14 ms·

No Tuition, but You Pay a Percentage of Your Income if You Find a Job

217 points by dhh2106 8y ago

pjc50 8y ago
So this is converting education funding from "debt" to "equity", by demanding a chunk of the salary of its graduates. It's not completely unheard of; airline pilots often have a similar this arrangement because their training is so expensive. However this is the dark side of a "human capital" approach - the educational capital exists in one person's head, but the return on capital is partly owned by someone else. It does however share risk back to the educational institution, which has become a problem of people being left stranded by imcomplete courses or worthless degree-mills. > Critics of such programs have argued they are a form of indentured servitude. The percentage of income that Lambda takes — 17 percent — is high, and has even been described as predatory. And Purdue’s program is even more aggressive: It is a loan-like arrangement that could charge high-earning students 250 percent of the cost of their education. Hmm.
mdasen 8y ago
How is this different from income-based repayment of federal student loans? While there are different programs, the general idea is that you pay 10% of your "discretionary" income for 20 years with the guarantee that your payments aren't higher than the 10-year payoff rate. The article doesn't really have information on the Purdue system other than saying that it might cost high-earning students 250% of the price of their education. Of course, a 30-year loan at 6% will have the borrower repaying 216% of the original amount and around $24k/year so it would only cross 10% for people earning a quarter million a year (and it doesn't generally seem bad for people earning a quarter million to pay more back). The big issue is for universities is how they would handle marriage. For federal IBR, I believe you have to file your taxes separately. That isn't a big issue in 2018 due to the Tax Cuts and Jobs Act of 2017 which meant that the tax brackets for "married filing separately" are the same as "single" up to $300,000 in individual income. However, in 2017 "married filing separately" had higher taxes starting at $76k. The federal government has a big hole in their IBR calculations in that it doesn't consider the fact that spousal income can change what another spouse might earn. But it's the federal government and they can afford to lose a bunch of money. How would a private university with a much more limited budget handle this? Would they be happy with someone deciding to leave the job market because they married a high-earning spouse? Would they require payments based on household income? Likewise, the article really doesn't answer how a university is going to do this. With the Lambda school, it's easy: VC. Lambda has quite low costs (their programs aren't 4 years), they only teach high-earning fields, and they have a 2-year payoff window. It's easy for them to say that their students average $70k/year and 17% of that for two years is $23,800. Likewise, the two-year payoff period means that things like marriage and leaving the job market aren't as likely. While universities have a bunch of money, can they essentially float tuition for a decade or two? Probably not. If they could, they could have just offered loans themselves rather than having the federal government lend to students. Plus, while the cost of university is terrible, most students don't graduate with a mountain of debt - more like a hill of debt. $22,000 is a lot of money, but a middle-income job can tackle $22,000 in debt. That's well below the cost of the average car sold in the US. More importantly, 10% of your income would likely be quite a bit more than the regular payments on a $22,000 loan. Are universities just going to use income sharing agreements to replace grants? Will students be graduating with $22,000 in loans plus an income sharing agreement to cover what the university scholarships/grants? Generally speaking, universities in the US price themselves as, "how much can you afford to pay?" If you are receiving need-based aid and get a merit scholarship, usually your price goes up because that merit scholarship means you can afford to pay more. Is the income sharing agreement going to mean that students can afford to pay more? "I know that you can't afford more than $X today, but this agreement ensures that you pay $X and then Y% of your income after graduation." Is that the future? One of the things that makes education financing so difficult is that steps taken to reduce student hardship can simply increase prices. If you give every university student a $10,000/year grant, every university knows that they can raise their prices by $10,000/year. The students (and families) were paying the price before given their means. If the government gives them an extra $10,000, the university knows they can ask for it with little to no options for the student. Universities can capture most or all of programs designed to help students afford them (rather than helping the students).
- austenallred 8y ago
  In a word: incentives. It’s not about the payment structure alone, it’s about a school that is incentivized to make its students successful. IBR is just taxpayers swallowing the bill when schools fail.
