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Cosmetology schools argue they need a break from new federal rules. State attorneys general worry the Trump administration will side with for-profit colleges.

February 28, 2017, 10:07 AM EST

In the early weeks of the Trump administration,beauty schools made anattempt to undoObamas career-college crackdown. Law enforcement just fired back.

After a multi-year crackdown on for-profit colleges by the Obama administration, the Department of Education under President Donald Trump is expected to be comparatively friendly to theindustry. But after a cosmetology trade organization challenged a rulethat punished certain career colleges, more than a dozen state attorneys general vowed to keep for-profit collegesaccountable, signaling that afight over how closely such schoolsare regulated may be ahead.

Earlier this month, the American Association of Cosmetology Schools suednewly-confirmed Education Secretary Betsy DeVosoverthe so-called gainful employment rule, whichmandates that a typical career program's graduate's annual loan payments notexceed one-fifth of discretionary income or eight percent of total earnings.The group argued that the rule shouldn'tapply to beautyschools, because graduates tend to underreport what they earn. The suitwas seen by many as the firstchallenge to a rule that the administration might end up doing away with altogether.

The skirmish escalated last week, after a group of 18 Democratic state attorneys general urged DeVos and congressional leaders to uphold the rule. They argued that the ruleprotects federal taxpayers and prospective students from predatory colleges, citing daily complaints from "hopeless" former for-profit college students with unaffordable debt and their own investigations into alleged school misconduct. "We are deeply concerned that rollbacks of these protections would again signal 'open season' on students for the worst actors among for-profit post-secondary schools," the state prosecutors said.

The Trump administration has not yet answered the beauty school group's complaint, and Education Department spokesmenMatt Frendewey and Jim Bradshaw didn't respond to messages seeking comment. But during DeVos's confirmation hearing, when Senator Elizabeth Warren (D-Mass.) asked DeVos whether she'd enforce the gainful employment provision, DeVos said simply that she'd "review" the rule to determine if "it is actually achieving what the intentions are."

The Obama administration had hoped that the so-called gainful employment rulewhich for-profit colleges have tried to overturn in court multiple timeswould force schools to cut their prices and reduce the number of programs they offer that dont help graduates in the workforce. For-profit colleges enroll relatively few students when compared to nonprofit and public schools, yet they produce an outsized share of student debt and defaults(PDF).

The rule requires career programs whose graduates earn too little in relation to their student debt to warn prospective students of that fact. After a few years of failing to meet the threshold, the programsbecome ineligible for federal aid. About 40 percent of the AACS's more than 500 member schools have at least one program that either failed the gainful employment testor isin danger of failing itin the next few years, said Anthony Civitano, a vice president of the group, in a court filing. Schools worry that the warning alone could scare off enough students that the resulting drop in revenue could force them to shut down.

The governmentrelies on Social Security Administration data to determine whether schools meet gainful employment thresholds, and the AACS says those data probably dont capture cash tips, making the income figures ofbarbers and beauticians artificially low and unfairlypenalizing beauty schools.

"Basically, our graduates are tax cheats, so give us credit for the income they dont report, is how Barmak Nassirian, a policy expert atthe American Association of State Colleges & Universities, summed up the lawsuit.

Beauty schools arent opposed to being held accountable for their students outcomes, said Edward Cramp, a partner with the law firm Duane Morris LLP, which serves as outside general counsel for the beauty school group. The problem is were just using garbage data, he said. Cramp said the cosmetology groups members have told him that internal surveys of former students show annual earnings that often are twice the level reported by the Education Department. Such surveys can be used to appeal official figures reported by the feds, and more schools would commission surveys of their former students, Cramp said, if only they could afford them.

The cosmetology group has asked a federal judge to immediately halt a looming federal requirement that beauty schools warn current and prospective students that some of their programs failed to meet the Education Department's gainful employment standards.

But theres a flaw in the group's argument, said Ben Miller, senior director for postsecondary education at the Washington-based advocacy groupCenter for American Progress. The problem for beauty schools isnt that their graduates are earning too little; its that some of the schools are producing graduates who are taking on too much debt.

Graduates of cosmetology programs that failed the gainful employment rule's standards reported annual earnings of just 8 percent lessthan those from schools that passed, but their loan payments werenearly triple, according to Miller's analysis of federal data.

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Federal data suggest that beauty school alumni have trouble repaying their student loans. At most schools overseen by the main beauty school accrediting body, the National Accrediting Commission of Career Arts &Sciences, less than half of recent former students paid down even $1 of student loan balances five years after their bills came due. Few earn as much as a typical high school graduate$25,000 a yeara decade after enrolling in their programs.

"We cannot overemphasize the harm to students and taxpayers that a rollback of federal protections would cause," the state attorneys general said.

See the original post here:
A Bitter Fight Begins Over an Obama Education Legacy - Bloomberg