It is definitely important to note that that these loans can be discharged in bankruptcy. But as far as I know, isn't this less stringent than typical student loans, which can't be discharged in bankruptcy? Is the point here that there was a population of Lambda students who weren't aware they could discharge their loan, and this contract prevision was preventing them from doing so? Or was the school deliberately making that process more difficult? The article makes none of that entirely clear.
On the whole this doesn't scream "deceptive educational financing practices" to me. That sounds like a government agency press release making a mountain out of a molehill and trying to knock Lambda down a peg, but I might be wrong.
Edit: after reading how dischargeability impacts people's ability to take out the loan in the first place, yeah, this matters quite a bit, and I was wrong because I didn't understand how education financing works. I'll own that. Seems Lambda was being less than equitable in how they approached the matter, and hoping no one would notice.
It makes it quite clear. The loan has always been dischargeable in bankruptcy. However, they had a provision in their contract stating otherwise, which was deceptive.
This does seem to violate the spirit of bankruptcy law as well as basic economics (presumably student loans consist of and are repaid with the same dollars that are used for other loans or unsecured debt) and has almost certainly helped universities raise tuition with impunity for decades while student loan debt has ballooned to more than $1T in the US.
You're allowed to say who it is - in fact, I think you should say who it is, reward quality and hard work!
Also, you might mention who does the ranking (possibly more important).
To me the idea that in a 'free country' today you cannot clear your debts through bancrupcy sounds crazy, it's a practice that belongs in history books along with debtor prisons, bondage, endentured servitude, feudalism, having public holiday 'execution day' and slavery.
In the UK we used execute people for vagrancy.
Federal is less of a loan, but more a subsidy that you have to repay at later date if you can. There is no market mechanism involved, government sets the terms and rules. Overall if you have your shit together(push paperwork on time), it is nearly impossible to default on that type of a loan. So for all intense and purposes, those loans are just another hidden tax.
The benefits of this system is arguable, but for America where people hate to pay taxes and government needs to put people through college, this is not a bad option.
But... There are two massive problems in the system, private loans and the way colleges charge for education. First a lot of colleges are free to set fees any way they like, as a result in many cases federal loans are not enough and people are forced to take private loans. The problem with private loans, that they are completely market driven(higher, fees, higher costs, depends on your assets etc), but you can't get rid off them via bankruptcy which is absolutely nuts.
Overall the whole system regardless of country is very unfair and regressive in nature(poor people pay more then rich) and represents an example of broken social contract between government and its citizens. As student debt skyrockets, it also impacts the broader economy and forces people to go into debt to pay day to day expenses.
But maybe it is all by design. It is much easier to control people if they are in debt very early on in live vs debt free.
That's the point, I believe. Lambda School was pretending their loans were protected from bankruptcy proceedings so students wouldn't consider it.
It's somewhat common for corporations to pretend that laws don't exist. Even if only half of the customers believe them and don't sue, they'll save money.
Do you have any personal experience of their deception or lack of quality?
I feel lucky to have enrolled at, now defunct, The Iron Yard at it’s peak in the end of 2016. I owe them everything for teaching me and coaching me into how to break into my new career as a web developer. It was life changing.
I can only speak for my particular campus, but I imagine it was similar at every other location. Never once, starting from my first interview, did they mislead me or make empty promises. They never guaranteed us anything.
They basically said, “You’re going to pay us $15K for 3 months, and it’s going to be one of the hardest things you’ve ever done. We can’t guarantee you a job but we will do our damndest to teach you & help you navigate the application process.”
And I still respect them for that. The people there were super smart and amazing mentors. The onus was always put on us to work our asses of and make our dream of being a coder come true on our own accord. RIP The Iron Yard.
I hate reading stories about Lambda and others, and reports from students who got chewed up and spit out by the system. They give ‘boot camps’ a bad name, and I’m hopeful soon there will be a school who rises to the top and will be as upstanding as the people I worked with. Someone needs to give coding bootcamps a good name again.
I have no evidence of this, but it seems plausible.
And it doesn’t seem like the job pool is drying up either. From what I can’t tell there are just as many job opportunities as when I started, and plenty of companies still complaining about not being able to find qualified candidates.
