La' James to forgive $2M in student debt as part of settlement

La’ James International Colleges has agreed to forgive $2.1 million in student debt, pay a $550,000 fine and submit to outside oversight as part of a settlement agreement in a lawsuit alleging it violated Iowa’s Consumer Fraud Act, state officials said Thursday.

The settlement resolves a consumer fraud lawsuit filed in Polk County District Court in 2014 alleging La’ James engaged in deceptive, omissive and unfair practices in marketing, enrollment and instruction.

“This settlement addresses certain past practices by La’ James that we allege were simply unfair to many of its students,” Iowa Attorney General Tom Miller said in a statement.

The settlement affects prospective and current students, as well as former students who owe debts to La’ James.

The cosmetology school encountered public scrutiny following a series of Des Moines Register Pulitzer Prize finalist editorials in 2013 about multiple students who said they were not being given credit for the hours worked and unable to graduate on time. Some were forced to drop out because La' James "pays itself first" with student loan and grant money, leaving students with no money for rent or living expenses.

La’ James and its parent company principals, Cynthia and Travis Becher, admitted no wrongdoing in the settlement.

A press release from the school noted its "proud history" and said 75 percent of its students complete their courses on time.

“We believe entering into this agreement is in the best interest of our students, instructors and alumni,” Cynthia Becher said in the statement. “The beauty industry is a growing and expanding area, and we want to focus all of our energy and efforts into educating the next generation of cosmetologists, estheticians and massage therapists.”

Miller’s office in 2014 alleged that Cynthia Becher, majority owner of a company that operates La' James International Colleges, and its cosmetology schools failed to adequately staff classrooms with instructors, required students to sell products from La' James' salons and perform janitorial duties, failed to fully inform students of important information, and assessed improper charges for students not finishing the program on time.

La' James has schools in Cedar Falls, Cedar Rapids, Davenport, Fort Dodge, Iowa City and Johnston. It also has sites in East Moline, Ill., and Fremont, Neb. It is not affiliated with La’James College in Mason City.

Yolanda Dings, a former student La’ James student, was enrolled in classes in Johnston for 10 months before she contacted The Register in 2013. Among her concerns was about the for-profit school’s educational practices and how little time she spent with customers, telling the paper “they should have given me a janitorial degree.”

Dings, who now lives in Florida, still owes money for her La’ James education and says she has been unable to enroll at another cosmetology school because of the debt. She planned to review Thursday’s settlement to see if she qualifies for the debt forgiveness.

“To this day, I felt I wasted all that money and time, and I didn’t learn anything,” Dings said.

The settlement, as outlined by the Iowa Attorney General’s office:

Prospective student transparency

The agreement requires the school to substantially bolster transparency to prospective students, including a one-page disclosure form:

• La’ James must clearly disclose costs and fees associated with enrollment and tuition on a one-page disclosure form.
• The form will include an expected timeline for completing the program, and the percentage of students who successfully completed it within the past three years.
• The form must disclose items and materials the school expects students to purchase. The school will allow students to buy required items elsewhere, a change from past practices.
• La’ James is required to provide a list of current instructors and their qualifications to prospective students who request one.

The school must also provide prospective and current students with a handbook that clearly discloses detailed program requirements, policies and expectations. The handbook must include the total number of hours the school requires for students to complete the program, attendance and leave-of-absence policies, and how the school assigns customers at its salons.

Current students

The agreement will affect student training, instructor staffing, leave-of-absence policies, and refunds:

• La’ James will change how it allows students to complete their required practical training. The school will no longer require students to recruit customers to receive credit or pay the school for clients. Through the agreement, La’ James will allow students to fulfill half of their skills requirements through non-paying customers. The school agrees to provide customers for the remaining half, or allow students to complete remaining skills requirements through non-paying customers or mannequins.
• The school agrees not to require students to perform janitorial or sanitation services beyond Iowa Board of Cosmetology Arts & Sciences or Iowa Board of Massage Therapy minimum requirements.
• La’ James agrees to staff classes with qualified, licensed instructors.
• La’ James may not remove a student’s completed program hours unless allowed by a written policy.
• La’ James must establish a leave-of-absence policy that permits extended absences for justifiable reasons, including medical leaves or financial hardships.
• If a student withdraws within two weeks of enrolling, La’ James must provide a full refund, except for the $50 application fee.

Debt forgiveness for former students

La’ James will cease attempting to collect $2.1 million in debt, fees and interest from former students who owe money to the school. La’ James must notify affected former students within 90 days, and also notify credit reporting agencies.

La’ James, principals pay $550,000

La’ James will pay the state $500,000, and principals Cynthia and Travis Becher each will pay an additional $25,000. The payments will largely go toward partial refunds to current and former students.

Consumer Protection Division to contact students eligible for partial refunds

The division will contact eligible current and former students about partial refunds. Current and former students do not need to contact the Consumer Protection Division to be eligible.

Oversight and duration

Former U.S. Attorney Nicholas Klinefeldt will serve as an independent settlement administrator, at La’ James’ expense, with authority to oversee La’ James’ settlement compliance. Klinefeldt will serve for a minimum of three years, and the settlement agreement is in place for at least four years.