Lambda School agrees to end deceptive educational financing practices
dfpi.ca.gov
dfpi.ca.gov
It is definitely important to note that that these loans can be discharged in bankruptcy. But as far as I know, isn't this less stringent than typical student loans, which can't be discharged in bankruptcy? Is the point here that there was a population of Lambda students who weren't aware they could discharge their loan, and this contract prevision was preventing them from doing so? Or was the school deliberately making that process more difficult? The article makes none of that entirely clear.
On the whole this doesn't scream "deceptive educational financing practices" to me. That sounds like a government agency press release making a mountain out of a molehill and trying to knock Lambda down a peg, but I might be wrong.
Edit: after reading how dischargeability impacts people's ability to take out the loan in the first place, yeah, this matters quite a bit, and I was wrong because I didn't understand how education financing works. I'll own that. Seems Lambda was being less than equitable in how they approached the matter, and hoping no one would notice.
That's the point, I believe. Lambda School was pretending their loans were protected from bankruptcy proceedings so students wouldn't consider it.
It's somewhat common for corporations to pretend that laws don't exist. Even if only half of the customers believe them and don't sue, they'll save money.
I see this brought up quite a bit, and I don't really see the issue. They are offering their graduates jobs, so why should these jobs not count just like any other jobs?
In other words it looks like a pyramid scheme if the grads only get jobs as teachers.
"Congrats on getting into the program, you're now adjunct faculty, the class you're teaching starts at 930am Monday."
5 years later maybe they have a piece of paper and maybe that impacts their job prospects.
From what I understand, teaching is generally seen as a positive signal (if the boot camp is a good one), because it means they know the material well enough to teach it.
I can totally imagine the opposite becoming true (teaching is a negative signal), creating a positive feedback loop in the opposite direction, and turning the boot camp into a pyramid scheme.
I guess it all depends on the credibility of the boot camp, kind of analogous to universities, as a sibling commenter points out.
It makes it quite clear. The loan has always been dischargeable in bankruptcy. However, they had a provision in their contract stating otherwise, which was deceptive.
This does seem to violate the spirit of bankruptcy law as well as basic economics (presumably student loans consist of and are repaid with the same dollars that are used for other loans or unsecured debt) and has almost certainly helped universities raise tuition with impunity for decades while student loan debt has ballooned to more than $1T in the US.
[0] https://en.wikipedia.org/wiki/Bankruptcy_Abuse_Prevention_an...
Yeah, it's pretty hard to do. You have to have an "adversarial proceeding" (i.e. a lawyer from the Department of Education or whoever shows up and argues against you).
To me the idea that in a 'free country' today you cannot clear your debts through bancrupcy sounds crazy, it's a practice that belongs in history books along with debtor prisons, bondage, endentured servitude, feudalism, having public holiday 'execution day' and slavery.
In the UK we used execute people for vagrancy.
Even now, the cost for something like a medical degree is negligible compared to the USA where $400K for medical school and undergraduate is not unheard of. (A medical degree is an undergraduate degree in the UK)
(a) is arguably not really true anymore (given some graduates are paying 5% interest), but (b) is even more true now than it was under the old (Plan 1) scheme because the salary threshold is now £27,295 (compared to the old one of £19,985).
Of course this argument was an excuse to inflate education prices and make lenders more interest as well.
Federal is less of a loan, but more a subsidy that you have to repay at later date if you can. There is no market mechanism involved, government sets the terms and rules. Overall if you have your shit together(push paperwork on time), it is nearly impossible to default on that type of a loan. So for all intense and purposes, those loans are just another hidden tax.
The benefits of this system is arguable, but for America where people hate to pay taxes and government needs to put people through college, this is not a bad option.
But... There are two massive problems in the system, private loans and the way colleges charge for education. First a lot of colleges are free to set fees any way they like, as a result in many cases federal loans are not enough and people are forced to take private loans. The problem with private loans, that they are completely market driven(higher, fees, higher costs, depends on your assets etc), but you can't get rid off them via bankruptcy which is absolutely nuts.
Overall the whole system regardless of country is very unfair and regressive in nature(poor people pay more then rich) and represents an example of broken social contract between government and its citizens. As student debt skyrockets, it also impacts the broader economy and forces people to go into debt to pay day to day expenses.
But maybe it is all by design. It is much easier to control people if they are in debt very early on in live vs debt free.
Even from the mustache-twirling evil perspective, it doesn't make a lot of sense to burden people with debt before they have even started to earn money to repay it.
being 'that guy' and pointing out that it's not:
> intense and purposes
but 'intents and purposes'.
a common eggcorn.
Do you have any personal experience of their deception or lack of quality?
You're allowed to say who it is - in fact, I think you should say who it is, reward quality and hard work!
Also, you might mention who does the ranking (possibly more important).
I feel lucky to have enrolled at, now defunct, The Iron Yard at it’s peak in the end of 2016. I owe them everything for teaching me and coaching me into how to break into my new career as a web developer. It was life changing.
I can only speak for my particular campus, but I imagine it was similar at every other location. Never once, starting from my first interview, did they mislead me or make empty promises. They never guaranteed us anything.
