You Were Misled By Your School. Now, You’re Being Misled By the Fix.
The entire premise of the Borrower Defense to Repayment program is straightforward: if an institution misled you into taking on debt, you shouldn’t have to keep paying for it. It is, at its core, a program built on the recognition that being misled has consequences - and that those consequences shouldn’t fall entirely on the person who was lied to.
Hold that thought.
The One Big Beautiful Bill - the sweeping federal legislation currently reshaping the student loan landscape - has been presented as a simplification. Fewer repayment plans, cleaner options, a more streamlined system. And for some borrowers, in some circumstances, that framing is probably accurate.
But for the student who took out loans to attend a cosmetology program - the exact demographic that borrower defense was designed to protect - the math tells a different story. And the gap between what this legislation was sold as and what it actually does to the most vulnerable borrowers in the system is worth examining carefully. Because if the whole point of borrower defense was that being misled about a program’s value has real consequences, then we have an obligation to ask whether legislation that claims to help those same students is being honest about what it delivers.
This Isn’t About Villains
Before we go further, something important needs to be said: this is not a piece about villains or bad actors. It is not an argument that legislators who supported this bill are malicious, or that the entire student loan reform effort is a fraud.
Postsecondary policy is genuinely, almost impossibly complex. The student loan system touches tens of millions of people across wildly different circumstances - traditional four-year students, working adults finishing degrees online, veterans using GI Bill benefits, first-generation students navigating FAFSA for the first time, and cosmetology students borrowing $15,000 to complete a state-required licensing program. Writing legislation that serves all of those populations well at the same time is not a simple task. Anyone who tells you it is hasn’t looked closely enough.
The problem isn’t that legislators are trying to harm cosmetology students. The problem is that legislation this broad, written at this scale, tends to get evaluated on its best-case outcomes - and the people who pay for the gaps between the best case and the reality are always almost the people who were already most exposed. That pattern is worth naming, even when no one intended it.
What the Bill Actually Does to Low-Income Borrowers
Under the current system, borrowers enrolled in income-driven repayment plans who earn below a certain income threshold can make zero-dollar monthly payments. This isn’t a loophole - it’s a deliberate protection for people whose incomes are too low to service their debt without creating serious financial harm. It exists because the alternative is default, and default has consequences that compound over time: wage garnishment, damaged credit, seizure of tax refunds including the Earned Income Tax Credit.
The One Big Beautiful Bill changes this. The new Repayment Assistance Plan sets a minimum monthly payment of ten dollars for the lowest-income borrowers - including those with no income at all. It also eliminates economic hardship and unemployment deferments, the tools borrowers currently use to pause payments during periods of genuine financial crisis.
Ten dollars a month sounds like nothing. But consider the realities of who we are actually talking about. A Century Foundation study found that cosmetologists earn an average of $16,600 annually three years after completing a credential - roughly $9,000 less than the average income of around $20,000 - but as a New America analysis notes, a borrower earning just over $20,000 could face monthly payments of up to $34 under the new Repayment Assistance Plan, compared to zero under existing income-driven plans. At $20,000 a year, a single filer takes home roughly $1,400 to $1,500 a month after federal taxes, Social Security, and Medicare - before rent, health insurance and/ or care, medications, retirement savings, utilities, groceries, transportation, or childcare. A $34 monthly loan payment in that budget is not a minor inconvenience. It is the difference between staying current and beginning the slow slide toward default. And default, under this bill, comes with fewer off-ramps than it ever has before.
The Cosmetology Student Is Not an Edge Case
Here is what the January 2026 federal borrower defense data tells us about cosmetology students: they are not a footnote. Empire Beauty School appears 44 times across the dataset with nearly 4,000 claims. Marinello Schools of Beauty appears 22 times. Dozens of smaller cosmetology chains fill in the rest. The beauty school sector represents one of the largest and most concentrated clusters of borrower defense claims in the entire report.
The government already acknowledged this. In 2022, the Department of Education discharged $238 million in debt for 28,000 former Marinello students, with the Secretary of Education stating directly that the school had preyed on students who dreamed of careers in the beauty industry. The finding wasn’t that a few students had bad experiences. It was that the school had made widespread, substantial misrepresentations - and that the students who believed those misrepresentations deserved relief.
Now ask the question: what happens to the next generation of cosmetology students - the ones enrolling today, at schools that are still open, still marketing aggressively, still making claims about career outcomes that may or may not hold up - when the safety nets that existed for the last generation are being systemically removed?
