Many of you were closely monitoring the case filed in February of this year against the Department of Education by the American Association of Cosmetology Schools (AACS) regarding Gainful Employment legislation. Announced today is a ruling where the judge ruled in favor of AACS on the case.
Read on for the update provided by AACS to the industry.
Today, in a ruling that allows the nation’s cosmetology schools to properly demonstrate their value to students who graduate from their programs, a federal judge in Washington, D.C. ruled in favor of the American Association of Cosmetology Schools (AACS) in a case challenging the so-called “Gainful Employment Rule” that was passed by the Obama Administration’s U.S. Department of Education. The rule judges college programs based upon the percentage of a graduate’s reported income that is devoted to paying back federal loans. AACS challenged the rule as applied to cosmetology schools because on the basis that SSA data does not fully capture the graduate’s full income. The judge’s order prohibits the Department from enforcing a requirement that AACS member schools must obtain at least a 50% response rate from graduate surveys of actual earnings before they can use that data in “alternate earnings appeals.”
The judge also ordered the Department to provide AACS members with additional flexibility as to the students whose alternate earnings are measured in the appeal, and strikes from the rule any other “requirement that a particular number or percentage of students respond to institutional surveys for alternate earnings appeals.” Further, the court ordered the Department to reasonably extend the deadline for AACS member schools to file alternate earning appeals, to reopen the alternate-earnings appeal process for any AACS member schools who failed to timely submit notice of alternate earnings appeal, and prohibit the Department from requiring AACS member schools who failed to timely submit notice of alternate earnings appeal to post warnings until the new deadline for alternate earnings appeal has passed.
AACS Executive Director, O. David Jackson stated, “this is a terrific victory for AACS, its member schools, and the cosmetology industry. The Court’s language is very forceful, and throws out the Department’s hear-no-evil, see-no-evil approach to earnings data it knows is wrong. We are thankful to our AACS membership who stood strong in challenging the weaknesses in this rule.”
A copy of the memorandum and opinion are available here: [ memorandum ] [ opinion ]
AACS Members – please note the following:
- The ruling does not impact AACS members’ obligation to post the 2017 GE Disclosure Template provided in Electronic Announcement #103. The 2017 GE Disclosure Template is available on the following web page: https://ope.ed.gov/GainfulEmployment/.
However, for AACS member schools who have a failing GE rate and who did not file a Notice of Intent to appeal by January 23, 2017, the ruling means that these schools no longer need to provide warnings until the Department has re-opened the alternate earnings appeal process for any AACS member schools who failed to timely submit notice of alternate earnings appeal and that appeal process has concluded.
- For institutions that have filed a proper Notice of Intent to appeal with the Department, the materials to substantiate the appeal were due by July 1, 2017. However, the order directs the Department to “reasonably extend” the deadline for AACS member schools to file alternate earning appeals in light of the relaxed survey standards to allow additional schools to file appeals.
- Under this ruling, AACS members schools have the option of notifying the Department that they would like to withdraw and resubmit any pending alternate earnings appeal in light of this added flexibility mandated by the court.
- It remains unclear if the Department will take any additional steps to delay the appeals deadline or other aspects of the GE rule more broadly.