They basically said, “You’re going to pay us $15K for 3 months, and it’s going to be one of the hardest things you’ve ever done. We can’t guarantee you a job but we will do our damndest to teach you & help you navigate the application process.”
And I still respect them for that. The people there were super smart and amazing mentors. The onus was always put on us to work our asses of and make our dream of being a coder come true on our own accord. RIP The Iron Yard.
I hate reading stories about Lambda and others, and reports from students who got chewed up and spit out by the system. They give ‘boot camps’ a bad name, and I’m hopeful soon there will be a school who rises to the top and will be as upstanding as the people I worked with. Someone needs to give coding bootcamps a good name again.
I have no evidence of this, but it seems plausible.
And it doesn’t seem like the job pool is drying up either. From what I can’t tell there are just as many job opportunities as when I started, and plenty of companies still complaining about not being able to find qualified candidates.
PS: there was a reply I read and was quickly deleted, but made a good point. These sensational companies like Lambda tend to dominate headlines now, but I’m sure there are plenty of smaller more local bootcamps fighting ‘the good fight’ in their areas. If whoever said that deleted comment wants to email me, I’d be interested in learning more about the program you mentioned.
It’s unfortunate these bad headlines taint the overall picture of bootcamps, because I’m sure there are plenty of smaller players around that are doing just as good of a job as The Iron Yard like I described.
And to be fair, there is a perfect example in my area, of a small bootcamp that popped up after TIY went out of business, and they are doing a great job of supplying the same mission and service to our local area.
This is completely missing the point: it's free to whine about a "labor shortage" (at the price you are willing to pay). Best case you'll get subsidies (direct or indirect) from the government. Worst case? Nothing happens.
Immigration quotas/special visas, programs to get more people into the field you are trying to hire from (all the X group in STEM programs for instance).
> I think I can think of a lot worse than ‘nothing’.
Like what?
The deception was that the screening test was marketed as informing prospective students whether they had the prerequisite skills to succeed in the school.
I saw so many students struggling for easy to predict reasons: some didn't even have the basic computer equipment to participate. A few more seemed to struggle with just basic concepts.
None of those people were inherently incapable, but they were mislead to believe that they were ready for the program.
The bootcamp I went to was pretty good when I started, but even a year later I was starting to get uneasy about my association with it. I've now completely removed it from LinkedIn and resume. I will mention it if it comes up, but I actively discourage prospective students now and don't want to do anything to lend them legitimacy. It's not worth mentioning its name here because my points apply to almost every bootcamp out there, based on discussions at meetups with prospective bootcamp students.
With Lambda in particular I've wanted to do the math on the gamble per student. IE it costs x per student to put them through the program, what percentage need to make what to make this enterprise worth it for whoever is buying their ISAs.
The law changed to make a deceptive statement about what can and can't be discharged in bankruptcy illegal, but it was always false to say that it couldn't be discharged in bankruptcy, even before the law changed.
This isn't a new California department, it's the old DBO under a new name as the DFPI, with enhanced powers to regulate financial matters that were previously unregulated and protect Californians against unfair, deceptive, and abusive practices. Basically there have been lots of innovative financial agreements that weren't well regulated under California law. They also weren't well regulated federally, but that's a whole other issue.
More info on the law here.
https://dfpi.ca.gov/california-consumer-financial-protection...
Are you suggesting this isn't an introduction of new regulations per se, since it was always a deceptive statement?
Or was the law actually changed by this California department specifically because of what Lambda was doing?
I get that the finance agreement was "innovative", but either it's dischargeable under bankruptcy -- or it's not -- and if it IS dischargeable, language implying that it is not dischargeable is deceptive. My understanding is that they have no power over bankruptcy proceedings, so whether they would LIKE it to be dischargeable or not bears no interest here.
This isn't some heavy-handed regulator stepping in and stopping innovation -- as a private for-profit business, you simply can't twist existing federal law around student loans to your benefit here, and that's always been the case all along. Deception aside, which I believe the word for is "fraud"; there's been a history of predatory financing around education. I was happy when it was DeVry University getting the book, and I'm also happy when it was some "cool" startup company as well.
It was always false and deliberately deceptive to claim that Lambda’s California Retail Installment Contracts were qualified education loans under federal law, and therefore subject to discharge only on cases of undue hardship.
Lying about that in commerce in CA was not previously something for which there was previously a clear cause of action, especially one which would allow the State to take action. It’s not, at least in purpose, classic fraud: it is designed not to induce purchases but to dissuade past purchasers from seeking bankruptcy relief.
Obviously ask your lawyer if you need legal advice, don't rely on anyone commenting on HN, but just as a general rule of thumb it's a bad idea to make deceptive or misleading statements to people you do business with.
> The settlement is the result of a DFPI investigation that found that Lambda was engaged in conduct that violated the new law.
So a new law was created, that Lambda was in violation of, and agreed to update their materials to comply with the new law?
This is kind of implying that Lambda was previously breaking the law, which doesn't really seem to be the case?
As well, Lambda stating that ISA's are not dischargable in bankrupcy when they actually are is probably the least shady "deceptive" marketing practice I've heard of from bootcamps and code-schools.
"Reaching a settlement" with an enforcement agency implies, at least to me, that you were acused of breaking a law.
