Feb 1, 2022 - News

Scoop: La' James' financial aid issues persist, report finds

A photo of La' James' location in Johnston.
La' James International College's Johnston location. Photo: Jason Clayworth/Axios

La' James International College continued to make omissions or misrepresentations about financial aid to its cosmetology students five years after the school promised to fix the problems, according to a 2021 report to Iowa Attorney General Tom Miller.

Driving the news: Nicholas Klinefeldt, a former U.S. attorney overseeing La' James' compliance in a 2016 settlement with Miller's office, reported last June that the college provided misleading or incomplete information to students about when financial aid would be disbursed.

  • Miller's office has deferred some of the issues identified in the report β€” which Axios obtained through a public records request β€” to the U.S. Department of Education.

Why it matters: Many students rely on timely financial aid disbursements to cover living and other expenses.

Catch up fast: La' James, which operates five cosmetology schools in Iowa, has been accused of unfair and deceptive business practices for roughly a decade.

  • In 2016, the school agreed to pay a $550,000 fine, forgive $2.1 million in student debt and submit to state oversight as part of its settlement to a consumer fraud lawsuit filed by Miller.
  • The school had planned to sell or close in 2019, but that didn't happen so Klinefeldt last year audited the school's compliance to settlement agreements, Lynn Hicks, Miller's chief of staff, told Axios.

The latest: Multiple students filed a class-action lawsuit against La' James in 2020, alleging that the school illegally retained funds and violated the Iowa Consumer Fraud Act.

  • Iowa's Court of Appeals just affirmed the lawsuit's class-action status in December, and the case is expected to determine whether the students are owed compensation.
  • La' James officials denied wrongdoing in court documents.

Of note: La' James officials and an attorney for the school didn't respond to Axios' requests for comment.

What to watch: The Department of Education has increased its oversight of the school's cash management.

  • A trial date has yet to be set in the class-action case.
A photo highlighting conclusions about La' James by the Iowa Attorney General's office.
A report to the Iowa Attorney General's office last year found La' James remained out of compliance with a 2016 agreement linked with student financial aid.
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