Federal 'Do No Harm' Rule Threatens 92% of Cosmetology Programs

A federal earnings-test rule that takes effect July 1 could financially cripple 92% of U.S. cosmetology programs and shutter up to 1,400 accredited beauty schools, the Professional Beauty Association, the American Association of Career Schools, and industry founders warn.

The U.S. Department of Education's "Do No Harm" (DNH) provision, finalized through the department's negotiated rulemaking process, requires career-training programs to prove graduates earn more than workers aged 25-34 with only a high school diploma. Programs that miss the threshold for two of three consecutive years lose access to federal funding, including Pell Grants and student loans.

What the rule actually measures

DNH compares new cosmetology graduates to a "high school graduate" cohort that includes people with trade certifications, apprenticeships, and years of prior work experience — a benchmark industry leaders call a rigged comparison.

"I could train 100% of my graduates, with 100% pass rate and 100% placement rate, yet I could fail," said Stacy Wells, AACS Vice Chair and owner of L'esprit Academy in Michigan. "I looked at the whole Michigan cohort. Not one school, including the community colleges, passed this metric."

Why the earnings data understates the industry

Three structural problems distort the comparison for working salons:

• Early-career timing. Licensed beauty professionals typically need 6 to 7 years to build a steady client base, yet DNH measures earnings shortly after graduation.
• Unreported income. Tips are routinely underreported, and many professionals are independent contractors who "take every tax advantage possible, keeping their net income as low as possible," Wells said.
• Unaccounted wage gaps. PBA workforce data shows the industry is 83% women, 47% people of color, and 98% single-location small business owners — groups that face documented gender, minority, and part-time wage gaps that drag reported earnings down.

How the rule diverged from Congress

The accountability framework traces to the One Big Beautiful Bill Act, signed into law in 2025, which originally excluded certificate programs — including cosmetology licensing tracks — from the earnings test.

"The Department of Education put certificate programs back into the rule when they were specifically excluded in the bill that was signed into law," said AACS executive director John D. Russell. "The best thing right now is to urge the department to follow the law. Certificate programs were not included."

John Paul DeJoria, co-founder of John Paul Mitchell Systems, cast the stakes in personal terms: "Federal regulations are about to wreck the industry that gave me everything," he wrote in a recent op-ed.

What's at stake beyond the schoolhouse

PBA counts more than 1.3 million licensed professionals in the U.S. beauty industry. Between 70% and 90% of cosmetology students depend on federal financial aid to complete their training.

"You choke this pipeline of talent and everybody's going to feel it," Wells said. "From manufacturers and distributors to business owners and landlords and the people sitting in the chair. It will have an economic impact and a social impact on communities."

What salon owners can do now

The rule sits in a public comment period that closes May 20. AACS has launched the My Secret Impact campaign with step-by-step comment instructions aimed at stylists, instructors, and owners. PBA, on behalf of cosmetology schools and advocacy organizations, has filed an amicus brief in the U.S. 5th Circuit Court of Appeals seeking to halt enforcement.

For context: median student debt at cosmetology programs runs about $6,000 — "a drop in the bucket" by higher-education standards, Wells said — and program default rates have historically run low. Tracking under DNH begins with the 2026-27 academic year; the first cohort of programs could lose federal aid eligibility in 2028-29.