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The claim made to the student is not that they have some long minded financial alignment with the student cohort in aggregate - it's that specifically, the school does not make any money off the student (individually) until the student has an outcome.

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Yes, and that is accurate; borrowing against a student's debt is not "making money" from the student. The transaction you describe does not hedge Lambda's risk; in fact it increases Lambda's risk because now if the student defaults they still need to pay interest as well.

that's a fair enough point, and I suppose I could have built the point more clearly in the article that I feel that the actual transgression is a misleading statement made to a student.

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