We Pay You to Learn to Code
modernlabor.com
modernlabor.com
After the program graduates pay 15% of their income for 2 years if they are earning over $40,000, capped at $30,000 total paid back to Modern Labor.
$91,476 The salary of an entry-level front-end developer (Source: PayScale, 2019)
%15 * $92K * 2yr - ($2K/mo * 5mo) = $17.6K total cost of tuition
$17.6K - $11.4K = $6.2K in interest
$6.2K / $17.6K / 2yr = 17.6% APRI think that tying your own financial reward to the financial success of your graduates is perfectly OK, perhaps even desirable.
If making $40k/year is "success". With your $6k payment on the $40k you made, your $34k is barely above the poverty line.
> Seems well worth the greatly reduced risk!
No, it doesn't. Just seems like a 300% repayment rate. I bet the number of software jobs starting under $40k is in the bottom 5%, maybe 1% of job listings. So, you're basically only mitigating risk if you can't find a job.
Which is.. everyone starting a bootcamp!! Lol.
Who are you looking out for? You seem really concerned about the biblical application of usury laws. Do you know anyone who has zero technical skill and would LOVE to make 40k? I have a feeling you live in a very, very small bubble.
I'm not so worried about this company in particular, but if this business model works, imagine desparate people signing up for a $100k loan and having to pay back $300k, or getting $300k for a house and having to pay back $900k.
It's the payback rate that's the problem.
I also don't think it's a bad thing to be concerned about other people in our community.
The difference here is that the incentives of workers and this company are aligned. Either workers start making some serious wages and the company gets their money back (with interest), or both lose - worker their time, company their investment. Given the risk I don't think this is even close to usury. In fact, I would assume they are getting paid by the companies too, for privilege of getting the suitable candidates (which is not a problem in my eyes, if true).
Edit: and if they ever move their operations to EU I know a few people who would probably grab such a chance with both hands.
The poverty threshold in the US for a single person under the age of 65 seems to be $13,064[1].
[1] https://www2.census.gov/programs-surveys/cps/tables/time-ser...
I agree that the salary estimate is high, and I wouldn't hire a remote junior dev, but still; you're paying nothing up front and they're handing you $2k / month.
You are paying extra in the hoped-for successful case in return for paying less if the whole thing turns out to be a bust. Or, equivalently, you are paying a lot extra for a portion of the tuition (which is, in fact, a straight $20,000—the $30,000 maximum minus the $10,000 stipend) to be due over time after completion, repaid on an income contingent basis, and foregone in part or in whole if after-program income isn't at least $200K over two years.
> $91,476 - The salary of an entry-level front-end developer
These two things should not be next to each other. It's exceptionally rare to get $90k a year remotely with no prior work experience.
Out of interest, what would you say are the key weaknesses at your company that makes successfully hiring, training and managing juniors for remote roles impossible?
Faulty premise. I would say that it's simply not worth the risk for someone with essentially no way to show they can actually do the work and manage themselves.
> someone with essentially no way to show they can actually do the work and manage themselves.
Two quick follow up points on that (the second point is more important)...
1. Junior devs graduating from places like this and Lambda School will have spent months learning, collaborating and working remotely as part of their course. I wouldn't say that counts as proof that they can do the work per se, but it's definitely proof that - if they can do they work - they can do it remotely.
2. You have the same challenges with non-remote hires as well... What part of your hiring/onboarding/management process requires you to be able to physically touch the junior dev in question?
BTW I absolutely don't think all companies should hire remote.
And I don't think all junior devs would be good remote hires. Far from it.
But there are enough successful companies out there hiring remote junior devs to prove that it is possible.
So when someone says they would never hire a remote junior dev, it just seems silly to me to pretend that's anything more than a company masking serious hiring, training or culture problems which remote work would expose...
In the metro Boston area, fresh college grads are getting $100K+bonus typically, with upside from there. I think $91K is not at all unrealistic.
FAANG are recruiting high-level programmers, not people hooking up forms to APIs.
In some ways this seems like a very selective program, since you pay people to do something whereas your competitors charge people. But selective programs would want to get the very best students — and here there's actually an adverse selection problem. That is, people who think they will be rock stars and get high-paying jobs will not want to enroll with you since they would expect the longer payback period (at their presumed high salary) would be less favorable than doing a typical program with a payback period that is half as long.
