The American Association of Cosmetology Schools is suing the U.S. Department of Education and seeking to block enforcement of the Department’s Gainful Employment rules. Although the rules were finalized under the Obama Administration, Betsy DeVos who has been expected to be a major ally to proprietary schools is defending ED’s position on GE in her roles as the Secretary of Education. While many speculate that the Trump Administration would seek to repeal the Gainful Employment rules, DeVos defending this suit demonstrates quite the opposite.

In its suit, AACS said that the Department of Education failed to take unreported tip income into account when it decided to use Social Security Administration data which identifies only reported income for applying Gainful Employment regulations. Attorneys for the Association claim that the Department’s GE regulations has caused their member schools irreparable injury resulting from the warnings and notifications they have been required to begin providing to students for each failing program at a school.

However, the Department argued that AACS failed to provide evidence that barbers, hairdressers, cosmetologists, and similar graduates actually have unreported income. DeVos’ attorney’s also argued that although some failing GE programs at some schools are already under sanctions, no schools or programs have been subject to loss of aid program participation since the GE regulations require a school to fail in two out of three years before losing eligibility. Since this is the first year of GE D/E ratios, the Department argues, no schools or programs have been harmed.

Since there are no known state databases of employment earnings, it will be difficult for AACS to prove alternate earnings. However, affected schools would be doing themselves a huge disservice by not attempting to submit an alternative earnings appeal if they have access to such data. If the department accepts a school’s alternative earning appeal it will use the school’s data to apply D/E rates. Schools were required to notify the department of their intent to appeal months ago, so it’s too late for this year’s cycle, but as we’ve come to learn, there’s no reason not to begin planning and preparing to submit appeals for next year’s cycle.

If you’re concerned about your school’s continued GE Program Eligibility, let’s talk.