After four years battling a chain of for-profit cosmetology schools in court, and many more years struggling with debts caused by those schools, about 150 students will receive some financial relief.
As part of a settlement finalized this week in a class action lawsuit, La’ James International College, which is based in Iowa, will pay current and former students who joined the lawsuit $1,500 each. It will also discharge debts those students owed to the school and make changes in how it communicates about financial aid.
The suit was brought against La’ James International College in 2020 following a Hechinger Report investigation into cosmetology schools in Iowa. Our reporting showed how the business model of beauty schools can help for-profit schools rake in profits while pushing students deep into debt for an ultimately low-paying career.
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The lawsuit, which was brought on behalf of current and former students by the nonprofit legal and advocacy organization Student Defense, accused La’ James of delaying financial aid payments and causing them financial hardship in violation of the Iowa Consumer Fraud Act.
“Students rely on their financial aid to stay afloat while they pursue their goals – and La’ James pulled that out from under them,” Student Defense’s litigation director, Eric Rothschild, said in a statement. “When for-profit colleges engage in such practices, hard-working students pay the price.”
La’ James did not respond to request for comment.
Most colleges disburse financial aid each semester, but beauty schools work differently. Students are required to clock a certain number of hours either in class or working in the school’s salon practicing their skills on paying customers. Financial aid payments are supposed to be made after students hit certain hour benchmarks, but students said La’ James often delayed those payments for months, so that they had to take out other loans to meet daily living expenses.
Cosmetology students in Iowa must complete more hours of training than those in any other state: 2,100 hours. (Most states require 1,500 hours.) Many for-profit beauty schools in Iowa have fought fiercely to keep it this way, lobbying hard against proposed changes. The state cosmetology school association has also protected its monopoly in this educational market, suing a community college that wanted to open a cosmetology program in 2005.
Related: Tangled up in debt
Many Iowa cosmetologists told Hechinger reporters that they spent a significant portion of their clock hours sitting around waiting for customers, not learning or practicing anything.
A Hechinger analysis showed that the more time a state requires for cosmetology training, the more debt aspiring hairdressers tend to take on. Yet the median annual pay for a cosmetologist is $35,000.
According to the most recent federal data, La’ James programs cost up to $20,000, while graduates from their schools make anywhere from $23,000 to $30,000 annually.
The Student Defense lawsuit is not the first time the school has found itself in legal jeopardy. The chain was sued in 2014 by the Iowa attorney general’s office, which accused it of deceptive marketing and enrollment practices. That suit resulted in a settlement in which La’ James forgave more than $2 million in student debt, paid a $500,000 fine and agreed to not make false or misleading statements about financial aid disbursements.
In 2021, however, the attorney general’s office found that the school was misleading students about financial aid, and once again entered into a settlement where the school forgave more than $460,000 in institutional debt.
This story about cosmetology schools was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for the Hechinger newsletter.
There’s something highly ironic going on here. The students brought a lawsuit not because they faced hardship during their careers, were misled about outcomes, or their ability to repay their loans (which are all valid concerns), but because they relied on loans to live off – to pay bills that have nothing to do with the school or education, and that is somehow the school’s fault.
Let’s say the school did disburse their loans sooner, as the students wanted – even if the students hadn’t earned them through participation. Would that have improved outcomes? If a school has questionable outcomes with low pay, shouldn’t we demand that schools delay disbursements until students have earned them through participation requirements, not disburse them sooner because their students have other bills to pay?
If we stopped including “indirect cost” in these career schools, it would solve this entire problem. If students knew up front they could not use loans to pay their bills, they would borrow far less and would make other arrangements before attending.