Is Beauty School Considered College for Financial Aid and Tax Benefits?

Paying for education can be expensive, and many students rely on financial aid and tax benefits to help cover costs. If you’re considering beauty school, you may wonder whether it qualifies for these programs. The answer depends on factors like accreditation, program length, and government regulations.

Accreditation and Financial Aid

Not all beauty schools qualify for federal financial aid. Eligibility depends on accreditation by an agency recognized by the U.S. Department of Education, such as the National Accrediting Commission of Career Arts & Sciences (NACCAS). Accreditation ensures a school meets educational standards, allowing students to access federal grants and loans. Without it, students must rely on private funding or state-based aid programs.

Federal financial aid is only available at beauty schools that participate in Title IV programs. These schools allow students to apply for Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOG), and Direct Subsidized or Unsubsidized Loans. Pell Grants, which do not require repayment, are awarded based on financial need. Direct Loans must be repaid with interest, though subsidized loans do not accrue interest while the student is in school. Schools that do not participate in Title IV programs may offer scholarships or payment plans, but options vary.

Student Loan Options

Many students take out loans to pay for beauty school, and the type of loan affects repayment terms and costs. Federal student loans generally have lower interest rates and more flexible repayment plans than private loans. Direct Subsidized Loans are available to students with financial need, and the government covers interest while they’re in school. Direct Unsubsidized Loans, available to all students regardless of need, accrue interest from the moment funds are disbursed.

Private student loans, offered by banks and credit unions, can supplement federal aid but come with different terms. These loans require a credit check, and interest rates vary based on credit history. Some lenders offer fixed rates, while others have variable rates that fluctuate with market conditions. Unlike federal loans, private loans do not offer income-driven repayment plans or forgiveness programs, making them riskier for students uncertain about future earnings.

Repayment terms also differ. Federal loan borrowers can choose from multiple repayment plans, including Standard, Graduated, and Income-Driven options, which adjust payments based on income and family size. Private lenders may allow deferment while a student is enrolled but often require immediate repayment, increasing financial pressure during school.

Tax Deductions and Credits

Students can offset beauty school costs through tax benefits. The American Opportunity Tax Credit (AOTC) provides up to $2,500 per eligible student for qualified education expenses. To claim the full credit, students must be enrolled at least half-time in a program leading to a recognized credential. The credit phases out for single filers with a modified adjusted gross income (MAGI) over $90,000 and joint filers over $180,000 in 2024. Up to $1,000 of the AOTC is refundable, meaning students can receive a refund even if they owe no taxes.

For students who have completed their first four years of postsecondary education, the Lifetime Learning Credit (LLC) offers a different option. This credit covers 20% of the first $10,000 in qualified expenses, up to a maximum of $2,000 per tax return. Unlike the AOTC, the LLC is non-refundable, meaning it can only reduce tax liability to zero but won’t generate a refund. The income phase-out begins at $80,000 for single filers and $160,000 for joint filers in 2024.

Students with loans may also benefit from the Student Loan Interest Deduction, which allows borrowers to deduct up to $2,500 in interest paid on qualifying student loans. This deduction is available to those with a MAGI under $75,000 for single filers or $155,000 for joint filers. It is an above-the-line deduction, meaning it can be claimed even if the taxpayer does not itemize deductions. Some states also offer education-related tax benefits, such as deductions for tuition payments or credits for vocational training, which can provide additional savings.