PS: there was a reply I read and was quickly deleted, but made a good point. These sensational companies like Lambda tend to dominate headlines now, but I’m sure there are plenty of smaller more local bootcamps fighting ‘the good fight’ in their areas. If whoever said that deleted comment wants to email me, I’d be interested in learning more about the program you mentioned.
It’s unfortunate these bad headlines taint the overall picture of bootcamps, because I’m sure there are plenty of smaller players around that are doing just as good of a job as The Iron Yard like I described.
And to be fair, there is a perfect example in my area, of a small bootcamp that popped up after TIY went out of business, and they are doing a great job of supplying the same mission and service to our local area.
The deception was that the screening test was marketed as informing prospective students whether they had the prerequisite skills to succeed in the school.
I saw so many students struggling for easy to predict reasons: some didn't even have the basic computer equipment to participate. A few more seemed to struggle with just basic concepts.
None of those people were inherently incapable, but they were mislead to believe that they were ready for the program.
The bootcamp I went to was pretty good when I started, but even a year later I was starting to get uneasy about my association with it. I've now completely removed it from LinkedIn and resume. I will mention it if it comes up, but I actively discourage prospective students now and don't want to do anything to lend them legitimacy. It's not worth mentioning its name here because my points apply to almost every bootcamp out there, based on discussions at meetups with prospective bootcamp students.
With Lambda in particular I've wanted to do the math on the gamble per student. IE it costs x per student to put them through the program, what percentage need to make what to make this enterprise worth it for whoever is buying their ISAs.
The law changed to make a deceptive statement about what can and can't be discharged in bankruptcy illegal, but it was always false to say that it couldn't be discharged in bankruptcy, even before the law changed.
This isn't a new California department, it's the old DBO under a new name as the DFPI, with enhanced powers to regulate financial matters that were previously unregulated and protect Californians against unfair, deceptive, and abusive practices. Basically there have been lots of innovative financial agreements that weren't well regulated under California law. They also weren't well regulated federally, but that's a whole other issue.
More info on the law here.
https://dfpi.ca.gov/california-consumer-financial-protection...
Are you suggesting this isn't an introduction of new regulations per se, since it was always a deceptive statement?
Or was the law actually changed by this California department specifically because of what Lambda was doing?
I get that the finance agreement was "innovative", but either it's dischargeable under bankruptcy -- or it's not -- and if it IS dischargeable, language implying that it is not dischargeable is deceptive. My understanding is that they have no power over bankruptcy proceedings, so whether they would LIKE it to be dischargeable or not bears no interest here.
This isn't some heavy-handed regulator stepping in and stopping innovation -- as a private for-profit business, you simply can't twist existing federal law around student loans to your benefit here, and that's always been the case all along. Deception aside, which I believe the word for is "fraud"; there's been a history of predatory financing around education. I was happy when it was DeVry University getting the book, and I'm also happy when it was some "cool" startup company as well.
It was always false and deliberately deceptive to claim that Lambda’s California Retail Installment Contracts were qualified education loans under federal law, and therefore subject to discharge only on cases of undue hardship.
Lying about that in commerce in CA was not previously something for which there was previously a clear cause of action, especially one which would allow the State to take action. It’s not, at least in purpose, classic fraud: it is designed not to induce purchases but to dissuade past purchasers from seeking bankruptcy relief.
> The settlement is the result of a DFPI investigation that found that Lambda was engaged in conduct that violated the new law.
So a new law was created, that Lambda was in violation of, and agreed to update their materials to comply with the new law?
This is kind of implying that Lambda was previously breaking the law, which doesn't really seem to be the case?
As well, Lambda stating that ISA's are not dischargable in bankrupcy when they actually are is probably the least shady "deceptive" marketing practice I've heard of from bootcamps and code-schools.
"Reaching a settlement" with an enforcement agency implies, at least to me, that you were acused of breaking a law.
CA Gov Site Denies Making Deceptive Headline
Journalists Covering CA Gov's Headline Deception Deny Using Clickbait
HN Commentariat Denies Having Insubstantial Discussion About Title Clickbait
https://news.ycombinator.com/item?id=26802601
https://news.ycombinator.com/item?id=25415017
Interview with Austen Allred, CEO of Lambda School.
