By StartBusinessByStatePublisher: Robert SmithResearch process
A new federal rule asks a simple question about career schools: do graduates earn more than people who only finished high school? In the U.S. Department of Education’s own preliminary data, most cosmetology and massage certificate programs fall short. Most heating and air conditioning, electrical, plumbing, welding and auto repair programs clear the bar easily.
We looked at 1,979 active undergraduate certificate programs in eight trades that had enough graduates for the Department to report earnings. Of 896 cosmetology and barbering programs, 830 (92.6%) had graduates whose median earnings were below the high school benchmark. For massage and bodywork it was 143 of 159 (89.9%). For heating and air conditioning programs it was 0 of 155.
Many graduates eventually go out on their own; our guides to opening a hair salon and starting an HVAC business cover the licenses and setup steps, and how much an LLC costs explains the cost of forming one.
What the earnings test is
Federal student loans and Pell Grants pay for a lot of trade school. The federal law the Department calls the Working Families Tax Cuts Act added a “do no harm” earnings standard, and the Department finalized the rules on June 29, 2026. The rule took effect July 1, 2026.
Here is how it works for certificate and other undergraduate programs:
- The Department takes the median yearly earnings of a program’s graduates four years after they finish, using tax records.
- It compares that number with the median earnings of working adults aged 25 to 34 who have only a high school diploma, either in the school’s state or nationwide, depending on where the school’s students come from.
- If graduates earn less, the program fails that year.
- A program that fails two out of three years loses access to federal Direct Loans. A school can also lose Pell Grants if more than half of its aid students or aid dollars are in failing programs.
The Department says it will run the first official test in early 2027. The earliest any program could lose loans is the 2028-29 school year.
The special delay for tipped jobs
The final rule gives programs that train people for mostly tipped jobs a one-year delay. The Department names cosmetology, barbering and massage therapy as examples. The reason: tax records often miss cash tips, so reported earnings can understate what these workers really make. The Department says the delay lets the new “No Tax on Tips” deduction take effect, which may lead more workers to report tips. During the delay, these programs neither pass nor fail, but their earnings are still published.
Results by trade
Certificate programs only, counting programs that still had federal aid students in 2023-24 or 2024-25 and that had earnings data. The benchmark is the high school earnings figure the Department used for each program (the middle value across programs is shown).
| Trade | Programs with earnings data | Below benchmark | Share below | Median graduate earnings | Typical benchmark |
|---|---|---|---|---|---|
| Cosmetology & barbering | 896 | 830 | 93% | $26,057 | $34,350 |
| Massage/bodywork | 159 | 143 | 90% | $28,797 | $34,808 |
| Vehicle maintenance & repair | 276 | 9 | 3% | $50,282 | $34,204 |
| Welding/machining | 325 | 9 | 3% | $48,249 | $33,298 |
| Building construction trades | 17 | 4 | 24% | $39,288 | $33,298 |
| Electrical installers | 135 | 2 | 1% | $57,461 | $34,808 |
| HVAC | 155 | 0 | 0% | $51,091 | $34,350 |
| Plumbing | 16 | 0 | 0% | $50,748 | $34,579 |
Two groups stand out. In cosmetology, barbering, massage and bodywork, graduates’ typical reported earnings were about $26,000 to $29,000, several thousand dollars under the high school line. In heating and air conditioning, electrical, plumbing, auto repair and welding, typical graduate earnings were about $48,000 to $57,000, well above it.
The pattern held across school types. About 94% of public cosmetology programs and 92% of for-profit ones were below the benchmark. For-profit schools run most cosmetology programs in this data (734 of 896).
Cosmetology and barbering by state
Every state with data had at least one cosmetology program below the benchmark. In 35 of the 51 places listed (49 states, DC and Puerto Rico; Alaska had no program with reported earnings), 90% or more were below it. The lowest shares were in places with only a handful of programs, such as North Dakota (1 of 3) and Montana (2 of 4). Below, “programs” means programs with reported earnings. Median earnings is the middle program’s graduate median in that state.
