A $21,000 Cosmetology School Debt, and a $9-an-Hour Job (Part one)

 

When she was in cosmetology school, Tracy Lozano had a love-hate relationship with weekday mornings. Those predawn moments were the only time she saw her infant daughter awake, and she savored them. When the time came to hand the baby to her own mother, she said in a recent interview, she would stifle her tears, letting them roll only when she had closed the door behind her.

She would put on her game face when she pulled into the parking lot of the Iowa School of Beauty, just outside Des Moines. From what Ms. Lozano could tell, a cosmetology license was a realistic way to ensure a better life, and she was willing to make sacrifices. While also working nights at a Pizza Hut, she borrowed $21,000 to cover tuition and salon supplies and put in eight-hour days at the school for the better part of a year.

The amount of time Ms. Lozano spent learning to give haircuts, manicures and facials was enormous, but the requirement was set by the state, and she didn’t much question it. She was determined to earn enough money to move out of her mother’s house. Only a few weeks after getting her cosmetology license in 2005, she was hired at a local Great Clips.  The job, though, paid just $9 an hour, which meant that her days double-shifting at Pizza Hut weren’t over. Even with tips, Ms. Lozano didn’t earn more than $25,000 in any of her first few years as a cosmetologist. For years, she relied on food stamps and health insurance from the state. She couldn’t cover living expenses and keep chipping away at her loan payments. Thirteen years after graduating, she still owes more than $8,000.

What Ms. Lozano didn’t know was that the state-regulated school system she had put her faith in relies on a business model in which the drive for revenue often trumps students’ educational needs. For-profit schools dominate the cosmetology training world and reap money from taxpayers, students and salon customers. They have beaten back attempts to create cheaper alternatives, even while miring their students in debt. In Iowa in particular, the companies charge steep prices — nearly $20,000 on average for a cosmetology certificate, equivalent to the cost of a two-year community-college degree twice over — and they have fought to keep the required number of school hours higher than anywhere else in the country.

Each state sets its own standards. Most require 1,500 hours, and some, like New York and Massachusetts, require only 1,000. Iowa requires 2,100 — that’s a full year’s worth of 40-hour workweeks, plus an extra 20. By comparison, you can become an emergency medical technician in the state after 132 hours at a community college. Put another way: An Iowa cosmetologist who has a heart attack can have her life saved by a medic with one-sixteenth her training.

There’s little evidence that spending more hours in school leads to higher wages. Nor is there proof that extra hours result in improved public safety. But one relationship is clear: The more hours that students are forced to be in school, the more debt they accrue. Among cosmetology programs across the nation, Iowa’s had the fourth-highest median student debt in 2014, according to federal data.

Walk into any hair salon in Iowa and you’re likely to find a stylist making $10 an hour who loves her job but is struggling to pay off her student loans. Over 10 months, in visits to a dozen salons and in conversations with 37 former Iowa cosmetology students — and an additional 25 in other states — we heard a variety of opinions about how much training the profession requires and the financial returns it offers. And we heard again and again how the dream of becoming a professional hairstylist, or someday owning a salon, can be stymied by debt.  The issue is national. More than 177,000 people enroll in for-profit beauty schools across the United States each year, which on average charge more than $17,000 for tuition, fees and supplies to earn a cosmetology certificate.  Across the Iowa border, in Fremont, Neb., Ashley Sandoval makes $10.50 an hour at another Great Clips location. In the five years since she graduated from cosmetology school, she said, interest has ballooned her debt from $22,000 to $29,000. “I’ll be paying it off for the rest of my life,” Ms. Sandoval said.

The Iowa Cosmetology School Association, which acts on behalf of several of the 13 companies that own schools in the state, would not make a representative available for an interview. But the association did provide written responses to questions through its lobbyist, Threase A. Harms. The group said that its primary concern was successfully preparing students, not making money, and that differences in state regulations made comparing hours difficult. The association also doesn’t see the crippling student debt as the schools’ fault, citing the fact that students are allowed to take out more in loans than is necessary to cover educational expenses. “We have students graduating with minimal debt because they made wise choices,” the association said.

Cosmetology schools have a unique business model in the for-profit school world. They have two main streams of revenue. The first comes from students, often in the form of taxpayer-funded grants and loans to pay for the tuition. Cosmetology schools took in nearly $1.2 billion in federal grants and loans during the 2015-16 school year.  The second stream is the salon work the students do while in school. They spend some time in classrooms learning about, for example, chemicals and how to sanitize the work space, but once they’ve hit a certain number of hours, they start working on real clients in salons run by the schools. In full-time programs, going to school becomes a full-time job, where students clock in and out for seven- or eight-hour shifts.

The total number of required hours varies, but all states require some amount of practice with paying customers. In Iowa, students spend 715 hours in the classroom and 1,385 hours on the floor.

Prices for these salon services — which include haircuts, manicures, facials and, at some schools, massages — are typically set below market rates to attract customers. The salons also sell shampoo, conditioner and other beauty products. One Iowa student said he and others had gotten perks (such as trips and special training) if they sold enough products. Another student, who sued a school in Pennsylvania, reported that her grades were partly based on whether she offered salon products to clients.  The schools don’t have to pay students for the services they provide; in fact, the students pay tuition for the hours they work in the salons.

