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Comment by Traster | Hacker News Reader

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.

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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.

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?

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.

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