Either they have found some revolutionary new way of injecting data into the brain Matrix style, or the people coming out of that program won't be even close to ready and will probably have a mess in their heads.
Also 90K for an entry level remote position? I have 20 years of experience, where do I have to sign for that? I'd gladly take an entry level position with zero responsibilities for that kind of money.
I could easily see variants of this happening. For example, companies could fund the students and get to pick first.
I can think of at least 5 people I know that has the potential to become competent developers, but their problem is exactly what this solves: they already have jobs and mortgages.
Assuming I could find 10 formerly convicted felons who live on unemployment/welfare and dropped out of high school and got them to apply to this program, would they get accepted? If "The most important thing we care about is evidence of grit" is true, I think these individuals should qualify.
We will pay you to learn to code, then place you on projects for real clients. They will then have the option to hire you within 6 months. It's outsourcing cross training. (We'll have a few senior devs to mentor the teams, and we'll hire an exec or three involved in government contracting to give ourselves multiple options.)
Who wants to fund? laughs
27 days ago (my favorite non fiction writer of all time): https://news.ycombinator.com/user?id=Eliezer
His comment is this: https://news.ycombinator.com/item?id=19231120
Something about taking a cut of someone's salary doesn't feel right to me.
If you were to borrow the $10k that they give you, over a 2 year period at a 10% rate (maximum allowed by law in CA), you'd pay a little over $11k. Modern Labor will charge you up to $30k over that same 2 year period, for an interest rate north of 100%.
How is this initial $10k different from a loan? Just because it's coming out of your salary doesn't mean it's not usurious.
Ummm, that's how the whole tech industry works. Ever work for a recruiter? They're taking a cut of your salary.
A company making a $100k/year hire might have $1M ARR. To them, the $15k commission is 1.5% of their annual budget. If the employee pays, it's 15% of their annual income. If recruiters charged 15% of a company's annual income no one would pay it, or it would bring a company to its knees.
Mortgage Company A is feeling virtuous and really wants people who can't afford down payments to be able to afford houses too. So, they offer up $300k and simply take 15% of your paycheck for 30 years until they've collected $900k.
A 30 year fixed at 4.5% would cost you $547k total over the life of the loan. Mortgage Company A is instead making $900k where they used to make $547k.
The problem with these loans is that desperate people accept them. It's the person who can't save enough for a downpayment and is getting kicked out of their rental that will agree to such a usurious loan.
It's the reason why we have a maximum interest rate to begin with. Because without it, it's possible to find someone in a tight spot and make a ton of money off of their temporary misfortune.
At the end of the day they are offering a lot more than just 10k. They are offering training AND placement assistance. They are also assuming the costs of the people who fail to complete the program of get a job.
I feel like it's somewhat predatory because only people who are struggling to make ends meet would accept such an offer. It's specifically designed and marketed towards people who can't save $10k. Nobody who can save $10k would take this offer IMO.
At least you understand your mental limitations. But this is also a form of false charity, where you make decisions on behalf of others in order to signal virtue. This is a business model that should be supported - because those of us with basic economic literacy know that competition will reduce corporate profits to market rate.
College is a misplaced job training program that is a self perpetuating status symbol. The poor NEED this model to be disrupted.
Students already struggle with 5-7% student loans. Sure, this is less total money, but just bring the repayment down to something reasonable like $30k over 10 years to offer a rate that doesn't exceed maximum interest rate laws.
Oh, MONEY - who cares about that stuff. Not the poor, they got tons of it.
I get the feeling you and your parents are well off. And I say that only because I've only met rich white people who are versed in Marxism.
Wow. I'm old enough to know that when someone tries to attack you personally, it's because of something deeper in their life and not about the subject matter anymore.
Sounds like you're really upset that someone wouldn't agree with you on this topic. If you're open to staying on the subject matter, are you OK with any limit? A $50k payback? A $100k payback?
A long time ago the US decided to put a maximum rate on loans. I guess I don't understand if you think maximum interest rates are Marxist or something else, because I'm only talking about the interest rate part of this equation.
