In our last blog post, we shared updates regarding the STATS final rule and reminded institutions of the upcoming October 1st reporting deadline. In this blog post, we want to expand on the final regulations in light of a recent Federal Student Aid (FSA) training on Student Tuition and Transparency System (STATS) reporting requirements and Earnings Accountability framework. At the same time, institutions are facing an important decision: whether to early implement the new Accountability regulations or remain subject to the existing Financial Value Transparency and Gainful Employment (FVT/GE) regulations until the new rule becomes mandatory on July 1, 2027.
For many schools—particularly those offering cosmetology, barbering and wellness programs—the answer may not be as straightforward as it first appears.
What We Learned From FSA’s STATS Training
The new Earnings Accountability framework represents a significant expansion of federal program-level accountability. Unlike the current GE sanctions, the Earnings Accountability provisions apply to Title IV-eligible programs at all types of institutions.
The new framework eliminates the Debt-to-Earnings measure for accountability purposes and instead focuses on an Earnings Premium measure. Generally, undergraduate program completers’ median earnings will be compared with the earnings of working adults ages 25–34 who have only a high school diploma or recognized equivalent. Programs pass when their completers’ median earnings meet or exceed the applicable earnings threshold.
The consequences escalate over multiple years. A first failure triggers student warning requirements. A program failing the measure two out of three consecutive award years becomes a low-earning outcome program and can lose Direct Loan eligibility. Additional institutional-level consequences can ultimately result in affected programs losing access to all Title IV funds, including Pell Grants.
Small Programs Are Not Automatically Excluded
One particularly important takeaway from FSA’s training involves programs with fewer than 30 completers. Rather than simply excluding a small program from the calculation, the Department can progressively expand the cohort across prior award years. If there still are not enough completers, FSA can expand the calculation to programs at the institution sharing the same four-digit CIP code and credential level.
This makes accurate program-level reporting, CIP classifications and NSLDS completion information increasingly important. Schools will receive Completers Lists and have an opportunity to review and correct the underlying information before earnings are calculated.
STATS Reporting: Some Relief, But Significant Reporting Remains
The STATS framework eliminates several data elements currently required under FVT/GE, including certain attendance and enrollment information, completion and withdrawal dates, institutional debt, and qualifying graduate program information. However, STATS still requires substantial student- and program-level data, including program information, CIP code, credential level, program length, accreditation and licensure information, cost of attendance, tuition and fees, residency information, and non-Title IV assistance—including private education loans.
The first STATS reporting deadline is October 1, 2027, but schools have a much more immediate October 1, 2026 decision to make regarding early implementation.
The Early Implementation Decision
On July 28th, the American Association of Career Schools (AACS) provided a webinar presented by attorneys from Thompson Coburn offering important insight into this decision. The Accountability Final Rule generally becomes effective July 1, 2026, unless a school . Until then, schools remain subject to the existing FVT/GE regulations unless they elect to early implement the new rule. According to the presenters, the institution’s October 1, 2026 reporting effectively communicates that decision: reporting only the information required under the new Accountability framework signals early implementation, while submitting the complete FVT/GE reporting requirements keeps the institution under FVT/GE until July 1, 2027.
That creates two very different paths.
Why Would a School Early Implement?
There are meaningful compliance advantages. Most notably, the new Accountability framework eliminates the Debt-to-Earnings measure. Thompson Coburn also noted that the Department projected substantially more programs to fail under FVT/GE than under the new Accountability framework. For many beauty and wellness programs, another major consideration is the new tip-based implementation delay. For qualifying programs preparing students for occupations where tipping is predominant, the Department will not consider the program to have passed or failed the Earnings Premium measure for an award year using earnings data from tax year 2025 or earlier. The intent is to allow future earnings data to reflect the new federal treatment of tipped income beginning with tax year 2026. As Thompson Coburn explained, qualifying programs could therefore avoid their first Accountability sanctions until 2028 at the earliest.
However, that protection belongs to the new Accountability framework. It does not shield a school that remains subject to FVT/GE from consequences under the existing regulations. A school choosing not to early implement could potentially receive FVT/GE results and be required to issue warnings before July 1, 2027. From a purely regulatory-risk perspective, that creates a compelling argument for early implementation for some institutions.
Why Might a School Choose Not to Early Implement?
There is another perspective schools should consider. Industry stakeholders continue to evaluate advocacy and potential litigation surrounding the new Accountability framework. For institutions that may wish to participate in or benefit from a legal challenge, voluntarily electing early implementation raises strategic questions that should be discussed with legal counsel before making the election. This is an important distinction. DJA is not suggesting that early implementation automatically waives a school’s right to challenge the regulations or necessarily eliminates legal standing. Those are legal questions dependent upon the claims, facts and relief sought in any particular litigation.
Rather, schools should recognize that voluntarily opting into a regulatory framework before its mandatory effective date could become relevant to litigation strategy. Institutions considering a legal challenge may therefore determine that there is value in remaining under the currently applicable FVT/GE regulations until the new Accountability requirements become mandatory. The Thompson Coburn presenters themselves acknowledged that there are differing opinions regarding early implementation and encouraged institutions to carefully consider their individual circumstances and consult counsel as appropriate.
So, Should Your Institution Early Implement?
At this time, DJA does not believe there should be a blanket recommendation applicable to every institution. For a school with programs facing significant exposure under FVT/GE—particularly programs that qualify for the tip-based implementation delay—the immediate regulatory benefits of early implementation could be substantial. Conversely, an institution with limited near-term FVT/GE exposure that is concerned about the legality of the new Accountability framework may determine there is little reason to voluntarily opt into the new regulations early.
Schools should consider at least three questions before deciding:
1. What is our potential exposure under the existing FVT/GE measures?
2. Do our programs qualify for the tip-based implementation delay, and what benefit would early implementation provide?
3. Are we considering participation in, support of, or reliance upon potential litigation challenging the new Accountability framework?
For that third question, institutions should consult qualified legal counsel.
The October 1 Decision Matters
Perhaps the most important takeaway is that schools should not treat the October 1, 2026 reporting process as simply another annual reporting exercise. The reporting path an institution chooses may determine whether it remains subject to FVT/GE for the remainder of the transition period or voluntarily moves into the new Accountability framework early.
DJA recommends that institutions make this decision intentionally and before submitting their October reporting.
Our team will continue monitoring FSA guidance, industry advocacy, potential litigation, and additional clarification regarding early implementation. We will also work with our clients to ensure they understand the reporting requirements associated with the path they ultimately select.
Thank you,
Renee Ford, Vice President