- the conduct Lambda School engaged in became unlawful on Jan 1
- Lambda School continued engaging in that contact well-past Jan 1
- The state called them out and a settlement (favorable to CA) was quickly reached
It is far more likely that a settlement was reached because the conduct was clearly unlawful but not deeply damaging - so worth enforcing but not worth an ugly legal brawl.
I sincerely don’t know why you’re pretending Lambda was “actually trying to follow this new law” and insinuating there’s something suspicious about anything here - it is not an onerous regulation and Lambda had plenty of warning. Clearly they weren’t trying to follow the law! (probably more out of bad management than nefariousness)
Regardless: companies do not get an implicit grace period between when a law comes into force and when the company is actually required to obey it. In certain cases the law can be unconstitutionally coercive or unfair but obviously not here.
Not really, I’d say it more implies:
(1) regulators were ready to start enforcement, at least of easy cases, on day 1 (unsurprising, as non-emergency laws in CA have a significant delay between passage and going into effect, both to prepare for enforcement and to give people subject to them sufficient notice to comply), and
(2) Lambda either didn’t want to comply or was lackadaisical (or they would have stopped before the law went into effect, since, again, there was notice) and
(3) the violation was open-and-shut leaving no room for denial, it was settle or lose for Lambda, with no upside for fighting.
Looks like that's 64 characters.
Just tossing out a suggestion. Maybe could stand to be edited to clarify where this language occurs or something.
Titles are hard, especially with a character limit.
The original title is "Lambda School Reaches Settlement with DFPI, Agreeing to End Deceptive Educational Financing Practices". The current HN title is "Lambda School agrees to end deceptive educational financing practices". It's the closest 80 characters can get. And Lambda School agreed in the settlement order it's what happened.
CA Gov Site Denies Making Deceptive Headline
Journalists Covering CA Gov's Headline Deception Deny Using Clickbait
HN Commentariat Denies Having Insubstantial Discussion About Title Clickbait
https://news.ycombinator.com/item?id=26802601
https://news.ycombinator.com/item?id=25415017
Interview with Austen Allred, CEO of Lambda School.
At the risk of being misconstrued as defending predatory practices, it sounds like they quickly reached an agreement to comply with legal stuff that probably didn't exist when they wrote the language that's being updated.
They're only agreeing to change their language because they were previously lying, and now there could be regulatory and financial consequences for them if they don't change it.
Except the language in the contract had always been deceptive, regardless of whether they were legally compelled to remove it. Lambda made a conscious decision to mislead customers for their own financial benefit, knowing full well that they were not covered by Section 523(a)(8).
They don't deserve credit for removing the language.
> Fraud is an intentionally deceptive action designed to provide the perpetrator with an unlawful gain or to deny a right to a victim. Types of fraud include tax fraud, credit card fraud, wire fraud, securities fraud, and bankruptcy fraud. Fraudulent activity can be carried out by one individual, multiple individuals or a business firm as a whole.
Seems to me like lying on this contract should constitute fraud.
It seems like Lambda was just genuinely confused about what the regulations were regarding their loans and whether they could be discharged in bankruptcy. The regulator clarified that they could, and they updated their agreement to reflect that.
No, it doesn’t, ever, for the California Retail Installment Contract at issue.
Their ISA, defers for five years and then discharges.
To me, defers means you are not required to make payments during that time.
Discharges means that the obligation is removed and you never have to make any payments.
So...if you go five years without getting a job that makes 50k, the ISA defers ... and is then discharged? You never pay it back?
How is that different from what I said?
Its different from what you said (or alternatively, what tou said is a nonsequitur to the discussion of the article, hard to tell which) because it applies only to their ISA, which for legal reasons isn’t used in California and is not what they are in trouble for lying about.
They are in trouble for misrepresenting the Retail Installment Contract, which is used exclusively in California, and which is deferred when income is under $50K, but is never discharged/forgiven except by full payment.
Sounds very California.
No, not at all.
They choose not to automatically discharge the California contracts after 60 months of deferment for low income (I believe as a backhanded protest against the fact that they got in trouble with ISAs in California, IIRC because there was no up-front pricing; the up-front statement that $30,000 is the price is specific to California.) They got in trouble for lying and saying the California contracts were “qualified education loans” under federal law, with the associated restrictive terms for discharge in bankruptcy.
Sounds very California.
No, again, the specific lie that they are getting in trouble with is claiming that the California contract was a “qualified education loan” which could not (easily) be discharged in bankruptcy when, in fact, it was a regular unsecured loan which can easily be discharged in bankruptcy.
Lambda was deceptive about the terms of their ISA (the one they now use everywhere but CA). CA's laws require lenders to disclose certain things to their customers, and Lambda didn't want to do that.
So, being the childish dicks they so clearly are, they retaliated by creating new terms that are worse for CA-based students. No one forced them to do this; they could have kept the same contract but properly disclosed the things they were required to disclose. And on top of that, they lied about whether or not their loans could be discharged in bankruptcy. This particular regulatory action is solely about this last thing.
https://www.forbes.com/sites/prestoncooper2/2020/08/21/calif...
The clause makes Lambda appear less attractive so not clear why it would be included.
Would be nice to hear Lambda’s side.