The Gainful Employment Problem
The bill does include a provision that sounds protective on its surface: beginning in July 2026, programs eligible for federal student aid will be required to demonstrate that graduates earn more than they would have without attending. Programs that fail this standard risk losing federal student loan eligibility.
This is a version of what was called the gainful employment rule, and in theory it should protect students from low-value programs. In practice, the picture is more complicated. The bill’s version notably does not include a debt-to-earnings measure - meaning a program can pass the earnings test while still saddling students with debt they cannot realistically repay, even if they end up earning slightly more than they would have otherwise. The bar is whether you earn more, not whether you earn enough to service what you borrowed.
For cosmetology students, who often graduate with debt loads that are disproportionate to the earnings trajectories of their field, that distinction is not a technicality. It is the whole question. A Century Foundation study found that cosmetologists earn an average of $16,600 annually — roughly $9,000 less than the average income of a worker with only a high school diploma — while carrying student loan debt that can reach $10,000 to $14,000.¹ Under the Department of Education's proposed gainful employment rule, 98 percent of cosmetology programs would fail the earnings threshold test. The bar this bill sets is whether you earn more than you would have without attending. For a population where the earnings trajectory already struggles to clear that bar, the absence of a debt-to-earnings measure is not a minor omission.
Pot, Meet Kettle
The borrower defense program exists because the federal government decided, correctly, that being misled about a program’s value is a form of harm - and that the people who were misled shouldn’t be left alone to bear the full cost someone else’s misrepresentation.
That principle doesn’t stop being true when the misleading party is a piece of legislation rather than an admissions counselor.
When a bill is presented to the public, to borrowers, and to the students and families trying to make sense of a system that was already confusing - as a simplification, as relief, as help - and it delivers something materially different to the most vulnerable people in that system, we are entitled to ask whether the standard we applied to Marinello should apply here too. Not because anyone was malicious. But because the consequences of being misled don’t change based on who was doing the misleading.
There is one more thing worth naming. For most career programs, the earnings threshold comparison - do graduates earn more than they would have with only a high school diploma - is at least a meaningful question. For cosmetology, it is almost a trick question. A cosmetology license is not optional. You cannot legally work as a cosmetologist in any state without completing a state-approved program and passing your licensing boards. The counterfactual the bill relies on - what would you have earned without this education - doesn’t really exist for this population. Without the program, you cannot enter the field at all. So comparing a cosmetology graduate’s earnings to a high school graduate working in an entirely different field isn’t a clean measure of whether the credential created value. It is measuring something considerably more complicated than that, in a way that the bill’s framework doesn’t fully account for.
What this means in practice is that a program can satisfy the earnings threshold - can technically be certified as providing a return on investment - while still leaving graduates earning wages that don’t come close to covering their debt. The bar is whether the credential generates any earnings premium over a high school diploma. It is not whether graduates can actually afford to repay what they borrowed. For cosmetology students, that distinction is not a footnote. It is the entire financial reality of their situation.
Accountability
None of this means the student loan system shouldn’t be reformed. It absolutely should. The current landscape of repayment plans is genuinely confusing, the borrower defense backlog is a real administrative failure, and there are legitimate arguments for simplification.
But accountability requires honesty about tradeoffs. It requires acknowledging that a bill designed to streamline a complex system will, by definition, create winners and losers - and being clear about who falls into which category. It requires evaluating legislation not just on its best-case outcomes but on what it does to populations that were already most exposed before it passed.
The government held institutions accountable for the gap between what they promised and what they delivered. That same standard - the one that generated over a million borrower defense claims and billions in discharged debt - applies to policy too. Especially policy that claims to be helping the exact people it may be leaving behind.
¹ Whistle, Wesley. "Study: Cosmetology Schools Yield Poor Student Outcomes." Inside Higher Ed, July 15, 2022. https://www.insidehighered.com/quicktakes/2022/07/15/study-cosmetology-schools-yield-poor-student-outcomes. Citing original research from the Century Foundation.
² Peller, Anna, and Rachel Fishman. "What the One Big Beautiful Bill Means for Cosmetology Students." New America, 2025. https://www.newamerica.org/education-policy/edcentral/what-the-one-big-beautiful-bill-means-for-cosmetology-students/
³ "Federal Income Tax Example: $20,000 Salary." TaxFormCalculator.com, 2026. https://www.taxformcalculator.com/tax/20000.html
