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La’James International College, a chain of for-profit beauty schools in Iowa that has been under fire on several fronts for its dealings with students, was sued last week for allegedly refusing to disburse students’ financial aid for months at a time.

The class-action lawsuit was filed by Student Defense, a national legal defense network focused on higher education, and a Des Moines law firm, Wandro & Associates P.C. It’s the second time La’James has been sued for defrauding students; the first suit, brought by the Iowa Attorney General, ended in a financial settlement.

The Iowa beauty school chain (which The Hechinger Report wrote about 15 months ago, in a story that also ran in The New York Times) is accused in the new lawsuit of causing students serious financial hardship by withholding financial aid. While most other colleges disburse student aid once a semester, cosmetology schools are supposed to do so when students hit certain benchmarks in their progress toward a certificate, and the schools must return the money to the government if the student drops out.

One plaintiff in the lawsuit, a former cosmetology student at the chain’s Davenport campus, said she had struggled to pay her rent and car insurance when her financial aid payments didn’t come through as promised. She eventually started working part-time while going to school, but still had to borrow money from her grandmother, who was on a fixed income. She finally got the payment months after graduating. Another plaintiff, Jenna Detmer, was a massage therapy student who had to take out an $8,000 pay-day loan, on top of her federal student loans, as a result of the alleged delay.

“If I can save one person from having to experience this, I’d say this lawsuit will be worth it.”

“It almost broke us,” Detmer, who graduated in 2017, said of her family. “If I can save one person from having to experience this, I’d say this lawsuit will be worth it.”

Related: Tangled up in debt

The suit alleges that the school violates the state’s Consumer Fraud Act by not getting these payments out on time. It seeks financial damages for the former students and asks the court to prevent La’James from continuing the allegedly deceptive practices.

La’James did not respond to requests for comment.

“The students who choose to go to beauty school are doing so in order to better their lives, and they really depend on the financial aid that their school is promising them,” said Alice Yao, senior counsel at Student Defense and a former attorney in the civil rights division of the U.S. Department of Education. “What we found was that La’James was withholding the money that students were entitled to and pushing them into financial ruin.”

The Iowa Attorney General’s suit against La’James, filed in 2014, accused the school of having used deceptive marketing and enrollment practices. La’James admitted no wrongdoing and settled, forgiving nearly $2.2 million in student debt and paying a $500,000 fine. The settlement specifically prohibited the school from making false or misleading statements about financial aid disbursements.

Pursuing a cosmetology certificate (needed for a state license) at a for-profit beauty school is expensive. On average, for-profit schools nationally charge more than $17,000 for tuition, fees and supplies for a cosmetology certificate. Tuition alone in La’James cosmetology programs costs more than $18,500. Its cheapest – and shortest – program is nail technology, which costs $4,600 for 350 hours. Tuition for massage therapy, Detmer’s program, neared $11,000, according to the complaint.

Related:  ‘They just saw me as a dollar sign’: How some certificate schools profit from vulnerable students

Most of the students who enroll at La’James and other institutions like it rely on federal grants and aid not only to pay tuition, but also to help with bills and rent while they take the time to go to school. This is particularly crucial in cosmetology and massage therapy schools because going to school full-time essentially becomes the equivalent of having a 9-to-5 job. Students clock in every morning and out every evening, and each state mandates a certain number of hours that students must attend school to get various occupational licenses. Cosmetology licenses take the longest time; requirements range from 1,000 hours in Massachusetts and New York to 2,100 hours in Iowa. That’s more than a year of going to school full time.

“What we found was that La’James was withholding the money that students were entitled to and pushing them into financial ruin.”

La’James has been under what’s called “heightened monitoring” from the federal government for more than two years, meaning it is subject to extra scrutiny of its cash management. In May 2018, the government warned La’James that it was out of compliance with regulations that require quicker disbursement of aid.

At the end of 2018, a settlement administrator appointed after the Iowa Attorney General’s lawsuit found similar problems. Students who had not gotten their money on time told him that calls and emails to La’James went unanswered.

“This was pressing when we first started working on it,” Yao said. “But now, in light of everything that is happening in the world, and that this is an industry in which people are really going to suffer, because it involves a lot of bodily contact, it’s even more important that we try to get these students the relief they deserve.”

This story about cosmetology colleges was produced by The Hechinger Report, a nonprofit, independent news organization covering inequality and innovation in education.

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Meredith Kolodner is a senior investigative reporter. She previously covered schools for the New York Daily News and was an editor at and for The Investigative Fund at the Nation Institute....

Sarah Butrymowicz is senior editor for investigations. For her first four years at The Hechinger Report, she was a staff writer, covering k-12 education, traveling the country and developing an affinity...

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