As Student-Loan Debt Soars, Alternatives, Like Income-Share Agreements, Are On the Rise (theatlantic.com)

Last year, Lavell Burton, 36, wanted to learn to code, but was surprised to find that many of coding bootcamps cost several thousand dollars upfront. Then he found a 30-week remote program, Lambda School, that was free to attend. The program would provide comprehensive web-engineering training, and would help with job placement. Once employed, graduates would be required to pay back a set portion of their salary under an arrangement called an income-share agreement, or ISA. The Atlantic dives into such income share agreements. From a report: The concept of ISAs has been around since at least the 1950s, when the economist Milton Friedman outlined them as a hypothetical model of repayment. Yet ISAs were rarely implemented until the past few years, as student-loan default spiked and schools sought to offer other ways to pay. In 2016, Purdue University launched an ISA tuition option aimed at families who might otherwise take out high-interest private loans or Direct PLUS loans for parents to fill the gap between federal student loans and the cost of tuition. Purdue hired Vemo Education, a for-profit startup, to help design and administer the program, which is largely backed by the university's funds. The private schools Clarkson University and Messiah College have since announced plans to follow suit, as has the United States Collegiate Athletic Association, which has partnered with Vemo to create ISA options for its roughly 80 member schools.

Among for-profit programs, in 2012, App Academy, a coding bootcamp with locations in San Francisco and New York, began offering a twelve-week program built around an ISA. Others, like the New York Code + Design Academy, which provides a range of web engineering and design courses, and Holberton School, a two-year program in San Francisco, have similar payment options. [...] The ISA-based programs have generated hype, as well as some early success stories. Yet questions remain about whether they are a good deal for students and if they make for profitable businesses in the long run. For one thing, there's little consensus around how much is fair to reap from program graduates, and for how long. Lambda School, for example, requires graduates earning at least $50,000 to pay back 17 percent of their salary for two years, with total payments capped at $30,000. The terms can vary widely among programs. Also, while it's clear how programs like Lambda School might help some people improve their prospects, many of them are so new -- Lambda School is one year old this month -- that there isn't much data about how people do once they get through the programs. That makes it difficult for prospective students to evaluate them.

Comments

Expensive

[rfengr]

Computer schools have been around a long time. I remember seeing TV ads from Control Data Institute back the the 70s. Why is it so expensive now that you need loans, or these schemes, to pay it off?

Sick system

[Anonymous Coward]

The entire higher education system is borked, and this is just one more symptom. There needs to be a massive federal review of public universities, which should be existing for the public good, but are instead ballooning in cost just because they can. They want to act like (very inefficient) private companies, while at the same time, getting state and federal funding. That can't go both ways. People say that costs are going up because loans ensure that even the poor students can go to higher education (and they very well should have that ability) but university administrators choose to take advantage of that. It needs to stop. If the university administrators aren't going to do the right thing, they should be made to.

As an aside, universities should also get rid of all the adult daycare bullshit. I have to pay thousands of dollars every year in 'student activity fees' for the PhD program I'm in (Clemson, no problem naming & shaming). These fees are going toward things like 'Chocolate Milk Night,' 'Dave & Buster's Night,' 'Decorate a Mug Night,' and 'Tie Dye a T-shirt Night.' Not making that up, that's the sort of absolutely idiotic things people are going further into debt for.

Re:Sick system

[Anonymous Coward]

I speak from experience at the University of Nebraska. What you say is only part of the problem.

Our state is experiencing large budget shortfalls while Pete Ricketts, a Republican Governor, has cut taxes and wants even more tax cuts. This has resulted in large spending cuts across the board, including to higher education.

The University has responded by raising tuition and cutting expenses through a number of ways. These include eliminating positions through attrition and adding more regulations on spending in areas like travel. The regulations are applied to all travel, not just what's funded with state money. The restrictions go far beyond federal regulations on funds from agencies like NSF and NIH. Travel to conduct research or attend conferences is now very frustrating because of all of the additional regulations.

Faculty aren't paid that much to teach. Even for a large lecture hall course, which can be a lot of work, the actual budget to pay for the instructor is several thousand dollars. For a normal faculty member, that's a month of salary or perhaps less. The rest of the tuition goes to overhead in a variety of areas, including subsidizing courses with lower enrollments.

A lot of the funds actually come from F&A costs on grants to conduct research. The F&A costs are supposed to represent the actual overhead involved with conducting the research. That might include the facilities where the research is conducted, paying someone to process payroll and other direct costs, and ensuring regulatory compliance. In reality, the current F&A costs are 53.5% of the modified total direct costs and go well beyond paying for the overhead. The F&A cost percentage has generally increased even when regulations haven't become stricter.