It’s designed to dissuade people from seeking bankruptcy to discharge the debt.
Regardless, people don't necessarily go into bankruptcy over a single loan. It could be the combination of credit card debt, a mortgage, a car loan, plus the Lambda loan that puts them over the edge.
Getting people to pay back loans they aren't required to pay back "isn't something to gain?". I'm trying to find a charitable reading of this but am struggling. In what way do you think they have nothing to gain?
You’re only paying back a small percentage of income and that’s IF you are even employed, so it’s not clear how you would be thinking of going into bankruptcy to discharge this loan.
The resell the debt to investors[1]. If students think these debts have to be repaid even if they don't then they are more valuable so yes, the school has something to gain.
[1] https://inside.com/campaigns/inside-dev-2020-02-13-21344/sec...
This is only relevant if the revenue lost from those that don't sign up out of fear of not being able to pay back the loans, exceeds the number of students who do sign up and would seek bankruptcy if it was dischargeable but don't having been told it isn't.
Just like the student debt problem in general, I'd imagine most students seeking to attend the school are optimistic they can pay it back, whether this ends up being true or not, so this proposed effect is minimal.
Also, some portion of those that wouldn't sign up out of fear of un-dischargeable debt, would, if it was dischargeable, not end up paying back some of this debt to Lambda School. So earning their trust as customers isn't much of a net benefit.
Putting all of these points aside, why did they do it? If it made their school overall less attractive to a point of diminished revenue, this would have been doubly stupid as it added regulatory risk since they were violating a law. Common sense tells us they were doing it because they saw it as beneficial.
> His previous work was mostly concerned with “growth hacking,” which is Silicon Valley jargon for finding underappreciated (or, less charitably, underhanded) ways of marketing something.
So anyone who put the term "growth hacking" on their resume will now get publicly discredited as being underhanded? If they tried just a little harder to stick to the facts, all of the other research they have done in their reporting would carry a bit more weight.
That is good thing! These 'growth hacks' people should be viewed in the same light as a 'SEO tricks' people. Both damage the quality of results and bring bad faith actors to the top.
I would qualify that as "underhanded"
It's also weird that the post is still up, but the username was changed from austenallred to another user: https://news.ycombinator.com/item?id=13502774
[1] https://twitter.com/calebhicks/status/1093885962059272193
[2] https://medium.com/user-acquisition-for-hackers/exploiting-t...
In fact, when we developed that feature, I replied to everyone who had emailed over the years asking for it, asking if they still wanted it. If you weren't on that list, your email must have been many years ago.
Edit: oops - I see I neglected the important thing. If you still want your account to be renamed, please email hn@ycombinator.com and we'll be happy to help!
If something like this really happened, this is pretty disturbing. The _pecl account that now owns that comment was created on the same day the comment was posted, has 1 karma, and has not posted anything else.
Edit: just emailed hn@; hopefully someone there will follow up on this.
If you look at https://news.ycombinator.com/newsfaq.html, there's an explanation there about how we usually don't delete entire account histories, but we do other things to help, and invite people to email us if they have concerns. There are tradeoffs between individual needs for privacy, fairness to the other commenters who participated in a thread, the community's interest in preserving its archive, and so on. We care about all of that and do our best to help whoever asks; as I tell people who write in, we just try to do it with more precise tools than wholesale deletion, and have built up a bag of tricks for that over the years. Obviously that doesn't extend to the Internet Archive or whatever other caches of HN posts are out there; users understand that.
When it comes to this sort of issue on HN, it's important for people to understand that there are no good answers—it's all tradeoffs. Because the pendulum has swung towards privacy concerns in recent years, we regularly get flamed for not deleting entire account histories. But we still get flamed from the classic internet perspective (nothing should be censored, etc.) too.
Yes? "Growth hacking" has always been basically a euphemism for saying that you're willing to do unethical things for growth.
Btw, "growth hacker" is not the only term whose perception changed throughout its lifetime. Here's a fun one: PHP. Actually, many other technologies suffer the same fate (Java, Rails, etc). Sort of related: NoSQL.
Prediction for a future liability term: AI (what are the chances that in 2030 people will feel about it the same way they feel about it today?).
Along with: various flavours of monetization specialist; pimps; politicians; used car sales; basically all the same category of exploitation-oriented narcissists that will poison your brand and your culture, create nothing themselves, and ultimately destroy more intrinsic value than they vampire from others.
I’ve been around this industry for decades. Joe MacMillan is an archetype, not a parody character.
It's starting a new form of education! There are going to be operational headaches and a few misses! While the referenced cases aren't good, we can assess Lambda on their overall contribution, not their mistakes alone.
The reality however is more important, especially when humans are adversely impacted if the promises are broken.
Check notes: "notify students that the bankruptcy dischargeability provision language is not accurate"
Just to be clear this isn't a "mistake" this is fraud.
The fact that it is dischargeable is itself interesting.
Edit: said the opposite of what I meant
Did University of Phoenix qualify for "educational loans"? I'm constantly surprised why this sector gets a pass like this from bankruptcy.
This is because if I were a student, the optimal route would be to take the largest loan possible while on no assets, then go to the most expensive university, then declare bankruptcy on graduation.
