It sounds like Lambda is growing so fast that it's not realistic to be profitable. Early cohorts of ~100 students can't possibly pay for newer cohorts of ~1,000 students.
Indeed. So, as per the article, they take $100M investment to keep this weird chain going.
Social security all over again
It's nothing like social security. It's a business that's growing. Eventually that growth will plateau, at which point it will be profitable. This is an extremely standard pattern that thousands of businesses have gone through successfully.