What the One Big Beautiful Bill Means for Cosmetology Students

Earlier last month, President Trump signed into law the One Big Beautiful Bill Act (OBBBA), following a narrow passage in the Senate and great contention in the House. The act makes drastic changes to the federal student aid system and will implement new accountability measures in higher education. While the House and Senate versions of President Trump’s megabill held key differences on these issues, the final legislation contains provisions that will touch upon the lives of cosmetology students, making it more expensive for them to repay their loans and likelier to default, and leaving absent-to-weak consumer protections in place for poorly performing programs.

Our recent report, Cut Short: the Broken Promises of Cosmetology Education, details the need for structural reform in the cosmetology education industry to ensure students receive the education and financial return on investment they expect when they enroll. We found that students pay high costs to meet licensing requirements, for an education that doesn’t meet standards, and that will pay little in return for their investment. The problems within the cosmetology education industry demonstrate the need for greater oversight of these programs, and an aid system that doesn’t overly penalize students when their education doesn’t work out.

This blog post focuses on how the OBBBA will impact cosmetology education—an industry that’s skirted accountability and left students worse off—as well as the students it enrolls. As the first in a series that aims to continue uplifting the findings and recommendations from our report, we discuss how specific changes to student loan repayment, accountability provisions, and the extension of the Pell Grant to very-short programs will affect cosmetology education and the lives of cosmetology students.

Student Loan Repayment

The OBBBA will drastically change the current financial aid and student loan system, including changes to student loan repayment. Those who already have loans (or borrow before July 1, 2026) will retain access to a number of the existing repayment plans, but they will lose access to three of the income-driven repayment plans—Income-Contingent Repayment (ICR), PAYE, and SAVE—in July of 2028. For those who borrow on or after July 1, 2026, the OBBBA will provide two options for repayment: a new “standard” plan with fixed payments based on how much a borrower took out in loans and a new income-driven plan called the “Repayment Assistance Plan” (RAP) with payments based on income and family size. Current borrowers will also have access to RAP when it comes online. Because these new repayment options are less forgiving and more expensive than current options for the lowest income borrowers, students who enter low-wage, high-cost training programs such as cosmetology will only become more vulnerable to default.

While the student loan provisions of the OBBBA take important steps to streamline repayment given the myriad and confusing maze of existing plans, they will also weaken the protections for low-wage borrowers to avoid default and all the harms it causes. For example, in the current system, borrowers who enroll in income-driven repayment plans and earn incomes below a certain threshold are allowed to make $0 monthly payments. This threshold takes into account their family size and the federal poverty level and allows the lowest-income borrowers to remain current on their loans even if they aren’t paying them down. However, RAP will change the minimum monthly payment to $10 for the lowest income borrowers, including those with no incomes.

While a $10 bill may seem insignificant, it may be a steep hurdle for low-wage cosmetologists who often are women of color, and/or are parents caring for children. In addition, the bill eliminates economic hardship and unemployment deferments, important tools borrowers can use to pause payments when they experience financial insecurity. These potential missed payments—paired with fewer options for relief—could result in default, which comes with harsh consequences such as wage garnishment, additional negative hits to credit scores, and the seizure of tax refunds such as the Earned Income Tax Credit, a program designed to support low- and moderate-wage working families, the demographic many cosmetology students come from. And recently released data about current rates of nonrepayment show worryingly high default rates for many cosmetology schools highlighting that these students face particular challenges to repaying their student loans.

Additionally, another element under RAP would require low-income borrowers to make higher monthly payments, generally, than they would under other income-driven repayment plans. Cosmetology graduates earn an average of around $20,000 annually four years after completing a credential, and the median cosmetology program graduate is repaying about $10,000 to $14,000 in student loan debt. Under the new RAP plan, a cosmetology graduate who earned the average wage would face a monthly payment of approximately $10 to $17 per month depending on their family size. And if she/he made just over $20,000, say $20,500, they could face nearly double that payment—up to $34 per month—even though their income increased only about 3 percent. Under existing income driven repayment plans, their payment would have been $0 under either scenario. Higher monthly payments will only create greater financial hurdles for cosmetology graduates who already make low-wage salaries.