  - soham 8y ago
    But then such schools that predominantly work on ISAs, will pre-select for good students, who are most likely to succeed and also for industries where the compensation is higher. Remainder (which is arguably 90%+) of the students will still be at the mercy of other schools + taxpayer. It seems, this just provides one more payment option to students who are likely to succeed anyway and a refreshing business model for schools that move early into the space. It doesn't address the real problem with schools i.e. making the 20th%le student successful and not a taxpayer burden.
    - zeroname 8y ago
      > But then such schools that predominantly work on ISAs, will pre-select for good students, who are most likely to succeed and also for industries where the compensation is higher. That still sounds far better than the current system of selecting for the most popular (instead of valuable) subjects that draw in the most clueless students to get indebted for life for something they are unlikely to succeed in anyway. > It doesn't address the real problem... What does?
      - noetic_techy 8y ago
        Exactly. With a federally garanteed loan no less! The school has incentive to take you and cater to your fanciful wim major, its free money to them up front and your problem (repayment) later.
    - sgeisler 8y ago
      > But then such schools that predominantly work on ISAs, will pre-select for good students, who are most likely to succeed and also for industries where the compensation is higher. That actually sounds like a good incentive structure to me. Most people shouldn't study something that will not give them some advantage (which these schools would select for). If you struggle to make ends meet it wouldn't be a reasonable decision to study something unprofitable in the first place. I wish it was different and everybody could invest an infinite amount of time to learn what they are interested in, but in a resource constrained reality that's not possible and individuals have to make decisions that are advantageous for them.
Shivetya 8y ago
Another sounds too good to be true because of just that. there are only the feel good details in the article and not the nitty gritty that is needed to even make it plausible. so, with regards to not paying it back if they don't land a job. how long are they held to that commitment? do we also look to see if they have another means of support? five years, ten, twenty? with regards to not paying up front, perhaps if we cross that one taboo. not every degree is worth its cost and many not worth having money risked to obtain them. but the big reason education is expensive is because government is free with loaning the money but not putting restrictions on what colleges can charge per course hour nor what those hours encompass. treat it like medicare/medicaid where the government sets the rates per course credit and you can guarantee colleges will fall over themselves to get that government money and loans
- austenallred 8y ago
  > so, with regards to not paying it back if they don't land a job. how long are they held to that commitment? The agreement lasts up ton5 years. If you haven’t paid back at the end of 5 years it goes away and you owe nothing. You can also pay upfront, but most students don’t have enough cash to do so.
  - jki275 8y ago
    it's also possibly cheaper to pay up front -- 20k vs up to 30k if you pay on the installment plan afterwards.
    - austenallred 8y ago
      Yes it likely is cheaper to pay upfront
- seem_2211 8y ago
  You don't pay anything back until you're making at least $50k a year. Not sure what the life of the contract is, but I've been following the Lambda school guys on Twitter for a while and they seem very focused on a 2-3 year payback. A lot of the criticism of Lambda School seems like unfairly comparing some ideal of education with their model, rather than comparing the current reality, which is colleges that frequently leave people in $30k + worth of student debt with no guarantee of a job afterwards, and that's before we talk about the years you sink into it. Then there are the learn to code bootcamps which seem to be garbage in general. I'd be willing to bet for most of us, paying 17% of our income (once we made $50k) a year, for two years, is a vastly preferable to whatever we've paid.
chrisamiller 8y ago
So you get an education for free, then pay back into the system after you're in the workforce? Congratulations, silicon valley, you've just re-invented public education! Imagine what our public universities could look like with solid funding increases (which would be a fraction of that 17% that this group wants to take). They could be both free and amazing.
- mcherm 8y ago
  > Congratulations, silicon valley, you've just re-invented public education! There is a key difference. With public education, the excess cost of the education is born equally by ALL taxpayers. With education that is funded by a percentage of future income rather than a fixed up-front cost, that is born only by the graduates. It means that those not fortunate enough to attend college (or not interested) are not expected to subsidize the students, and it also means that students can choose from a range of different qualities (and costs) of school. Also the original article spoke at length about aligning the incentives of the school and the student. If you believe (I do not) that the only or most important role of a school is to prepare the student for a more lucrative job, then this alignment of incentives is a significant value of its own.
