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Comment by DonHopkins | Hacker News Reader

What happens if Lambda shuts down? Are all the people they trained who are obligated to pay them part of their salary off the hook, or are those obligations a resource that Lambda can liquidate to pay off their creditors, and their customers still have to pay whoever bought the rights from Lambda?

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It's worth noting that the entire shtick of "We don't get paid unless you get a job" is bullshit. Those rights to part of your salary can be sold off to other people, and that has already happened several times - so Lambda got paid whether you got a job or not.

It would have been more accurate to said "You don't pay unless you get a job" but you seem to be bitter about it, why so?

I gather GP's point was that the implicit motivation was that Lambda must do a good job because they will fail if you aren't employed, but this is akin to a sub-prime mortgage taker thinking they must be able to afford the mortgage if the bank says it will lend to them because they're at risk otherwise...

whereas in reality the banks just didn't care about quality because they'd package them up into securities and sell them on.

Yes but for the package to have any value the student still need to find a job.

LambdaSchool can get money on the long term, when the student get a job, and need to cover their costs now, so the packaging is not a weird thing to do. As long as the people buying them understands what they are, there is nothing nefarious going on.

There may be bad things happening at LambdaSchool but I wouldn't say that this part of the financing is one.

The Lambda School needs to do a good job with placing people in appropriate jobs or people will stop buying the portions of the ISAs from them. Would you feel differently about the financing if they simply borrowed money from lenders and used the ISAs as collateral?

They're pretty transparent about that too: https://lambdaschool.com/the-commons/announcing-our-new-isa-....

They get a partial advance on the ISAs from other investors, but the bulk of their revenue is collected when students pay.

Sure, but they will struggle to find investors to sell the ISAs to unless they can show people actually go on to get jobs. So the end result is the same.

For sure those ISAs will get sold and resold... probably packaged into traunches.

Yep, this is already happening

https://mobile.twitter.com/edlyISA/status/120485362545921638...

If you completed the course, and had a contractual obligation to, I don't see why not? Would it matter if you had paid up front, still got a job, and lambda shut down later? I'd think the only argument is if you got an honest education or not.

Down-voted for expecting people pay what they said they would -- this is why we can't have nice things haha

Yes, I don't understand why their approach is bad. The choice is between paying a bank or the school.

wait - I had no idea this was their business model

how is this not different from indentured servitude?

Because if you don't get a job, you don't owe

Indentured servitude historically meant you worked for no pay for a period of years in exchange for something (e.g. passage on ship to America). This is simply a student loan indexed to your earnings. I have not seen what percentage of the earnings they take, but presumably it is less than 100%.

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