| State | Programs | Below benchmark | Median graduate earnings | Typical benchmark |
|---|---|---|---|---|
| Alabama | 9 | 8 | $25,641 | $30,927 |
| Arizona | 12 | 12 | $31,155 | $35,969 |
| Arkansas | 18 | 18 | $24,262 | $31,625 |
| California | 86 | 83 | $24,704 | $36,082 |
| Colorado | 16 | 16 | $31,650 | $39,174 |
| Connecticut | 7 | 6 | $28,938 | $36,491 |
| Delaware | 4 | 3 | $31,836 | $34,808 |
| District of Columbia | 1 | 1 | $25,747 | $38,290 |
| Florida | 69 | 67 | $23,811 | $32,488 |
| Georgia | 30 | 26 | $23,286 | $32,203 |
| Hawaii | 2 | 2 | $21,333 | $36,491 |
| Idaho | 11 | 11 | $25,112 | $34,808 |
| Illinois | 42 | 39 | $28,182 | $34,808 |
| Indiana | 19 | 18 | $27,283 | $35,051 |
| Iowa | 15 | 13 | $30,930 | $36,082 |
| Kansas | 13 | 12 | $27,739 | $34,058 |
| Kentucky | 11 | 11 | $26,115 | $34,058 |
| Louisiana | 24 | 23 | $21,993 | $32,203 |
| Maine | 3 | 3 | $27,755 | $34,808 |
| Maryland | 12 | 12 | $27,218 | $36,491 |
| Massachusetts | 13 | 13 | $33,478 | $39,449 |
| Michigan | 27 | 27 | $25,486 | $32,989 |
| Minnesota | 8 | 5 | $34,603 | $36,491 |
| Mississippi | 17 | 17 | $21,645 | $30,408 |
| Missouri | 17 | 14 | $27,601 | $32,989 |
| Montana | 4 | 2 | $27,371 | $31,564 |
| Nebraska | 5 | 5 | $30,176 | $36,082 |
| Nevada | 7 | 7 | $30,250 | $36,082 |
| New Hampshire | 3 | 3 | $34,453 | $40,791 |
| New Jersey | 15 | 14 | $28,716 | $36,082 |
| New Mexico | 6 | 5 | $26,974 | $30,927 |
| New York | 32 | 28 | $26,983 | $34,350 |
| North Carolina | 26 | 23 | $27,493 | $32,203 |
| North Dakota | 3 | 1 | $36,244 | $36,082 |
| Ohio | 30 | 29 | $22,694 | $34,808 |
| Oklahoma | 14 | 14 | $22,192 | $32,989 |
| Oregon | 11 | 11 | $28,552 | $36,082 |
| Pennsylvania | 32 | 31 | $27,294 | $35,274 |
| Puerto Rico | 22 | 14 | $14,376 | $15,979 |
| Rhode Island | 1 | 1 | $32,091 | $38,865 |
| South Carolina | 10 | 9 | $27,896 | $32,989 |
| South Dakota | 4 | 4 | $35,256 | $36,067 |
| Tennessee | 32 | 31 | $25,314 | $32,989 |
| Texas | 81 | 75 | $22,973 | $33,298 |
| Utah | 21 | 20 | $27,247 | $37,112 |
| Vermont | 1 | 1 | $31,291 | $36,491 |
| Virginia | 12 | 9 | $31,554 | $35,969 |
| Washington | 15 | 14 | $31,040 | $39,073 |
| West Virginia | 5 | 4 | $20,245 | $32,604 |
| Wisconsin | 17 | 14 | $32,924 | $36,491 |
| Wyoming | 1 | 1 | $30,258 | $37,112 |
What the data does and does not show
- It is preliminary. These are the Department’s rulemaking data, published in January 2026. Official results in 2027 will use newer graduates and may group programs differently.
- Tips are undercounted. The earnings come from tax records. Cash tips that are not reported do not show up. That matters most for hair, nail, barber and massage work, and it is the Department’s own reason for the delay.
- The graduates are from a while ago. Earnings are for people who finished in the 2017-18 and 2018-19 school years, measured four years later, so they cover the pandemic years.
- Small programs are left out. Many programs had too few graduates to report. We counted 1,979 programs with data out of the active certificate programs in these trades.
- Self-employed income counts, but only if reported. The measure includes wages and business income, so a stylist who rents a booth is counted only on what they report.
- This is about graduates who got federal aid. Students who paid without federal aid are not in the numbers.
The data shows what graduates reported earning. It does not show why earnings are low, or whether a given school is good or bad.
If you are thinking about trade school
- Look up the program, not just the school. The Department’s College Scorecard shows earnings and debt for specific programs.
- Compare cost with likely pay. Cosmetology hours required for a license vary widely by state, and so does tuition. Ask for the total cost, including kits and fees.
- Check your state’s licensing rules. Some states have cut required hours or allow apprenticeships, which can cost less than school.
- Plan how you will earn. Many stylists and massage therapists end up self-employed, renting a booth or opening a small studio. Pay depends heavily on building a client list.
For licensing and startup steps, see our guides to starting a hair salon, salon and barber license rule changes by state, starting an HVAC business, starting an electrical business and starting a plumbing business.
How we did this
We downloaded the Department of Education’s AHEAD Session 2 Program Performance Data (debt, earnings and earnings test file, plus the institution characteristics file). We kept undergraduate certificate programs in these program codes: 12.04 (cosmetology and related grooming, which includes barbering), 51.35 (massage and bodywork), 47.02 (heating and air conditioning), 46.03 (electrical installers), 46.05 (plumbing), 48.05 (precision metal working, which includes welding), 47.06 (vehicle repair) and 46.04 (building finishing and inspection). We kept programs flagged as still enrolling federal aid students and used the Department’s own flag for failing the earnings test as written in the law (variable mstr_obbb_fail_cip2_wageb). Earnings are in 2024 dollars.
Sources: U.S. Department of Education, AHEAD negotiated rulemaking data files and codebook; Department fact sheet on the final accountability rule, June 29, 2026.