Bellingham beauty school grads’ debt too high, so feds pulled financial aid funding

A recently shuttered beauty school was saddling graduates with excessive loan payments, according to federal data, apparently leading to the school’s loss of financial aid.

The Beauty Institute-Schwarzkopf Professional, a private cosmetology school at 1411 Railroad Ave., abruptly ended classes in early April as a result of the funding loss, according to signs on the school’s front door. The sign said the school was in negotiations to reopen.

But students and at least one instructor said school leaders, who are seldom reachable, have given minimal or conflicting information about whether that will happen.

The school operated two locations in Idaho, in addition to the one in Bellingham: one school in Boise, and another in Coeur d’Alene, where the program was headquartered.

Calls to most phone numbers listed on the school’s website went unanswered. Other numbers were disconnected, or were no longer associated with the schools, according to people who answered.

Messages left at Schwazkopf Professional’s headquarters were not returned.

School failed new regulations

The Department of Education rolled out new rules, called gainful employment regulations, in 2015. For schools to be compliant, graduates’ loan payments must be less than 8 percent of their total income, or less than 20 percent of their discretionary income, according to the department.

Proponents say the law prevents for-profit schools from burying students in debt, and schools that fail risk losing access to taxpayer-funded loan dollars.

The department in November released gainful employment data on thousands of career programs across the country.

The Beauty Institute-Schwarzkopf Professional’s programs were among the nearly 1,000 others whose graduates’ loan payments exceeded regulation standards, according to the data gathered by the Social Security Administration. Graduates from the school came away with loan debt amounting to more than 15 percent of their annual income, the numbers show.

The school has appealed the data, the records say.

Tuition for the school’s 10-month program started at $15,000, according to the school’s website, but students say they had about $20,000 in loans.

Few explanations from school leaders

Administrators told instructors and students of the school’s closure on April 5, said Cassandra Everett, an instructor, and three students: Chloe Arguello, 18, Tatum DeKriek, 19, and Yvonne Ramos, 24.

The announcement, they said, came in the morning after everyone had arrived for what they thought was a normal day of class.

Genny Orloff, the school’s director, met first with instructors, and explained the school’s struggles to meet the federal regulations, Everett said. Orloff also mentioned the school could reopen if another company bought it. Orloff did not respond to messages from The Bellingham Herald requesting comment.

When the staff gathered with students, Orloff said the school had lost its financial aid funding, according to the three students, but didn’t explain why. She assured the class that it would reopen, the students added, after a 30-to-45-day spring break. But the program didn’t allow for spring break, Everett said, and only took time off for Thanksgiving and Christmas.

Students were instructed to grab their hairdressing supplies and leave immediately after hearing the news. Soon after, a sign on the door, which has since been replaced, said students were taking spring break and the school would reopen in May.

“The teachers were kind of baffled because they told us they didn’t know if they were finding a buyer,” Everett said. “But then they told the students not to worry and that everything would be back to normal in 30 to 45 days.”

Brandi Jones, the school’s recruiting and admissions director, assured the school would reopen later that month, writing in an email to Ramos the “school is reopening, but for now it is closed.” Jones did not respond to a message from The Bellingham Herald requesting comment.

Despite the reassurances, some students said they weren’t convinced.

“My faith ended on May 4 when I got a message saying the Beauty Institute had closed for losing Title IV,” DeKriek said. “I just knew at that point that the school was going to be closed for good.”

The school officially closed on May 5, according to an email from the state Department of Licensing that Arguello provided to The Bellingham Herald.

Since closure, leaders unresponsive

After the announcement, students said they came away with questions beyond whether the school would reopen. They wondered how they would get their transcripts to transfer and how they would get in touch with clients. They also had loan-related concerns.

Orloff and Jones, students said, no longer take phone calls, and have only been in touch via email or text message. The messages have been sporadic and haven’t gone to every student. The class created a private Facebook group to share information, students added.

“Every student I’ve kept in contact with has called and emailed,” Arguello said, adding that few have gotten all their questions answered.

Some students returned to the building to post handwritten signs decrying the school’s leaders, according to a photo sent to The Bellingham Herald. One sign read: “I want my hours! Why are you holding my work hostage?”

The department’s emails also included students’ progress reports to be used to transfer hours to other schools. The reports, two of which were provided to The Bellingham Herald, raised more questions, students said. One such question is why the reports indicate students dropped out of class on April 10, rather than showing that the school closed.

Everett – who lost her job with the closure – said she, too, has heard nothing from Orloff since early April. It was Orloff’s limited and contradictory information, Everett said, that caused the confusion.

“Every time we had questions we got very few answers,” she added. “They said, ‘We’ll let you know, we’ll let you know.’ Unfortunately, the day they let us know was the day we closed.”

Students, instructors search for backup plans

The Beauty Institute-Schwarzkopf Professional was the only hairdressing school in Whatcom and Skagit counties, Everett and the students said. The next closest schools are a 60-mile drive away in Everett.

Administrators for Evergreen Beauty College, Paroba College, also in Everett, and Gene Juarez Academy in Mountlake Terrace said they will consider transferring the displaced students on a case-by-case basis.

Arguello and DeKriek both have plans to live with family in Everett and attend school there. Ramos said she was told her financial aid won’t transfer to another school because she was so close to graduating from the Bellingham program. She said her best option is to wait and see if the local school reopens under new ownership.

Everett, who lives in Oak Harbor, had until recently owned her own salon there. She made the commute every day, about an hour and 15 minutes one way, to teach part time at the school, she said.

In January, Everett said administrators asked her to teach full time, which would require her to close her salon. She liked teaching, she said, and agreed. She closed her salon and began organizing her move to Bellingham only to watch the school close three months later.

She’ll likely have to move back to North Carolina, her home state, to live with family, she said.

“For me, what hurts is that was my livelihood,” she said. “I made that sacrifice to work for the school and they left me hanging.”

This story was originally published May 19, 2017 at 5:00 AM with the headline "Bellingham beauty school grads’ debt too high, so feds pulled financial aid funding."