Accountability for Poorly Performing Programs

On the accountability front, the OBBBA makes great strides to ensure that associate, bachelor, and graduate degrees provide a sensible, minimum bar return on investment for students. Beginning in July 2026, it will require that most students attending programs eligible for federal student aid earn more than they would have had they not attended the program. If this standard is not met, programs are at risk of losing federal student loan eligibility (but somewhat inexplicably, will retain access to Pell Grants). This new provision is similar to the recently finalized, but not yet implemented, gainful employment rule, which aims to protect students from low-financial-value certificate and for-profit programs. However, there are two important distinctions in OBBBA. First, the new provisions do not include a debt-to-earnings measure to make sure that borrowers make enough money to pay down their federal student loan debt, missing an opportunity to prevent institutions from saddling students with debt they won’t be able to repay, even if they end up earning more overall. And second, undergraduate certificate programs, such as cosmetology programs, are excluded from these new accountability measures.

Excluding undergraduate certificate programs from the accountability framework neglects vulnerable student populations that this proposal should be aiming to protect. According to an American University PEER Center analysis, certificate students take out less student debt compared to those pursuing other credentials, yet they have among the highest default rates three years after entering loan repayment. And while certificate programs would be held accountable for an earnings metric through the previously finalized gainful employment regulations, those regulations face litigation (from a lawsuit brought by the cosmetology industry which, as we wrote in our report, is backed by an incredibly strong lobby). The Trump administration also plans to re-regulate these provisions this winter, potentially weakening or completely eliminating (like it did during the President's first term), the consumer protections put in place.

Our research shows that 75 percent of cosmetology students were enrolled in programs that will likely fail the earnings threshold under gainful employment regulations. At large for-profit conglomerate beauty schools, approximately 90 percent of cosmetology graduates fail to make more than what they would have with only a high school diploma, thus indicating the need for more accountability to protect these students' investment.

Workforce Pell for Very-Short Programs

One of the biggest changes in OBBBA will be the creation of a new “Workforce” Pell Grant. Currently, the Pell Grant can be used for bachelor’s degrees, associate degrees, and certificate programs as short as approximately one semester’s length. Workforce Pell will allow grants to flow to very-short training programs that are only about 8 weeks long, with fairly weak consumer protections that don’t ensure students’ outcomes are better than if they only had a high school diploma. Although gainful employment regulations apply to these very-short certificate programs, as mentioned above, those regulations face legal challenges and there are plans to change them in the near future. In general, gainful employment regulations have always been vulnerable to the whims of the court and the president.

Cosmetology schools have a history of taking advantage of new federal funds. And given that they would largely fail the gainful employment regulations if they remain in place, “Workforce” Pell would be a new way to pad institutional revenues. While the bread and butter of beauty schools across the nation is the cosmetology certificate, most offer very-short certificates including esthetics (facials, waxing, and make up artistry) and nail technicians. Before now, these programs have not been eligible for federal aid. Workforce Pell will change that, and federal taxpayers will now subsidize these credentials, with beauty schools having a new revenue stream to chase. This has historically resulted in predatory recruitment, particularly of women and people of color. Cosmetology Schools will continue to thrive, despite having no real track record of success in terms of return on investment for students or taxpayers.

Reinforcing the Status Quo

OBBBA stands to dramatically expand the reach of federal dollars into the for-profit cosmetology education sector—without fixing the structural problems of the industry that have long harmed students. By weakening repayment protections, excluding these programs from new statutory accountability rules, and introducing a new federal funding stream with weak consumer protections, the law risks super-charging a broken status quo that harms students while the industry enriches itself. Cosmetology students—often women of color and/or parenting students seeking economic mobility—will be left struggling to repay their loans, more vulnerable to default, and potentially less protected from predatory institutions. As we continue to analyze the ripple effects of OBBBA, our hope is that policymakers will recognize that without strong, universal consumer protections, and a student-centered approach to federal aid and repayment, new funding and reforms will do nothing more than prop up certain industries like the cosmetology sector that have repeatedly failed students.