The lender knows this, so they won't give me any loan unless I can put up collateral equal to the value of the loan.
The government knows this, and they also want kids to go to college, so they provide a mechanism by which kids can promise to pay back the money.
Shouldn't there be a metric built in that says something like "the quality of education didn't meet the expectations of the loan, so the loan can be discharged"?
Where's the warranty for the lender?
How do you prove whether the failings are because of the student or the school? The fact that there are three parties involved (the student, the school, the lender) also complicates things. Finally, lenders would bake this risk into the loan itself, which means higher interest rates for people going to non-famous institutions.
There are, in fact, several policies in this area, the most significant is Borrower Defense to Repayment: https://studentaid.gov/borrower-defense/
It is a relatively new thing that really only came in to existance coincidentally around the same time that education became so expensive that going through the effort of bankrupcy became "worth it".
I was implying that education should never have been allowed to become so unreasonably expensive and unsustainable that it has to be propped up with special exceptions.
> The means test looks at the gross income of everyone in your household during the six months before you file. If your household income is below the median income in your state, you’ll qualify to file a Chapter 7 bankruptcy.
If it isn't, then the courts can force your chapter 7 case be converted to a chapter 13. But if someone, say, lives alone and still works at their minimum-wage job from college, I don't see anything else that would prevent a chapter 7 from proceeding.
https://www.nolo.com/legal-encyclopedia/chapter-7-bankruptcy....
To quote the law directly-
> After notice and a hearing, the court, on its own motion or on a motion by the United States trustee, trustee (or bankruptcy administrator, if any), or any party in interest, may dismiss a case filed by an individual debtor under this chapter whose debts are primarily consumer debts, or, with the debtor’s consent, convert such a case to a case under chapter 11 or 13 of this title, if it finds that the granting of relief would be an abuse of the provisions of this chapter.
11 U.S.C. § 707(b)(1)
* Information Reform: Schools should be required to report median income of graduating class by major by year (with number of declined-to-disclose). Students should know what they're going to get out of this program.
* Incentive Alignment: School programs above a certain cost should only be payable either up-front or via income share agreement. Schools should only be paid if their education yielded economic gain for students but students should be permitted escape valves if possible.
* Bankruptcy Reform: Student loans should be discharged in bankruptcy, ISAs should not.
What a sad narrow view of education.
I recognize that for many education is a vocational experience meant to provide accesss to better jobs, but really education can be so much more broad and valuable.
Now, for anyone else reading for whom it wasn't clear: I want schools to primarily receive economic benefit by providing economic benefit but (quoting from above) I believe students should have an escape valve to pay for education that does not have direct economic benefit. I believe that paying upfront is sufficient as an escape valve.
> Schools should only be paid if their education yielded economic gain for students but students should be permitted escape valves if possible.
This sentence reads (to me) as if "schools should only get paid if it leads to students making money" and the "escape valve" part seems like "students have an escape from paying when its not profitable" not "they can pay when its not profitable".
Under your new wording, I think that i still disagree. I think schools should charge however they want and instead of regulating how private institutions receive income, we should ensure that there are affordable options focused on vocational outcomes (state-run schools) that are so affordable that they are always economically gainful.
Some taxes are already based on income, so maybe in a profit-sharing model, attending state school is free but you share X% of income in taxes per credit-hour or per-semester until a certain cost is repaid to the state. (eg. a 100 credit hour degree costs 10% income at 0.1% per credit hour until $50k is repaid while a drop-out who attended for a single 15 credit hour semester pays 1.5%, while Harvard can charge 50k per semester up front to any one willing, regardless of outcome)
If you want the government to play such a role in funding education why not let it simply do so? It's not like you are wasting the money by creating a productive workforce.
Student loans become dischargeable > lenders stop lending where tuition cost != market value > exorbitant tuition no longer affordable > universities forced to reprice to new market coniditions > paying back tuition now preferable to 7 year hit on credit for bankruptcy > diplomas for everyone :)
The inability to discharge tuition via bankruptcy has become a moral hazard that society needs to deal with.
Keep in mind that society != government. It's government that is enabling nondischargeability; and it's not in the best interests of the political class to change this situation.
> ...a qualified educational loan…subject to the limitations on dischargeability contained in…the United States Bankruptcy Code.
1. The DFPI has existed since 2013 (when it was formed by the merger of two other agencies). It used to be called the DBO. It was renamed to DBO in 2020, but it is not new.
2. The California Consumer Financial Protection Law (CCFPL) is a recent law that gives the DFPI new powers and responsibilities.
3. The introduction of CCFPL did not change the accuracy or inaccuracy of the 'bankruptcy dischargeability provision language'. The CCFPL just made it the DFPI's job to stop any inaccuracies.
Is that correct?
Sounds like a good idea.
"Lambda school is a much worse model for students than normal colleges." Maybe? Maybe not?
Pretty excited to reach settlement on this one. The DFPI is a new regulatory agency in California that was tasked with reviewing Lambda School’s new incentive-aligned tuition (https://lambdaschool.com/tuition/tuition-options) in California. They came back requesting that we update a bankruptcy provision in the agreement to clarify that these agreements are dischargeable in bankruptcy, and to do a review of our marketing to make that clear. All things we’re happy to do, and always happy to work with regulators!
