Las Vegas Review-Journal (Sunday)
For-profit cosmetology schools can entangle students in debt that starting jobs barely dent
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 mother, she said recently, 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 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 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, 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 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, 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.
‘Most of these schools wouldn’t be profitable’
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 fulltime job, where students clock in and out for seven- or eight-hour shifts.
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.)
Sitting and waiting but earning credit anyway
In 2016, Glenda Martin wasn’t aware of any trouble brewing between La’ James and the federal government, or that the school had spent the previous two years in a legal dispute with the Iowa attorney general’s office.
In 2016, Martin went for a short tour of the La’ James campus in Fort Dodge. The school’s storefront was airy and glamorous. Hair products lined the walls under enlarged photographs of well-coiffed women. Makeup displays were fronted by placards advertising the services available in the student-staffed salon. Students dressed in black shirts and pants.
Before her visit was over, Martin filled out her enrollment and financial aid paperwork. She took out $23,000 in loans.
Martin liked La’ James at first, she said, but quickly discovered problems. She found the classes boring and repetitive. Some instructors had students read aloud from textbooks and watch instructional videos.
Martin said that she supported Iowa’s 2,100-hour requirement in theory — as did several of the women we spoke with — but that in practice, many of those hours were wasted, particularly once she got to the salon floor.
Although Fridays and Saturdays would be busy, the rest of the week generally dragged. She’d be itching to practice what she had been learning in class. But some days there were so few customers that she’d sit and wait for hours.
One day, she braved a snowstorm to get to the salon. The school had stayed open, requiring students to come in. Martin was the only one who did. She left at the end of the day without having seen a single customer — but those hours still counted toward the 2,100.
The fight to reduce hours
In the past five years, legislators in at least 11 states have introduced bills to lower the number of hours required for a cosmetology certificate. These efforts are driven by a mix of anti-regulatory libertarians, national salon chains that are having trouble hiring enough qualified stylists and the national association for cosmetologists, which wants its members to be able to carry their licenses across state lines.
While aggressive lobbying by schools has managed to stall or defeat legislation in several states, at least eight have reduced the number of hours in their regulations. In recent years, required hours were lowered to 1,500 in South Dakota and Montana. And Nebraska legislators, after a long battle with the schools, trimmed their mandate to 1,800 hours.
Administrators from schools in those states disagreed with the reductions, but said they were still able to cover the same material as before.
Iowa, with its 2,100-hour standard, remains “an embarrassment,” said Dawn Pettengill, a Republican state representative. Hoping to lower the profession’s barrier to entry, Pettengill introduced legislation that would drop the hours to 1,500. Republicans in the Senate proposed a similar bill.
Cosmetology schools say the numbers do not accurately capture what their graduates earn in an industry with so many tips. And it is true that cosmetologists have the potential to make a good living. According to the Bureau of Labor Statistics, the median annual wage for a cosmetologist is $24,850. Those in the top 10 percent earn more than $50,000, or nearly $25 an hour. The problem is that most of these professionals flounder for years before getting to that point, if they reach it at all.
After more than seven years on the job, Lozano finally got a raise. But that meant the loan payments she had been able to defer came due.
The money she’ll use to finish paying them most likely won’t come from haircuts. Lozano plans to go back to school to become a registered nurse. If she’s able to find a position in that line of work, she could more than double her current salary. And it will give her and her daughter, who wants to be a doctor, another thing to bond over.
“I told her she wasn’t allowed to go to school for hair,” Lozano said. “I don’t want her going through the same thing that I did — the debt, and everything after the fact. I won’t let her do it.”