Terra Harvell went to cosmetology school with the help of federal student loans. Without that financial aid, she says, she doesn’t know where she’d be today. And where she is today is impressive: She runs an eight-figure business—Harper Ellis Hair Co., Strata Salon Systems and Harper Ellis Salon in Fort Smith, AR—and has helped more than 10,000 stylists generate more than $300 million in new revenue.
She is, by any measure, proof that the industry works. That’s why she’s alarmed by what the Department of Education (DOE) could do next.
In April 2026, the DOE proposed a rule that would judge cosmetology programs based on graduate earnings. The department finalized the rule in July, though cosmetology, barbering and similar programs now have an extra year before the new requirements take effect.
Still, beauty education advocates say the framework could put most cosmetology and wellness programs at risk, with some estimates exceeding 92 percent. If a program fails two out of three years, it could lose access to federal student loans and Pell Grants. And for an industry where 70 to 90 percent of students rely on federal financial aid to attend, Harvell says the extra time doesn’t erase the stakes—it could still amount to a shutdown.
Ahead, Harvell explains what the rule could mean for cosmetology schools, why she believes the earnings data is incomplete and what she says the industry needs to fix.
The Problem With the Data
"The Department of Education has really cracked down and wants to defund cosmetology schools because of how many students are defaulting on their loans," Harvell explains. "My take on it is we have to change the data that's in front of them in order for there to actually be a change."
Harvell says the numbers may not reflect what stylists actually take home. When the DOE reviews cosmetology graduate earnings, it looks at tax filings, which can dramatically undercount income in an industry where some stylists don’t report everything they make. “There's a lot of stylists that aren't claiming their full income,” she adds. “They're filing their taxes saying they're making $30,000, when that’s not exactly true.”
"I have stylists in my salon that are making $30,000 a year in just tips,” Harvell adds. “We put those on their W-2 statements because that's the law." To Harvell, that’s the larger issue: The government is looking at the numbers in front of it, while the industry’s own reporting habits helped make those numbers incomplete.
The Training Gap Behind Graduate Earnings
"The actual problem is that cosmetology schools don't teach business," Harvell says. "Graduates enter the industry knowing how to do the work and nothing about how to charge for it, build a clientele or run a sustainable career. That's the data behind the data, and it's being ignored entirely."
Alex Yerger, who owns Undertone Salon in Trexlertown, PA, sees the same gap from the salon floor. "Cosmetology schools teach you the basics and fundamentals, basically everything needed to pass your state exam," she says. "But the biggest missing pieces—and this is what makes up half of your career—is everything that has nothing to do with the physical skill part. It's knowing how to talk to people, care for people and build relationships and connections. Part of the business is marketing yourself, social media, leadership and being confident in yourself and what you provide."
Harvell says the industry’s “be your own boss” messaging can also set new stylists up for failure. "There's a lot of messaging out there that's about going independent. ‘Go be your own boss, that's why you should get into the industry.’ Truthfully, that whole messaging really sets people up for failure because reality is, no one's ready to run their own business until they learn how."
How Harvell Is Trying to Fix the Gap
About 20 percent of Harvell's business is education, and her curriculum focuses on what she says many schools skip. "We teach everything from helping stylists understand their numbers. The difference in revenue, the difference in profit and the difference in income, and those are very, very different things."
From there, her training covers high-ticket pricing strategy, financial literacy, profit and loss statements and tax compliance. "We have a lot of failure in our industry because there's a lot of money going under the table. There's a lot of Venmo and a lot of things happening and stylists need to pay their taxes. That's why they can't buy homes and they can't scale their own personal life."
Yerger frames the issue more simply: "A lot of stylists that just start out think that if they have a full book they're good to go. Sometimes, just quantity is not going to cut it. In order to successfully profit, save and manage, everything needs to have a place to go and a reason for why it's going there.” Her advice: “Break down the price of your services according to your expenses and have a reason behind each dollar."
How Harvell Hopes to Change the Outcome
This summer, Harvell is working to join the Arkansas state cosmetology board, hoping it will be a first step toward influencing policy nationally. She estimates the rule could take three to four years to fully take effect, but she isn’t waiting to act.
"I believe it 100 percent will happen because we won't have a Department of Education if they keep throwing money at people that aren't paying back their loans,” Harvell adds. “We have to fix the problem right in front of us."
The fix, she says, doesn’t require dismantling the system. “The messaging needs to be: ‘Go find someone that is doing what you want to do in life. Go find a salon that has a great training program in order to get you where you want to go before you decide to go out and be on your own.’”
For Harvell, it comes back to where she started: a young woman who needed federal financial aid to get her foot in the door. "If I hadn't been able to get financial aid in order to attend cosmetology school, I don't know that I'd be here today."