He might not be entirely wrong. They're still not going to sell any to the general public, though, especially if it is carcinogenic.
https://en.wikipedia.org/wiki/Microwave#Health_effects:~:tex...
Also, it looks like you get out of Lambda School debts via bankruptcy, which you don't with regular college, so that's... an improvement?
During the middle of my enrollment at the program (Sept 2020), the school suddenly dropped all notion of grading, code review, and attendance, let alone the length of the program. It remained this way for 3 months, 50% of the length of the program.
This is a broad description of the changes, but I want to emphasize that the changes were terrible, _many_ students complained, and the school essentially whistled with fingers in their ears.
In the meantime I have a part time job and working through the MIT Computer Science OCW
That said, I’ve read through your profile and you’re a heck of a good writer. You likely don’t need any help and you’re going to do very well for yourself!! :)
That was always the case, Lambda School just communicated otherwise to students.
Apologize.
> Also, it looks like you get out of Lambda School debts via bankruptcy, which you don't with regular college, so that's... an improvement?
"You can't discharge student debt," is actually a myth. I have two relatives that discharged their loans due to financial hardship. It isn't trivial, but there's a process.
The issue with ISAs, in their current form, is the lack of legal framework. Short of bankruptcy, the best you can do is lawyer up. Lambda School targets people who can't afford lawyers.
What specific issues do you have with the ISA?
There are options other than being weirdly positive and ranting. They could not say anything at all. They could give one of several varieties of mea culpa. They could simply state their intentions going forward.
But if you lie about it, then...
Previously -> if you go bankrupt you still owe us.
Now -> if you go bankrupt you don't owe us.
On the face of it this seems like it would make Lambda school _more_ attractive than less.
Note, the clause in question is "qualified educational loan…subject to the limitations on dischargeability contained in…the United States Bankruptcy Code."
One of the biggest reasons student loans can't be forgiven in bankruptcy is because, after school, chances are the graduate has zero assets and can go bankrupt with the only downside being destroying their credit for 7 years. Whether or not you think this is justified or fair is up to you, but the situation before this ruling simply [de-]elevated Lambda School to the same playing field as other educational institutions - the only difference being that those institutions don't offer student loans themselves.
The ISAs are, as far as I know, capped at 30k, and only apply if you're making 50k/yr. I can't imagine a situation where someone's decision of whether or not to declare bankrupcy comes down to the 30k-max ISA; either it's the majority of your debt, and you're making >50k/yr, or it's a small amount relative to your other debt, in which case you should proceed anyways.
It’s exactly this. Lambda School customers tend to be young and financially ignorant, with very few resources. If a graduate is in a position where, say, they can’t find a software job, they could be functionally bankrupt, and their dwindling income/savings will still be going towards outstanding Lambda School payments.
From this perspective, it’s extremely shitty for LS to deceive students that they would have to make the payments, with no legal options, even if they were stressed about rent and groceries.
Technically sure. On the face it tells me something about their branding - that their offering may be more deceptive than I might realize. Especially since its a new economic model for education, the customer probably hasn't thought through everything, so trust is important here.
It in no way resembles the college financing model, and in fact the purpose was to succeed in precisely the way it does not.
This is similar to when you fought with the BPPE for a year because they insisted you can't operate in California while offering ISAs. After you finally gave up the fight, and agreed to not offer ISAs, they approved you. You said:
> Their approval is a huge testament to our team and our students, as well as an official endorsement of our all-remote, career-focused educational model.
The BPPE does not endorse schools. They simply said you were no longer operating illegally.
Honestly, the California website claims this was "deceptive" but to me that seems like an exaggeration. Lambda claimed this thing wasn't dischargeable in bankruptcy, the state of California says actually it is. Okay, fine. It doesn't mean Lambda was doing something malicious. It's not like California makes it extremely transparent and clear what the rules are for starting a new sort of educational financing. When you do something new that's covered unclearly by California regulations it is no surprise to have this sort of issue.
To me the real injustice is that California does not allow ISAs. Students are not idiots incapable of making deals for themselves, and the big ripoff in education right now isn't ISAs at coding schools, it's taking out a regular student loan to get a worthless degree at a mediocre university. All of this argument about "catching Lambda's deception" is a distraction from the real problems with education.
Maybe I'm missing something, but if someone were in the unfortunate position to be considering bankruptcy, wouldn't knowing whether this loan is actually dischargeable or not be a big deal to them? It seems like it would be.
I really don't get why some people dislike ISAs. They're way better than student loans.
(1) The “Income share agreement” is a $30K loan with various wrinkles,
(2) Lambda School, for legal reasons, doesn’t use ISAs in California, but a somewhat less obfuscated $30,000 loan, the “Retail Installment Contract”.
> I really don't get why some people dislike ISAs. They're way better than student loans.
They aren’t better than federal student loans, which have an optional income driven repayment plans, which are a similar or lower percentage of discretionary income than most ISAs are of total income.
They may sometimes be better than the available nonfederal loans for people attending institutions not qualified for federal loans, but that’s a pretty low bar.
ISAs seem a lot closer to "student loans" than, like, a new boat. I don't think this is totally unreasonable.
