How Occupational Licensing Contributes to the Student-Loan Crisis
According to the Institute for Justice (IJ), every state requires aspiring cosmetologists to earn a license through at least 1,200 hours of training, and sometimes as many as 2,300 hours. Every year, colleges and trade schools grant nearly 100,000 certificates in cosmetology — almost one fourth of all professional certificates issued annually. Most of the schools that offer these training programs operate for profit. On average, they collect more than $10,000 in tuition from each student, even after accounting for taxpayer-funded financial aid such as Pell Grants. Graduates typically leave cosmetology programs with more than $12,000 in federal student-loan debt. The financial blow might be reduced if students could work for a wage while receiving their training, but IJ has documented that many beauty schools require students to serve paying customers for free — while they keep the profits.
A recent study conducted by the Foundation for Research on Equal Opportunity analyzed whether cosmetology programs increase graduate earnings enough to justify the cost of tuition and the time spent working for free.
The answer is a resounding no.
An eye-popping 86 percent of cosmetology programs fail to provide graduates with an increase in lifetime earnings large enough to justify the costs. When accounting for the risk that students will not complete their programs — resulting in debt but no credentials — the share of programs that provide no positive financial return rises to 89 percent. This means that for most students, the path to a career in the beauty industry runs through a certificate program without financial value.
Worse yet, there is scant evidence that these programs actually help aspiring beauty-industry professionals do the job better. Studies have found that many salons do not adhere to the health and safety principles that schools are required to teach. Nail and skin infections among salon patrons are common. Many salon pedicure footbaths contain concerning mycobacteria. A representative of the California Department of Consumer Affairs even admitted in 2019 that “it is a common problem [throughout] our establishments in California. We license a lot [of] technicians and establishments, and this [is] one of the common complaints we receive.”
In addition, cosmetology courses are not all-inclusive. They teach students about many things, including skin care, cosmetological hygiene, and hair coloring, but forgo topics such as hair braiding. It makes little sense then, that many states require licensing for hair-braiders. The overwhelming majority of states also require a license to blow-dry customers’ hair — and all states require a license to paint nails. Thirty-seven states even license shampooers. And all these mandates hit Americans hard. African immigrants who braid hair, for instance, often struggle to obtain unnecessary but required licenses, and then to make a living braiding once they are licensed.
If licensing does not prevent health and safety problems, perhaps states should ramp up inspections instead. And while it is fine to prefer formal training, people can of course learn skills in other ways. At the very least, it seems silly to regulate professional hair-braiding or blow-drying.
Such strict occupational-licensing laws hold aspiring beauty professionals captive to cosmetology schools, which rarely deliver a positive return on investment. This should be no surprise. If the law requires students to complete a cosmetology program, there is no incentive for schools to provide an education valuable enough to deliver significant earnings gains for their graduates. If aspiring beauticians must attend, schools feel little competitive pressure to attract them with a quality education.
As is the case with too many professions, the current path to work in cosmetology leads to financial hardship. Reducing the cost of schooling is key. State governments should lower the number of training hours required to get licensed. Removing licensing altogether for hair-braiders, blow-dryers, and shampooers would also help. And the federal government should refuse to fund programs that don’t provide their graduates with a return on investment, forcing schools to either lower their costs or improve their graduates’ earnings if they want to keep their federal subsidies.
Educational programs that offer graduates no financial return are one of the biggest drivers of student-loan debt. It is because of licensing and degree requirements for many jobs that students are being funneled into such programs. But there is a better way. States can and should do more to remove the need for many students — especially cosmetology students — to take on debt in the first place.
Image: anna baburkina