  - pitaj 8y ago
    Also, it's voluntary. Taxation is involuntary.
- austenallred 8y ago
  The 17% is capped at $30k and only happens if the student gets a job that pays $50k+. If the student doesn’t get a job that pays $50k+ the school makes $0. If universities had that tuition plan they would be bankrupt.
  - marcc 8y ago
    Or, instead of bankrupt, they would likely focus on degrees that were marketable in the current economy. I feel that this option would really reduce the number students in some degree programs that aren't directly employable, or at least not at high wages. Universities could offer this today in some programs (CS, medicine, law, etc). But what about arts programs? Music? Are these employable enough to incentivize a University to to take a chance on students ability to repay?
lordnacho 8y ago
This is replacing student debt with student equity. Here's some thought on debt and equity: https://en.wikipedia.org/wiki/Modigliani%E2%80%93Miller_theorem https://en.wikipedia.org/wiki/Modigliani%E2%80%93Miller_theo... AKA the "capital structure irrelevance principle." My thoughts for some reason wandered that way, but I was actually going to address another issue: as long as it's expensive to go to college, you can't win. There's no free lunch. If college were cheap, you could spend a few years improving your future earnings. If it's fairly priced, you can't. It's as if everyone will be trapped by efficiency, though I haven't quite fleshed this out in my mind. Of course college is not the only thing there is, but it's a fairly big aspiration for a fairly large chunk of the population.
- quickben 8y ago
  Where do you see "equity"? This is replacing a student loan, with a no barrier of entry, no approval needed, student loan. If the housing market is any example of what happens when entry is eased (low % rates, etc), we are looking at student loans being a lot higher than they are now.
  - acchow 8y ago
    The "school" is "buying equity" in the student (which may or may not end up being worth something).
deleted 8y ago
[deleted]
JamSandwich 8y ago
This isn't new, we do this in the UK and it's still rubbish (but arguably better than having a $200k student loan balloon from interest while you're pouring coffee). Someone correct me if I missed something.
- austenallred 8y ago
  The school doesn't get paid if the student doesn't get a job. Pretty different.
rland 8y ago
We're asking the wrong questions. A full semester at my local community college is under $1000. Extrapolating to four years of undergrad education, that's $8,000 total. WHY do we need this never ending whirlpool of sophisticated financial schemes to take care of this problem?
- austenallred 8y ago
  What school is that? That’s very low.
  - skywhopper 8y ago
    One that's heavily subsidized by its community, the same way most public universities in the United States used to be. The neverending slashing of education funding at the state level has led to sky-high student debt which leads to bad ideas like this one.
    - austenallred 8y ago
      I still have never seen tuition that low, even subsidized
      - pkaye 8y ago
        In California Community College is $46/unit for California residents. Typically people take 10-15 units. There are a few additional fees probably total under $100/semester.
        r00fus 8y ago
        They used to be free, too, not too long ago.
- applecrazy 8y ago
  That’s true, but community colleges can’t award baccalaureate degrees. You would still need to transfer to a more expensive four-year university after 2 years (at least here in California).
seiferteric 8y ago
I thought this was going to be a bit more radical, like a market for students that companies would pay into. I could see something where you could take "aptitude" tests that would get you tuition funding from a company if you showed some signal that you could be useful to them, but I guess that's basically just a scholarship... Also they can't force you to work for them once you are done, so that's a problem. One thing It would be useful for though would be to strongly signal when there is a LACK of demand in a specific area. It might save some people a lot of heart ache and money getting a "useless" degree.