Are you seriously arguing that it is plausible that Lambda School has a good faith mistaken belief that they were qualified to participate in federal Title IV financial aid, but somehow made no mention or use of that qualification other than falsely claiming debts to the school were “qualified education loans” with limited dischargeability in bankruptcy?
Or are you claiming that it is not obvious that Title IV financial aid eligibility is a requirement for loans for a school to be qualified education loans?
That...strains credulity.
> "Lambda made a false statement about the California law"
Actually they broke California law by making a false statement of federal law. (“qualified education loan” is a federal-law category that determines both if the loan qualifies for the student loan interest deduction and if it has the “undue-hardship-only” discharge rule im bankruptcy.)
The rules are federal, and its very clear that the requirements for a loan to be qualified education loan (which gets tax deductible interest and protection from easy discharge) include that it must be used solely for costs of education at an institution eligible for Title IV financial aid under federal law.
This is not something it is plausible someone running a business in the space would make an honest mistake about, it is a targeted deception to discourage debtors from seeking available bankruptcy relief, leveraging the fact that lying to discourage people from such relief for existing debt, unlike lying to induce purchases, is not usually prosecutable as fraud.
Really, its standard corporate spin when accepting a settlement, “We’re super happy to work with regulators to make things better.” When, of course, if the company had any interest in making things better the regulator would never have needed to get involved in the first place.
Obviously, its deceptive, but its not bizarre, its just making PR lemonade out of PR lemons.
I'm still getting up to date on what happened here, but corporate malfeasance isn't incompatible with aggressive and even corrupt regulation. In fact my starting place is that both are likely.
What I reject is the claim that the State only steps in and takes action if the party they're investigating has done something wrong. That's absurd.
Since nothing in the comment you are responding to implies, or even has anything to do with, that, I’m not sure, other than love of pure non-sequitur, you would post that.
Kind of precludes alternate motives, like "the regulator is captured by existing interests and is prosecuting the company despite the company's sincere intention to make things better".
This is ridiculous oversimplification. Can you elaborate at all on how the company has "no interest in making things better"? It's an interesting attack on the 'character' of a corporate entity, that's almost impossible to disprove.
You should be asking why every school loan is not dischargeable in bankruptcy.
>You were caught putting deceptive language in your contracts.
I'm curious if there's a way you can mess up language in a contract that isn't deceptive/misleading?
>You're on probation. This is nothing to be excited about
This is standard procedure, but you're clearly painting it as if they've been knocked down another peg.
>The BPPE does not endorse schools. They simply said you were no longer operating illegally.
And this is blatantly false and makes me further question everything else you've stated.
https://www.bppe.ca.gov/schools/approved_schools.shtml
Try the search function.
According to the linked document, this was not a typo. This line contradicts reality: "this extension of credit is a qualified educational loan and is subject to the limitations on dischargeability in bankruptcy contained in Section 523(a)(8) of the United States Bankruptcy Code."
In addition, the document points out, "Certain Lambda School marketing has included representations implying its program is “free.”" It is not free.
> This is standard procedure, but you're clearly painting it as if they've been knocked down another peg.
The parent post made it sound like they were out of the woods, when they clearly aren't. If I were the subject of this press release, I would not be "excited."
> And this is blatantly false and makes me further question everything else you've stated.
I did not say they were still operating illegally. I said that they used the word endorsement, when the state had simply approved them. The two words mean different things.
> Try the search function.
I searched for the word "endorse" on that page, and found zero matches.
This in no way answered my question.
>In addition, the document points out, "Certain Lambda School marketing has included representations implying its program is “free.”" It is not free.
Interesting and not related to the contract, we're talking about marketing. I find your comments extremely disingenuous, you're switching contexts of "misleading" in the very separate domains of marketing and legal contracts which should be too obvious.
The order is non-specific, so what do you want to get into? "Free until you get a job" comes to mind, is that misleading? I'll argue it's true, given that you don't pay them money when you don't have a job.
>The parent post made it sound like they were out of the woods, when they clearly aren't. If I were the subject of this press release, I would not be "excited."
It's certainly a step forward in my opinion, and you seem to take issue with the fact that it wasn't a flawless approval. Fair enough, your opinion is noted.
>Approval is very different than endorsement.
This seems like doubling down on a total misrepresentation.
Austen clearly said approval, then elaborated to claim it was an endorsement of their relatively unique education model. You don't need to be that generous to imagine that 'approval' by a body (which only approves or does not) of a new/innovative model is something of an endorsement of this new model.
You picked out endorsement, and responded as if he had said "BPPE endorsed our program". It's clearly not what he said.
Austen even appears to have removed the egregious line, which I imagine makes sense from a PR standpoint as people will try to misrepresent it as you have.
I can't believe I have to make this explicit, but ok.
> I'm curious if there's a way you can mess up language in a contract that isn't deceptive/misleading?
Reading the contract, a student will think that they can't discharge the debt through bankruptcy. In reality, yes, they can discharge the debt through bankruptcy. It's right there in the order:
"The Bankruptcy Non-Dischargeability Provision is misleading because, contrary to the Dischargeability Provision, the Contract is not a “qualified educational loan,” as defined in section 221, subdivision (d)(1), of the Internal Revenue Code of 1986, and is not subject to the limitations on dischargeability pursuant to section 523, subdivision (a)(8), of the United States Bankruptcy Code."
