I'm confused as to why this headline has to be so close to clickbait. I'm not even one to stand up for people like Lambda, I think a lot of bootcamps are shady at best, and actively deceptive at worst (Trilogy).
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.
> 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.
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.
Although it is harder to discharge student loans in bankruptcy, as I understand it they can be discharged in bankruptcy if the borrower can prove undue hardship (probably hard to do, especially with income-based repayment) or if 7 years have elapsed since the start of repayment.
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.
“Deceptive practices” is a commonly used legal term in consumer protection. It’s often used in conjunction with “unfair business practices” or “unfair and deceptive practices” depending on the state and what has been alleged.
Totally valid but just feel like I have to throw in that I went to a bootcamp, was very suspicious from the earliest stages of consideration but found on the other side that all the friends I made there who attended-even the one that failed out and went to another bootcamp-went from part time jobs making less than 30k a year to legit software engineering positions making 60~120k in less than a year. Im still surprised that the whole thing wasn't a scam. That said it was the most competitive and highest ranked bootcamp then and now in terms of job placement, not sure how places like lambda differ...
If you agree that it's an important detail, how is misrepresenting their status in the contract, and thus misleading people about their rights, not deceptive?
You're right and wrong. You already touched on the latter in your edit, so let's focus on the former for a sec. I was not surprised at all to see your comment, since I walked away with the same impression - someone at a gov agency tried harder than usual to achieve the max juice out of this release. Learning in this thread that this is a brand new agency and that this might have been the very first case they were tasked with (hope I got that right), helped me complete the full picture.
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.
For starters there are two types of loans in the system, federal(92%) and private(8%).
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.
The argument for it is that without it a graduate with a large balance could default on their loan immediately after graduation. The classic example being a surgeon getting hundreds of thousands in loans for medical school, and then skipping out on paying them back when they begin making bank as a doctor.
In my country personal bankruptcy does not exist, never did. For us the idea that in a 'free country' one can take a loan and declare bankruptcy not to pay it back sounds crazy. This is evidence of cultural differences, nothing else - definitely not 'free country' or education.
> But as far as I know, isn't this less stringent than typical student loans, which can't be discharged in bankruptcy?
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.
Could you comment a bit more about Trilogy? From what I understand, they provide a bootcamp as a service to be offered by other institutions, such as universities around the world.
Do you have any personal experience of their deception or lack of quality?
I can't speak to Trilogy specifically, but for many bootcamps, the deception is in the marketing about job and salary prospects, as well as padding the hiring statistics by giving jobs to graduates and counting those jobs towards those marketing numbers.
It makes me sad that many of the prominent boot-camps now have such a bad reputation, and seem to be run so poorly, or recklessly.
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 wonder if there was a gold rush when bootcamps started because there was a pool of motivated people with potential who needed training and help getting into the industry. Once that pool was gone, the only new people entering it are basically high school graduates, so in order to keep operating, bootcamps had to get scammier and lower their standards.
I have no evidence of this, but it seems plausible.
Well, my intuition tells me that the ‘pool’ will always be there. I’m not sure it’s dried up, I think it will always be there for one reason or an other.
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.
There absolutely was a gold rush at the beginning! I believe it started with Dev boot camp in SF. Many of the students in the first cohort split off after graduation and made their own schools. If I recall correctly the person who started App Academy was a DBC grad. Anyways, imagine that, some one who just learned to code, now running their own unaccredited program. Scam is too strong of a word for these programs. They were just amateurs really. Add in a little silicon valley hustle and now you have a nice little pressure cooker where they need to start hitting enrollment and graduation numbers. It also didnt help they were in one of the most expensive real estate locations in the world.
Similar experience here. The problem I witnessed during my year or so involvement was a race to the bottom in terms of selectiveness of admitting students.
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.
I had the same experience and I think many of the more successful people from the same program did as well. There's also a bit of a bias, the only people I still talk to from the program were also successful. We haven't seen anyone from it in awhile and have all mostly cut off contact.
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.
Wanted to clarify two things, since I saw some confusion.
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.
Thank you, if possible, would like some more clarification, since I'm still a bit confused (if not more confused) after reading this.
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.
> Are you suggesting this isn't an introduction of new regulations per se, since it was always a deceptive statement?
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.
But they didn't say that the loan couldn't be discharged in bankruptcy -- they said it was a fully qualified educational loan subject to the limitations on being discharged that are contained in the law. It seems like you are relying on people making connections that are not spelled out in the contract.
'As part of the settlement Lambda will:
(1) notify students that the bankruptcy dischargeability provision language is not accurate
(2) retain a third party to review the terms of the school’s finance contract to ensure that it complies with all applicable laws; and
(3) undergo a review of its marketing materials to ensure that the information is accurate and not likely to mislead consumers. '
> 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.
I didn't realize the HN headline was different than the linked article, which is "Lambda School Reaches Settlement with DFPI, Agreeing to End Deceptive Educational Financing Practices".
"Reaching a settlement" with an enforcement agency implies, at least to me, that you were acused of breaking a law.
The language violates the new California Consumer Financial Protection Law (CCFPL), which took effect this year
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.
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.
True, but I think it's important to acknowledge that those practices, regardless of their prior legality, were predatory. If it was an honest mistake about something that wasn't a big deal, I don't think many people would be up in arms about it. But these particular circumstances lead me to believe Lambda is a pretty scummy organization.
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.
That seems accurate. Consumer protection laws are a genuine mess - it’s okay to lie about some things and not okay to lie about others. Some lies are meant to be dealt with in civil court whereas others are meant to be dealt with by regulators. That line moves back and forth every few years.
Isn't lying to trick people for financial gain to their detriment fraud?
> 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.
My reading of it is that their contract claimed student debt with the school could not be discharged with bankruptcy similar to federal student loans. This is not true, and it's doubtful that the people writing the contract didn't know that it wasn't true. If they were being intentionally deceitful, which I believe is the claim here, it would be to prevent loss of loan-repayment in the case that a student finds the debt to be too burdensome and wishes to instead file for bankruptcy. Why else would they include it in the contract if it weren't to their benefit to discourage the student from discharging their debt? All that's left is to prove the intent to decieve.
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.
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?
Readit News
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.
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.
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).
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.
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.
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.
Do you have any personal experience of their deception or lack of quality?
Deleted Comment
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.
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.
Deleted Comment
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.
> 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.
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.
https://soundcloud.com/vwoo/interview-with-austen-allred
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.
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.
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.
[1] https://news.ycombinator.com/item?id=26947875
Deleted Comment
> 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.
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...
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?