noetic_techy 8y ago
Good. This does exactly what Nasim Taleb argues and forces the college to have "skin in the game." Education needs this sort of revamp badly. Government meddling with student loan guarantees caused the price inflation, more government meddling won't solve the problem. The system needs a reboot, and this sounds like exactly what it needs. Don't pay unless you make over 50k, awesome. Payback lasts 2-3 years, awesome! I'm sure there are nitty gritty details, but this sounds like the model we need. As far as less profitable majors or high risk individuals, they can remain in the traditional system and pay up front. You don't have to totally scrap everything else. If you truly want to study Russian literature that's fine, stay in a traditional system, but don't force the rest of us to accept it just because you want to be a special butterfly edge case. We should not be catering to those types. Eliminate guaranteed federal loans and the price of those majors would come way down anyways. If you truly want to preserve some niche program, some strategic investments on the schools part could set up something that returns enough money to allow a handfull of true scholars who do well but are too poor to pay up front still attend and get their niche major. You may even see the emergence of a school that has radical teaching methods that turn high risk students into earners. Probably a system you can't even fathom yet which involves some level of psychology and counseling along with your education to get you to the finish line.
- omegaworks 8y ago
  >Good. This does exactly what Nasim Taleb argues and forces the college to have "skin in the game." This philosophy operates under the assumption that colleges should be beholden to an economic system that values individuals solely for their ability to grow existing capital. It's a recipe for cultural stagnation. Where do we develop entirely new modes of thought and expression [and potential new sources of wealth] if we deprioritize every activity other than those that optimize for the growth of existing wealth?
- voidhorse 8y ago
  This "special butterfly edge case" == anyone who wants to specialize in the humanities attitude will probably lead to a bleak future. Life does not begin and end with technics nor economics. Supporting the continued interest in the historical, artistic, cultural, literary and philosophical development of mankind and likewise supporting the preservation of these fields shouldn't be seen as 'catering to those types'. If you'd like to live in a world devoid of art, culture, and history, but efficient, logical, and completely determined to the apex, be my guest; it sounds like tons of fun. If these systems are to be adopted nationwide they'll have to figure out a reasonable way to fund studying the humanities for more than just 'a handfull[sic] of true scholars'. Traditions and whole fields of disciplines don't live and die off the progress of a few geniuses--they are worldwide human endeavors sustained by a complex of economic, political, and pedagogical interests. Maybe that means this sort of model is only fit for 'trades', but eliminating support for the humanities wholesale wouldn't work.
simplecomplex 8y ago
Why not just let the market do what it wants? That’s how we got Lamda School in the first place. That way there could be income-sharing schools like Lamda School for trades that make financial sense. For degrees that don’t make financial sense, students could pay for them upfront, as many already do. The government never had to be involved with financing higher education to begin with.
- twblalock 8y ago
  > The government never had to be involved with financing higher education to begin with. The government needed to become involved to make education affordable to students without wealthy parents. If the market was going to take care of that by itself, it would have happened before the government got involved.
  - simplecomplex 8y ago
    Affordability has gotten worse since the government started giving loans. The non-wealthy students still have to pay their tuition. I think you might mean accessibility. Government loans do expand access, but so does the private income sharing model. There are market-based ways to serve the poor education, and arguably where it does it’s more affordable, and incentivized to lift them out of poverty.
deleted 8y ago
[deleted]
wbronitsky 8y ago
While interesting, this is not a new approach. I graduated from App Academy in San Francisco over 5 years ago, paid a percentage of my income for 6 months in my first engineering job, and after roles at Stripe and Bain Consulting, have never looked back.
- RunawayGalaxy 8y ago
  Out of curiosity, does Bain hire a lot of web developers?
  - wbronitsky 8y ago
    Great question! I asked myself the same thing initially. Bain now has a design and development lab to help solve problems using software. We add human driven design and development to the traditional Bain toolkit. Its an interesting role to say the least!
- popcorn49 8y ago
  App Academy has replied back to the New York Times through twitter: https://twitter.com/appacademyio/status/1082723232782868481 https://twitter.com/appacademyio/status/1082723232782868481
bitwize 8y ago
Sounds like Unbounded Solutions/BrighterBrain. I told those scumbags where they can stick it more than once.