A 'mess up' would be misuse of an Oxford comma. You don't 'mess up' dropping a very specific reference to a very specific legal code that does not apply.
> Interesting and not related to the contract, we're talking about marketing. I find your comments extremely disingenuous, you're switching contexts of "misleading" in the very separate domains of marketing and legal contracts which should be too obvious.
The order cites their deceptive marketing. Presumably that's why they were ordered to review all of their previous marketing.
> The order is non-specific, so what do you want to get into?
I copied and pasted directly from the order.
> You picked out endorsement, and responded as if he had said "BPPE endorsed our program". It's clearly not what he said.
I copied and pasted from his own post.
Since we can't reach common ground on basic facts, I see no reason to engage with you any further.
I'm sorry, do you feel I'm not being generous in my interpretation? I certainly feel you're not, is that not a guideline here?
>I can't believe I have to make this explicit, but ok.
You don't have to, you misunderstood me. If a contract is flawed, is there a result other than 'misleading'?
Do we expect all contracts to be flawless 100% of the time? Are all of the flaws deliberate?
> You were caught putting deceptive language in your contracts.
So I'll try to be generous, I read this as you accusing him of deliberately misleading people. You assert that this cannot be a 'mess up'. Am I wrong?
> I copied and pasted directly from the order.
I'm asking if there's marketing material you'd like to point out and discuss. I quoted some, do you not want to engage on that?
>I copied and pasted from his own post.
Which I explained, he explicitly stated approval, and then at worst, embellished upon it.
Is there no overlap between "approval" and "endorsement" that ever warrants the statement he made?
> Since we can't reach common ground on basic facts, I see no reason to engage with you any further.
You're extremely adversarial, yet I'm unsurprised you want to withdraw.
> You don't have to, you misunderstood me. If a contract is flawed, is there a result other than 'misleading'?
Or from further up
> I'm curious if there's a way you can mess up language in a contract that isn't deceptive/misleading?
Of course there is. Especially if you don't conflate misleading and deceptive, because they certainly don't mean the same thing. Not every statement in a contract that might turns out to be against the law was made to deceive one party. And that's so obvious that your question is nothing else but distraction from the situation at hand.
A contract can have clauses made in good will in the interest of both parties that turn out to be against the law. E.g. in my country copyright is absolutely nontransferable, but of course I wanna transfer the usage rights for paid work. If the contract would say my copyright is transferred rather than me transferring usage rights it's certainly wrong and against the law, but it's neither misleading nor deceptive of the intent behind the clause.
> You are ignoring the evidence presented, ask open questions beside the point and attack him personally. That's not a way to have a discussion and it feels like you're acting on an agenda.
Where have I attacked him? Telling him I think he misunderstood me is attacking? Seriously?
To go over my initial contention here,
Austen's original statement:
"Their approval is a huge testament to our team and our students, as well as an official endorsement of our all-remote, career-focused educational model."
The user's response:
"The BPPE does not endorse schools. They simply said you were no longer operating illegally."
So, Austen clearly said approval, and then I would argue embellished it at worst, and I would further argue it's not unreasonable. "Approval" and "Endorsement" are literally synonyms.
Beyond that, the BPPE doesn't endorse schools, but it clearly does approve them.
Does the user's response seem a generous interpretation to you at all? Or should it not be?
> A contract can have clauses made in good will in the interest of both parties that turn out to be against the law. E.g. in my country copyright is absolutely nontransferable, but of course I wanna transfer the usage rights for paid work. If the contract would say my copyright is transferred rather than me transferring usage rights it's certainly wrong and against the law, but it's neither misleading nor deceptive of the intent behind the clause.
This is actually an answer to my question which the other user never addressed. How does this constitute me attacking him? Do I seem too ignorant to warrant an answer...?
At this point I feel I'm simply being high roaded. The other user clearly ignored or misunderstood many of my questions, and I'm not attacking him for acting in bad faith the way you're attacking me. If you'd like to address any other specific points I'm happy to continue discussion.
edit: spelling/grammar
makes your arguments seem a little less credible since you clearly have a bone to pick but like I said, I don't know anything about lambda school. maybe you're justified, idk.
But that makes this response confusing — I was hoping to see a refutation of the regulator's claims or, failing that, a thoughtful discussion on what went wrong.
Is the regulator accurate? If so, were the statements significant? If so, what happened?
gigglesnort
ie Was anyone harmed, or is this just preventative? Seems like the latter, but just want to make it clear for people.
Was it previously a gray zone on the dischargeability? Did something change in the law? Was Lambda just being cautious in saying it ::may not:: be dischargeable? Something else?
I remember hearing that ISA case law isn't very deep, so I can imagine that there may be more gray zones.
Obviously if the defendant did not agree to comply with the law, there would be no settlement and the case would be pursued further.
The worst thing that could ever happen isn’t that college is too expensive. The worst thing would be a company like Lambda convincing people their awful indentured servitude was somehow better.
A broad open learning approach that comes from a liberal education is how young men and a women find their passions, lifelong friendships, and themselves.