Universities are far more concerned with the ability of faculty to obtain research funding and bring in F&A funds than they are with the ability of the faculty to teach. A lot of money also gets spent on redundant or unnecessary amenities for students, justified on the grounds that other universities are spending on similar projects and they want to remain competitive. Some of those funds come from donations, but then someone has to maintain those facilities. There's a very large amount of wasteful spending.

Tuition increases generally make for bad press, so universities tend to limit those. Nobody reports on F&A increases, so universities have become increasingly dependent on using grants to balance their budgets. As a result, teaching isn't prioritized, and the product for undergraduates usually isn't that great.

Social Skills

[Anonymous Coward]

Your university is trying to teach you some social skills. Perhaps chocolate milk night isn't such a bad idea... and might actually get you laid.

Debt Slavery is the Future for America

[Anonymous Coward]

And here it is, the end result of the Fascist agenda of Wall Street and their pay off for the price of buying the Dems and the GOP these last 45+ years. Enjoy your slavery you fucking assholes. Much worse is to come. By 2030, if can't pay that $10,000 ambulance fee and $500,000 overnight stay for a broken leg you will legally be able to sold into "debt servitude" since bankruptcy for private citizens will be outlawed The primacy US is over, and Wall Street knows it. Their plan is to enslave all you fuckers through debt, prison and military service while playing 2nd fiddle to China and the BRICS You want your freedoms? You'd better get out in the streets and BLEED FOR IT

Re:Free

[b0s0z0ku]

Subsidizing useful things like education (as opposed to US military homicide sprees) is part of being a civilised society.

Re:You haven't got your head screwed on

[Billly Gates]

Listen if you know your shit I'll hire your ass in a heart beat. Doesn't matter if you have no job experience or if you're a felon. You know how to program and have written something decent you can show me on github and I'll hire your ass.

Hi, this is your local HR representative. I am afraid I will have to deny your candidate due to not meeting the job requirements. Feel free to have us find the best candidate for you as we have to meet certain criteria to reduce turnover and firings dictated by the VP of HR.

Thanks

Re:You haven't got your head screwed on

[serviscope_minor]

A lot of people seem to think coding is "easy" and don't realize how sometimes you can work VERY VERY long hours to meet deadlines. I have been working since 8 in the morning, and it's now past 9 in the evening, and yes, I am taking a break to eat and read some slashdot, but after that I am going back to work.

You should spend your time polishing your resume and finding a new job instead. Working those hours is a failure of management. Unless the management is changed (it won't be because you're delivering) then you'll see the same shit over and over again.

You have one life: don't waste it working heroic hours for an asshat.

Re:Pseudo-universities the problem

[q_e_t]

We need to fix this by raising school standards to the point where employers can use them for a wide range of jobs. While this will cost money it will also save a lot of money by making these pseudo-universities unnecessary.

There seems to be the presumption that school standards are falling, but if you look at PISA results, there isn't any evidence for it, and if anything, standards are gradually rising. People say "30 years ago, when I was at school, it was much better, and now employers can't trust a school leaver", but 30 years ago they said exactly the same thing. Even 2000 years ago they said the same thing.

Re: Oh wow, actually expecting a result?

[The Cynical Critic]

Having been a student pretty recently (got my master's degree papers in 2016) what you're describing sounds way more like some rich trust fund kid than the average student.

The few of my fellow students that had cars were bangers used to commute from places barely served by public transport, nobody I knew actually owned their own apartment, daily "eating out" was just subsidized lunches at the school cafeteria, drinking was mostly at unlicensed student dives way cheaper than a regular bar and vacation trips were mostly to nearby cities to stay with friends or relatives living in them.

On top of that, people still worked on the side and particularly during the summers. Before I was able to get far along enough to be able to work in my own field during the summers I worked in construction during the summer and actually ended up having to delay my graduation because of working practically full time on the side while studying. A close friend of mine moonlighted as a security guard the whole time I knew him and actually liked the work.

Seriously thou, old people have complained about how young people are lazy, disrespectful and that we're doomed as a society because of them since at least Plato's times, but here we still are. Thus it's beyond obvious that new generations being worse than their predecessors isn't any less false than it was back in Plato's times.

Re:Income share until obligation is paid off

[cmseagle]

Is it worse than student loans which can't be discharged under bankruptcy? At least with an income share agreement, the university doesn't get paid if they don't give the skills needed to get a paying job.