At the risk of being misconstrued as defending predatory practices, it sounds like they quickly reached an agreement to comply with legal stuff that probably didn't exist when they wrote the language that's being updated.
Except the language in the contract had always been deceptive, regardless of whether they were legally compelled to remove it. Lambda made a conscious decision to mislead customers for their own financial benefit, knowing full well that they were not covered by Section 523(a)(8).
They don't deserve credit for removing the language.
They're only agreeing to change their language because they were previously lying, and now there could be regulatory and financial consequences for them if they don't change it.
> Fraud is an intentionally deceptive action designed to provide the perpetrator with an unlawful gain or to deny a right to a victim. Types of fraud include tax fraud, credit card fraud, wire fraud, securities fraud, and bankruptcy fraud. Fraudulent activity can be carried out by one individual, multiple individuals or a business firm as a whole.
Seems to me like lying on this contract should constitute fraud.
The resell the debt to investors[1]. If students think these debts have to be repaid even if they don't then they are more valuable so yes, the school has something to gain.
[1] https://inside.com/campaigns/inside-dev-2020-02-13-21344/sec...
Getting people to pay back loans they aren't required to pay back "isn't something to gain?". I'm trying to find a charitable reading of this but am struggling. In what way do you think they have nothing to gain?
It's starting a new form of education! There are going to be operational headaches and a few misses! While the referenced cases aren't good, we can assess Lambda on their overall contribution, not their mistakes alone.
The reality however is more important, especially when humans are adversely impacted if the promises are broken.
Check notes: "notify students that the bankruptcy dischargeability provision language is not accurate"
Just to be clear this isn't a "mistake" this is fraud.
> His previous work was mostly concerned with “growth hacking,” which is Silicon Valley jargon for finding underappreciated (or, less charitably, underhanded) ways of marketing something.
So anyone who put the term "growth hacking" on their resume will now get publicly discredited as being underhanded? If they tried just a little harder to stick to the facts, all of the other research they have done in their reporting would carry a bit more weight.
Along with: various flavours of monetization specialist; pimps; politicians; used car sales; basically all the same category of exploitation-oriented narcissists that will poison your brand and your culture, create nothing themselves, and ultimately destroy more intrinsic value than they vampire from others.
I’ve been around this industry for decades. Joe MacMillan is an archetype, not a parody character.
I would qualify that as "underhanded"
Yes? "Growth hacking" has always been basically a euphemism for saying that you're willing to do unethical things for growth.
That is good thing! These 'growth hacks' people should be viewed in the same light as a 'SEO tricks' people. Both damage the quality of results and bring bad faith actors to the top.
Did University of Phoenix qualify for "educational loans"? I'm constantly surprised why this sector gets a pass like this from bankruptcy.
This is because if I were a student, the optimal route would be to take the largest loan possible while on no assets, then go to the most expensive university, then declare bankruptcy on graduation.
The lender knows this, so they won't give me any loan unless I can put up collateral equal to the value of the loan.
The government knows this, and they also want kids to go to college, so they provide a mechanism by which kids can promise to pay back the money.
It is a relatively new thing that really only came in to existance coincidentally around the same time that education became so expensive that going through the effort of bankrupcy became "worth it".
Student loans become dischargeable > lenders stop lending where tuition cost != market value > exorbitant tuition no longer affordable > universities forced to reprice to new market coniditions > paying back tuition now preferable to 7 year hit on credit for bankruptcy > diplomas for everyone :)
The inability to discharge tuition via bankruptcy has become a moral hazard that society needs to deal with.
Shouldn't there be a metric built in that says something like "the quality of education didn't meet the expectations of the loan, so the loan can be discharged"?
Where's the warranty for the lender?
If you want the government to play such a role in funding education why not let it simply do so? It's not like you are wasting the money by creating a productive workforce.
> ...a qualified educational loan…subject to the limitations on dischargeability contained in…the United States Bankruptcy Code.
1. The DFPI has existed since 2013 (when it was formed by the merger of two other agencies). It used to be called the DBO. It was renamed to DBO in 2020, but it is not new.
2. The California Consumer Financial Protection Law (CCFPL) is a recent law that gives the DFPI new powers and responsibilities.
