La' James cosmetology school to refund more than $200,000 to settle Iowa student loan suit
An Iowa cosmetology school with a long and checkered history of financial issues has agreed to refund hundreds of thousands of dollars to students whose financial aid checks it delayed or withheld.
The refunds are the result of a settlement in a class-action lawsuit filed in 2020 against La' James International College, a for-profit chain of schools with locations in Johnston, Fort Dodge, Cedar Falls, Cedar Rapids and Davenport.
Many La' James students are eligible for federal student loans meant to cover living expenses during their education. But those who sued the school, which is responsible for administering those loans, of failing to make timely disbursements. That left many in financial peril, with some missing rent payments, suffering damage to their credit ratings and, in some cases, dropping out.
The parties reached a tentative agreement on the settlement in March 2023, according to court filings, but it was not until January that the deal was finally submitted to the court for approval. A judge approved it and dismissed the case April 30.
Under the terms of the agreement, nearly 150 former La' James students will receive $1,500 reimbursements from the school, for a total of more than $220,000.
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Attorney: deal 'a warning' to other colleges
Eric Rothschild, an attorney with the National Student Legal Defense Network who represented the students in the case, said in a statement they had had their financial aid "pulled out from under them" by La' James.
"When for-profit colleges engage in such practices, hard-working students pay the price," Rothschild said. "This settlement provides restitution for the students, accountability for La’ James, and a warning to other college executives not to engage in similar conduct.”
Attorneys for La' James did not respond to messages seeking comment.
Who gets the money?
Eligible class members included students who for whom promised disbursements of student aid were delayed or denied after March 2018. A total of 149 students joined the class out of more than 300 who may have been eligible, said Ben Arato, another attorney representing the plaintiffs. T
The notice and claim period has closed, and former students who did not already register their claims can no longer do so.
Related: More Iowans are getting student loans forgiven. Learn how many qualified and how.
Under the Iowa Consumer Fraud Act, La' James will also foot the bill for the plaintiffs' attorneys, Arato said. National Student Legal Defense Network will share the negotiated fee of $560,000 with Des Moines law firm Wandro, Kanne & Lalor.
La' James legal history
The cosmetology school has a history of trouble with regulators long predating the current lawsuit. In 2014, La' James was fined for lapses in sanitation and insufficient or unqualified instructors.
That same year, the Iowa Attorney General's Office sued La' James for defrauding students, a case that resulted two years later in a $500,000 payment to the state and forgiveness for $2.1 million in student debt. A consent decree enlisted a third-party administrator to oversee La' James' compliance with state law and its own policies. State officials have said the college continued violating the terms of that decree, though, and in 2020 sought to extend the independent monitor's authority at La' James' expense.
The Register has written repeatedly about complaints and allegations against La' James, which benefits from a state requirement to complete 2,100 hours of education at a state licensed school to obtain a cosmetologist license. Editorial writer Andie Dominick was a Pulitzer Prize finalist in 2013 for a series of editorials on occupational licensing, including several that addressed allegations against La' James.
William Morris covers courts for the Des Moines Register. He can be contacted at wrmorris2@registermedia.com or 715-573-8166.
This article originally appeared on Des Moines Register: Iowa cosmetology school settles class-action student loan lawsuit
