Lambda School agrees to end deceptive educational financing practices

I&#x27;m confused as to why this headline has to be so close to clickbait. I&#x27;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).<p>It is definitely important to note that that these loans can be discharged in bankruptcy. But as far as I know, isn&#x27;t this <i>less</i> stringent than typical student loans, which <i>can&#x27;t</i> be discharged in bankruptcy? Is the point here that there was a population of Lambda students who weren&#x27;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.<p>On the whole this doesn&#x27;t scream &quot;deceptive educational financing practices&quot; 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.<p>Edit: after reading how dischargeability impacts people&#x27;s ability to take out the loan in the first place, yeah, this matters quite a bit, and I was wrong because I didn&#x27;t understand how education financing works. I&#x27;ll own that. Seems Lambda was being less than equitable in how they approached the matter, and hoping no one would notice.

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.<p>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.<p>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.<p>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 &amp; help you navigate the application process.”<p>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.<p>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.

Wanted to clarify two things, since I saw some confusion.<p>The law changed to make a deceptive statement about what can and can&#x27;t be discharged in bankruptcy illegal, but it was <i>always</i> false to say that it couldn&#x27;t be discharged in bankruptcy, even before the law changed.<p>This isn&#x27;t a new California department, it&#x27;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&#x27;t well regulated under California law. They also weren&#x27;t well regulated federally, but that&#x27;s a whole other issue.<p>More info on the law here.<p><a href="https:&#x2F;&#x2F;dfpi.ca.gov&#x2F;california-consumer-financial-protection-law&#x2F;" rel="nofollow">https:&#x2F;&#x2F;dfpi.ca.gov&#x2F;california-consumer-financial-protection...</a>

&#x27;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. &#x27;

This headline feels overly clickbait:<p>&gt; The settlement is the result of a DFPI investigation that found that Lambda was engaged in conduct that violated the new law.<p>So a new law was created, that Lambda was in violation of, and agreed to update their materials to comply with the new law?<p>This is kind of implying that Lambda was previously breaking the law, which doesn&#x27;t really seem to be the case?<p>As well, Lambda stating that ISA&#x27;s are not dischargable in bankrupcy when they actually are is probably the least shady &quot;deceptive&quot; marketing practice I&#x27;ve heard of from bootcamps and code-schools.

Recent discussion on Lambda School.<p><a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=26802601" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=26802601</a><p><a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=25415017" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=25415017</a><p>Interview with Austen Allred, CEO of Lambda School.<p><a href="https:&#x2F;&#x2F;soundcloud.com&#x2F;vwoo&#x2F;interview-with-austen-allred" rel="nofollow">https:&#x2F;&#x2F;soundcloud.com&#x2F;vwoo&#x2F;interview-with-austen-allred</a>

<i>The language violates the new California Consumer Financial Protection Law (CCFPL), which took effect this year</i><p>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&#x27;t exist when they wrote the language that&#x27;s being updated.

Isn&#x27;t lying to trick people for financial gain to their detriment fraud?<p>&gt; 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.<p>Seems to me like lying on this contract should constitute fraud.

See also Lambda School’s Misleading Promises: <a href="https:&#x2F;&#x2F;nymag.com&#x2F;intelligencer&#x2F;2020&#x2F;02&#x2F;lambda-schools-job-placement-rate-is-lower-than-claimed.html" rel="nofollow">https:&#x2F;&#x2F;nymag.com&#x2F;intelligencer&#x2F;2020&#x2F;02&#x2F;lambda-schools-job-p...</a>

&quot;contains a provision that falsely asserts that the Contract is a “qualified educational loan” ...&quot;<p>Did University of Phoenix qualify for &quot;educational loans&quot;? I&#x27;m constantly surprised why this sector gets a pass like this from bankruptcy.

Reading this, I&#x27;m actually not sure if Lambda implied the tuition <i>wasn&#x27;t</i> dischargeable in bankruptcy when it actually is, or the other way around. If you sign up for Lambda and then go bankrupt, do you still have to pay them back?

From what I read, it seems that:<p>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.<p>2. The California Consumer Financial Protection Law (CCFPL) is a recent law that gives the DFPI new powers and responsibilities.<p>3. The introduction of CCFPL did not change the accuracy or inaccuracy of the &#x27;bankruptcy dischargeability provision language&#x27;. The CCFPL just made it the DFPI&#x27;s job to stop any inaccuracies.<p>Is that correct?

That is a blustery title for what seems like a pretty simple regulatory review. Good job by the state for enforcing laws and Lambda for adapting to new rules. Obviously this CA state agency felt like they needed to pat themselves on the back for doing their job.

&gt; California Consumer Financial Protection Law (CCFPL), which took effect this year and <i>prohibits companies from engaging in practices that are unlawful</i>, ...<p>Sounds like a good idea.

How much will this cost them? Are they on the hook for losses to investors who bought the revenue streams attached to the ISAs?

Welp, it seems like this was a good year to create a CS education platform. I&#x27;ve always been disatisfied with boot camps, I feel that for most people online learning is a better route. You can see what I&#x27;m building on <a href="https:&#x2F;&#x2F;qvault.io" rel="nofollow">https:&#x2F;&#x2F;qvault.io</a>

Lambda school is a much better model for students than normal colleges.

Is Lambda the only school that&#x27;s using this loan model?

Hey everyone,<p>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 (<a href="https:&#x2F;&#x2F;lambdaschool.com&#x2F;tuition&#x2F;tuition-options" rel="nofollow">https:&#x2F;&#x2F;lambdaschool.com&#x2F;tuition&#x2F;tuition-options</a>) 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!

Why is it a settlement, were the regulators not sure that they violated the law and sought compromise? It sounds like &quot;Lambda School agrees to comply with the law&quot; which implies that doing so is optional.

Lambda also actively argues that traditional four-year colleges are outdated and unnecessary.<p>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.<p>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.