I want to see this model taken to the extreme. Offer luxury living to students while they learn, and offer work from home positions upon graduation. Have developers compete to create modern campuses that compete for unskilled labor. They would only do this knowing there's profits to be shared by developing the unskilled to the skilled.
It's a 300% return rate only because you are assuming the repayment only covers the $2K/month stipend ($10K total), with $0 tuition equivalent. They are comparing the program to $15K tuition programs (and also saying it offers more). If you assume the payback is for the stipend plus $15K in tuition, it's a lot more reasonable. If you assume that they are offering 1/3 more than a $15K tuition program so that the tuition equivalent is $20K, it's effectively a zero interest loan at the maximum repayment amount.
It's a numbers game. Out of N graduates, some will pay back $30K, some will pay back $0, some will pay back something in between. For those who pay back $30K, it may be a bad deal... except they're the ones who made the most in salary, too.
I'm not sure whether that's a fair deal or not.
It seems to me, though, that the hotter I thought I was, the less I should be willing to take this deal, because the more I thought it would cost me...
But from the individual perspective, it seems to be way higher than the max interest rates allow.
Now imagine colleges saying you can pay your $300k 4-year tuition up front or pay us 15% of your salary until you pay us $900k. Already wealthy kids will have an even bigger leg up in life because they'll pay their tuition up front. While those who had to choose between an aggressive loan or no education will have to pay an extra $600k.
Right now, with student loans capped at 5-7% it's still a huge disadvantage to those that need to borrow. I can't imagine if this lending model is extended to classical universities how much a 300% repayment rate will drag down those who are already struggling with 5-7%.
10% is the maximum allowed in CA for non-exempt lenders. However, a seller of services to the public financing the services they sell is exempt as a retail installment lender, and has no maximum (most actual lending other than informal person-to-person lending is exempt.)
> Modern Labor will charge you up to $30k over that same 2 year period, for an interest rate north of 100%.
They aren't charging you $30,000 to repay the stipend, but the stipend plus the training, which they compare to a $15,000 cost coding bootcamp; $30,000 over over about 2¼ years (roughly the time from the midpoint of the stipend and training) for $25,000 is a little north of 15% annual interest rather than over 100%. And that's assuming a minimum income of $200K in the two years immediately following the program; any lower and the payback is lower, too.
The people I know who had trained through that could not wait to leave and didn't feel that it had been overall positive.
On the upside you get some work experience too.
I wonder why, though? Is there a legal barrier that prevents them from introducing this to foreign students as well? Or is it just because US-based salaries are much higher than in many other parts of the world?
It's a full-stack dev training program that is clearly targeted to get people making around $100K/year over the first two years out, I doubt very much that they are really concerned with slight adverse incentives for students whose best offer is between $40-47K, which is deep in the failure zone.
"The $40,000 threshold is inclusive. So if their income is equal to our greater than $40,000, they owe 15%. If they ever dip below $40,000 payments stop until it goes back up to $40,000."
Now, if I am applying to YC I'm going to have to consider that they will have access to sensitive plans, strategies, strengths, and weaknesses of my startup, and that they might inadvertently share that with a competitor in a later batch.
I'm sure they'll say they have a Chinese wall and don't share information, but YC as a company now has a conflict of interest.
Really makes you think twice.
I fully support more attempts to spread this out! Competition is good!
> (you must have the right to work in the US)
So you and I, both out.
The agreement is by completing the program, you pay 15% of your salary for 2 years as long as you're receiving more than $40,000. However, it also says it's capped at $30,000 total over that period.
If you pay someone a $2,000 a month salary for 21 weeks, that's already $42,000. Where's the extra $12,000 coming from?
I'm just trying to understand since if I agree to quit my "current job" and rely on another company to help pay for me, I'm relying on that company to not pull the rug out from under me when I'm half-way through the program. How do I know this is a reliable and sustainable program?
Interesting concept! That's just the first question that comes to mind for me.
It's $2,000 a month for 5 months, so $10,000 total.
Is that total the monthly max cap or total net "payment" back to the organization? If it's 2000 a month salary for 21 weeks then yeah that's fine, but I guess it's the semantics that I failed to understand.
I just can't do math apparently.