All told, for-profit cosmetology schools nationwide brought in more than $200 million in revenue from their salons in the 2015-16 school year, according to federal statistics. Most schools are small, privately owned entities that do not have to disclose their profits.  “Without the revenue coming from those salons, most of these schools wouldn’t be profitable, or it would be marginal,” said Leon Greenberg, a lawyer in Las Vegas who has examined the financial documents of several schools he unsuccessfully sued under the Fair Labor Standards Act. “It’s pretty much ingrained in their business model.”  Some schools have pushed their business models to the legal limit — and beyond, according to government regulators.

La’ James International College owns six of the 27 cosmetology schools in Iowa, plus one in Nebraska and another in Illinois. Iowa’s attorney general sued the school in 2014, accusing it of defrauding students through deceptive marketing and enrollment practices. Under a settlement, the school admitted no wrongdoing but agreed to forgive almost $2.2 million in student debt. It had to pay a $500,000 fine, and the owners — Cynthia Becher and her son, Travis Becher — had to personally pay fines of $25,000 each. The federal government also placed La’ James under restrictive monitoring for alleged mishandling of students’ financial aid. (The Bechers declined to comment on the suit.)

Lisa Shaw, a former La’ James massage instructor, said Ms. Becher had met with staff members regularly and often told them, “This is a business first, and a school second.”

Ms. Shaw and Bez Lancial-McMullen, a former La’ James cosmetology instructor at the campus in Davenport, Iowa, recalled attending meetings in which company officials spoke of the need to maintain sizable profits. Students were regularly pulled out of Ms. Lancial-McMullen’s classes to work in the salon, she said. Other complaints submitted to the attorney general’s office about the school describe similar practices, although the Bechers have consistently denied the claims.  Both women eventually resigned because they objected to the way students were being treated. Ms. Shaw left in 2014, saying the company’s owners looked at students “as dollar signs.”  “I feel like the school is predatory,” Ms. Shaw said. “I could no longer be a part of taking people’s money and then treating them like that.”  Stephanie Wood Becher, who is the school’s director of marketing (and Travis Becher’s wife), denied that Cynthia Becher would ever tell employees to put the school’s business needs first.  “Education and betterment of the student is always and has always been the #1 priority for her and L.J.I.C.,” Ms. Wood Becher wrote in an email.

La’ James had to open its books during the attorney general’s lawsuit, revealing annual profits that ranged from $1.2 million to $3.4 million from 2009 through 2012. In Iowa, tuition, fees and supplies for its cosmetology program come to $21,500 per student.  Compared with other institutions, “I think we’re cheap,” Mr. Becher said, noting that the cost includes books and supply kits. “We’re private. We’re not public. We don’t get tax breaks.”  The Becher family also owns more than a dozen limited liability companies, which include a distribution center for its salon products. In 2017, the United States Department of Education reprimanded La’ James for failing to publicly disclose a rape in a dorm in Nebraska. Federal law requires colleges to publish annual security reports and logs about crimes on campus, which La’ James failed to do, “exposing students and staff to potential harm,” according to government reviewers.Joni Buresh, the school’s compliance officer, said in an email that the security reports were available to students, and that she believed that the law requiring crime logs didn’t apply to campuses like the one in Nebraska.    She acknowledged that a rape had been reported to the police but said that school officials “honestly are not confident that this rape incident ever occurred.” Ms. Buresh said they had now filed the paperwork requested by the federal reviewers.

END OF PART ONE.

John Paul DeJoria Sued for $5 Million By Employees For Failure To Pay Minimum Wages!

The Real Hair Truth

The Real Hair Truth has exclusively learned that the reality TV star and entrepreneur has been slapped with a $5 million class action lawsuit by students in his beauty schools, who claim he worked them like dogs and paid them nothing in return.  According to court documents obtained by Real Hair Truth , DeJoria, the founder of the hair products company Paul Mitchell and Paul Mitchell cosmetology schools, is not giving his students any compensation for their services, and they are suing for “failure to pay minimum wages and/or overtime wages.”

The schools charges the general public a lower rate for hair services than local salons, but the lawsuit claims that the students are required to provide the services to those customers without receiving wages in return.

The Paul Mitchell schools — allegedly numbering “over 50 and possibly over 100″ in 35 states — are able to operate at a lower cost because the students are providing them with free labor, according to the court documents. If the students weren’t there, they claim, the school would have to hire regular cosmetologists, and pay them minimum wage at least.

“The class members are paid no compensation by the defendants for the labor they provide in the Paul Mitchell Schools’ personal service business, meaning they receive no payments in United States currency,” the documents claim.The class action lawsuit against Paul Mitchell Schools also says that due to the policy of making students work for free, the schools are able to operate at low cost and high profit, making competitors are unable to pay their workers more than minimum wage.

The members of the lawsuit state they were employees, not students, and since they weren’t paid, DeJoria broke federal law. They are asking for a jury trial and a $5 million payment from DeJoria.

Real Hair Truth will keep you posted on this Lawsuit.