3. The introduction of CCFPL did not change the accuracy or inaccuracy of the 'bankruptcy dischargeability provision language'. The CCFPL just made it the DFPI's job to stop any inaccuracies.
Is that correct?
Sounds like a good idea.
"Lambda school is a much worse model for students than normal colleges." Maybe? Maybe not?
Pretty excited to reach settlement on this one. The DFPI is a new regulatory agency in California that was tasked with reviewing Lambda School’s new incentive-aligned tuition (https://lambdaschool.com/tuition/tuition-options) in California. They came back requesting that we update a bankruptcy provision in the agreement to clarify that these agreements are dischargeable in bankruptcy, and to do a review of our marketing to make that clear. All things we’re happy to do, and always happy to work with regulators!
This is similar to when you fought with the BPPE for a year because they insisted you can't operate in California while offering ISAs. After you finally gave up the fight, and agreed to not offer ISAs, they approved you. You said:
> Their approval is a huge testament to our team and our students, as well as an official endorsement of our all-remote, career-focused educational model.
The BPPE does not endorse schools. They simply said you were no longer operating illegally.
Honestly, the California website claims this was "deceptive" but to me that seems like an exaggeration. Lambda claimed this thing wasn't dischargeable in bankruptcy, the state of California says actually it is. Okay, fine. It doesn't mean Lambda was doing something malicious. It's not like California makes it extremely transparent and clear what the rules are for starting a new sort of educational financing. When you do something new that's covered unclearly by California regulations it is no surprise to have this sort of issue.
To me the real injustice is that California does not allow ISAs. Students are not idiots incapable of making deals for themselves, and the big ripoff in education right now isn't ISAs at coding schools, it's taking out a regular student loan to get a worthless degree at a mediocre university. All of this argument about "catching Lambda's deception" is a distraction from the real problems with education.
Really, its standard corporate spin when accepting a settlement, “We’re super happy to work with regulators to make things better.” When, of course, if the company had any interest in making things better the regulator would never have needed to get involved in the first place.
Obviously, its deceptive, but its not bizarre, its just making PR lemonade out of PR lemons.
You should be asking why every school loan is not dischargeable in bankruptcy.
makes your arguments seem a little less credible since you clearly have a bone to pick but like I said, I don't know anything about lambda school. maybe you're justified, idk.
>You were caught putting deceptive language in your contracts.
I'm curious if there's a way you can mess up language in a contract that isn't deceptive/misleading?
>You're on probation. This is nothing to be excited about
This is standard procedure, but you're clearly painting it as if they've been knocked down another peg.
>The BPPE does not endorse schools. They simply said you were no longer operating illegally.
And this is blatantly false and makes me further question everything else you've stated.
https://www.bppe.ca.gov/schools/approved_schools.shtml
Try the search function.
Also, it looks like you get out of Lambda School debts via bankruptcy, which you don't with regular college, so that's... an improvement?
Previously -> if you go bankrupt you still owe us.
Now -> if you go bankrupt you don't owe us.
On the face of it this seems like it would make Lambda school _more_ attractive than less.
Note, the clause in question is "qualified educational loan…subject to the limitations on dischargeability contained in…the United States Bankruptcy Code."
It in no way resembles the college financing model, and in fact the purpose was to succeed in precisely the way it does not.
But that makes this response confusing — I was hoping to see a refutation of the regulator's claims or, failing that, a thoughtful discussion on what went wrong.
Is the regulator accurate? If so, were the statements significant? If so, what happened?
gigglesnort
ie Was anyone harmed, or is this just preventative? Seems like the latter, but just want to make it clear for people.
Was it previously a gray zone on the dischargeability? Did something change in the law? Was Lambda just being cautious in saying it ::may not:: be dischargeable? Something else?
I remember hearing that ISA case law isn't very deep, so I can imagine that there may be more gray zones.
Obviously if the defendant did not agree to comply with the law, there would be no settlement and the case would be pursued further.
The worst thing that could ever happen isn’t that college is too expensive. The worst thing would be a company like Lambda convincing people their awful indentured servitude was somehow better.
A broad open learning approach that comes from a liberal education is how young men and a women find their passions, lifelong friendships, and themselves.
