For Immediate Release - Ruling in AACS v. Department of Education
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 promulgated by the Obama Administration’s U.S. Department of Education. The rule judges postsecondary 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 on the basis that Social Security Administration 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/. Our analysis thus far of the practical impact of the ruling on AACS member schools is a follows (we will update or amend this as necessary as additional information becomes available):
- The judge’s ruling striking the 50% threshold response for surveys, striking any requirement for alternate earnings to be drawn from a set cohort of graduates, and requiring a reasonable extension of the current July 1, 2017 alternate earnings appeal deadline applies to all AACS member school GE programs, whether in pass, zone or failing status.
- For AACS members schools with a failing GE program and that did not file a Notice of Intent to Appeal by January 23, 2017, the judge’s order requires the Department to re-open the appeal process so that such schools can prepare and file appeals based on the more relaxed standards. Such schools are now not required to provide warnings to students until the school has availed itself of the new appeal opportunity and standard. Therefore, no warnings for schools with failing programs need to be given on the new GE template or by other means until the appeals process under the new standard is complete.
- AACS members schools that already filed appeals survey data with the Department will likely have the option of notifying the Department that they would like to withdraw and resubmit data in light of this added flexibility mandated by the court.
- We are currently seeking clarification from the Department as to whether Bureau of Labor Statistics earnings data may be submitted as part of this revised appeal process.
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.