The Verge: Coding bootcamp Lambda School — now BloomTech — is finally getting punished
Thursday, 18 April, 2024 — tech
In 2020, we wrote how coding bootcamp Lambda School seemed like a bit of a bait-and-switch. Four years later and one rebranding to “BloomTech” later, the US Consumer Financial Protection Bureau (CFPB) is finally slapping it on the wrist – it’s permanently banning it from issuing any more student loans, fining the company and its CEO $164,000, and releasing some students from some of their debt.
Why? Among other deceptive practices, the “Bloom Institute of Technology” didn’t call them loans. It advertised a way for students to get high-paying tech jobs “risk free” with “no loans” by paying 17 percent of their future income for five years – rather than the $20,000 sticker price of tuition.
But those Income Sharing Agreements (ISAs) were definitely loans, the CFPB has decided, since Bloom was earning an average finance charge of $4,000 on each one, students could default and get sent to collections if they failed to make payments, and Bloom was turning around and selling those student debts to investors for $7,000 to $10,000 a pop.
What a reckless and abusive business model. I’ve worked with several fantastic software engineers that came out of code schools. The practical focus of these programs is incredibly beneficial, but there’s zero reason a program like this has to be run as a for-profit endeavor as opposed to being a certificate program administered through community colleges.