying to the 2027-2028 award year and requiring warnings following the first Earnings Premium test results. Programs could become designated as low-earnings outcome programs beginning in the 2028-2029 award year, if such programs fail the Earnings Premium test in both 2027 and 2028. In the absence of a successful appeal, such programs would lose Direct Loan participation following completion of the eligibility termination procedures established by the Final Rule. We expect programs that fail the new administrative capability standard could lose all Title IV eligibility (including Pell Grants) in the 2029-2030 award year, the year following the Department’s designation of such programs as low-earnings outcome programs.
While not entirely clear based on the Final Rule, we expect cosmetology, barbering, and wellness programs subject to the tip-based exception (discussed above) would benefit from an implementation timeline delayed by at least one year. In other words, we anticipate the earliest such programs would be subject to warnings requirements would be following determinations made during the 2028-2029 award year. We anticipate such programs would not be designated low-earnings outcome programs until the 2029-2030 award year, at earliest, meaning the loss of Direct Loan eligibility would not attach until after that designation. We expect the loss of all Title IV eligibility (including Pell Grants) would not impact such programs until the 2030-2031 award year, at earliest. Impacts of the Final Rule on programs requiring cohort aggregation due to a small number of program completers will be delayed even further.
No. The Final Rule exempts programs from the accountability framework’s sanctions when those programs have not received Direct Loans for the five most recently completed awards years or if an institution voluntarily agrees to forego disbursing Direct Loans to students in that program for at least five years. This means that such programs would not be at risk of losing all Title IV eligibility (including Pell Grants) under the new administrative capability standard, even if such programs are deemed to have “low-earning outcomes.”
No. As in the proposed rule, the Final Rule has the effect of comparing both the earnings of students who completed a bachelor’s degree in aerospace engineering and the earnings of students who completed a nondegree program in cosmetology, barbering, or wellness to the same median earnings of working high school graduates. AACS asked ED to adopt a proportional comparator group for nondegree programs (i.e., individuals without a high school diploma or equivalent), but the Department declined to adopt this suggestion.
No. The Final Rule provides a narrow appeals process, applicable only when institutions believe ED made an error in calculating the Earnings Premium. The Department declined to provide an alternate earnings appeal, meaning institutions are not expected to have an opportunity to demonstrate that the Department’s calculations fail to consider regional, demographic, or other income-based disparities.
No. The Final Rule does not contemplate a mechanism to account for the impact of part-time work or wage discrimination on the earnings of program completers, both of which impact graduates of cosmetology, barbering, and wellness programs at rates disproportional to the general population.
No. The Department declined to provide any accommodations to account for regional or statewide disparities in earnings, such as those between rural and urban areas within a state.
Undoubtedly. ED spent page after page of the Final Rule preamble specifically addressing comments submitted by AACS membership. While the Final Rule represents a mixed outcome for cosmetology, barbering, and wellness programs, there is no question the victories for our sector were secured thanks to the tireless efforts of the AACS membership. Without our shared commitment and tireless advocacy from all of you, we would not have secured the delay and other improvements to the Final Rule. Much work remains ahead, and we will navigate the next steps in our advocacy together to protect our schools and students.
On May 19, the American Association of Career Schools officially submitted comments to the Department of Education regarding the proposed “Do No Harm” accountability framework.
This submission reflects not only AACS advocacy efforts, but also the more than 8,000 individual comments submitted by voices across our industry—including school owners, educators, students, graduates, veterans, salon and spa professionals, employers, and small business owners nationwide.
Together, our industry made it clear:
The comments AACS submitted outline the significant concerns our sector has with the proposal, including its failure to account for self-employment, gratuities, part-time scheduling, and the time it takes many graduates to build clientele and income.
We are incredibly grateful to every member and industry advocate who took the time to submit comments, share personal stories, attend webinars, and encourage participation throughout this process.
Your advocacy mattered. AACS will continue to provide timely updates on this matter as the Department reviews comments and makes final decisions.
Thank you for standing together to protect students, schools, and the future of our industry.
Measures graduates just 4 years out against older, more established workers.
Many professionals work part-time by choice or are self-employed.
The industry is 90%+ female, yet the metric doesn’t account for wage disparities.
Early-stage business owners show lower earnings due to startup costs.
Beauty careers grow over time—this captures only the early stage.
Losing financial aid means fewer students and a threat to the future of your school.
Fewer schools mean fewer new stylists entering our industry.
Less access to affordable training and career opportunities.
Thank you for standing up for beauty education and professionals.
Click the links below for more information, insights, and studies relevant to this advocacy effort.
Note: These studies are provided for informational purposes only and do not represent a position statement from AACS or its members.