atiredturte 8y ago
Australia has a system that, while different, has similar perks to this. We have a government loan system called HELP (formerly HECS). Basically students can get a zero interest government loan (rises with inflation), and only need to pay it off once they make above a certain threshold ($51,957 according to the official website[1]). The payments are deducted as a percentage of your income, with the payments increasing with your wage. This has a number of benefits: 1. Students whose degrees don't work out for them (i.e. can't find meaningful employment) aren't stuck with rising interest on their debts. 2. Allows poorer students to go to uni without parental support (I am currently a student and support myself entirely) 3. Reduces pressure on graduates to find a job just to pay off their debts. They can take their time to find a good job in their industry, rather than working lower-paying, unrelated work to pay off their loans. My degree at UNSW in Australia will cost about $27k AUD (~$19k USD) and I'm unsure about the costs of others in my country. Under the HELP system, Australians are allowed a fair go at an education, and can take their future into their own hands (rather than relying on their parents). [1] https://www.studyassist.gov.au/paying-back-your-loan/loan-repayment https://www.studyassist.gov.au/paying-back-your-loan/loan-re...
- nthot 8y ago
  Is it stepped at all? Do you owe nothing before 50k and then once you cross that threshold you now owe money? That would seem to incentivise staying below that threshold for a percentage of borrowers. I also have difficulty seeing the first benefit you list as being a benefit. I don't have a problem with people pursuing degrees in fields that aren't big money makers, but I also don't know that the government should be in the business of incentivising people to study in these fields. On the other hand, there is societal benefit to these fields being pursued in general. And the market economy may not adequately pay for the benefits it receives. As a society we wouldn't want everyone to major in poetry, though.
  - voidlogic 8y ago
    >That would seem to incentivise staying below that threshold for a percentage of borrowers. That only makes sense if its not implemented like taxes are. For example if when you exceed 50k and your repayment rate for the first 10k of income past 50k is 2%, and you earn 59k, you would take home $58,820. Why would you not want to take home this extra income. Is of course is assuming it works like taxes in the US (which it probably does). The same kind of bad logic occurs in the US when people won't take a raise because they don't want to "jump tax brackets", but they don't realize you only pay the higher bracket rate on the income that was in that bracket!
jtlienwis 8y ago
I like the concept that the mining industry has developed. Its calle NSR ( net smelter return). A company will loan money to another miner that has a deposit but lacks money. The miner will use the money to build the mine and when they send their ore to the smelter, will pay back a percentage of the value of that ore to the company that loaned the money. Replace miner with student. Company issuing the NSR with teachers.
kraig 8y ago
IMO a great idea and could flip the table on ivy league schools and other institutions that favor political connections over an individuals potential.
voidhorse 8y ago
This is an interesting idea and generates a lot of questions. How does this change the dynamic of 'going back to school' for an alternative degree? If the domain I initially studied starts hurting economically and I have to get a different degree, do I still owe the school for my initial degree if I get a job that meets the income threshold off my second degree? How do we determine which degree netted me my current job? (assuming I get the new degree and a job within the N year period during which I owe the initial institution a percentile of my income). Am I able to 'pay out' at any time? Or, if I get a better paying job, does the institutions paycheck increase if I'm still in the payback time interval? Do I simply need to pay the pay cap? Should I be comfortable with the notion that my institution is x% responsible for my wage-earnings and overall economic worth? Are there situations in which this isn't the case? Does this change promote student assessments that are better or worse for the edification of the next generation? As the article states, would schools be tempted not to bother with 'high-risk' students? What does it mean to put a label like 'high-risk' on a student? What does it mean to treat a human being like an investment? Does this reduce interest in students to purely economic terms (a big part of how universities already conceive of their students today, but reputation to some degree still factors in)? Would such a model further exacerbate the gap between the wealthy and poor—would wealthy kids, who grow up in environments that promote study and make them 'low-risk' investments (likely to succeed) have an unfair advantage over kids growing up in poor households? This also seems to imply that one's learning is the majority of what factors into one's getting a job. What about all the additional work it takes to get a job (networking, etc.) Will these institutions assist in these areas as well? What of the notion of scholarship? Is it absent in this model? Does this model actually work for all disciplines? Arguably, it creates a very tight coupling between the 'value' of an education and wage-earnings/income. What of those pursuits that seem to be valuable, in a different light and aren't (today) usually high-income generators ,e.g. the study of history, literature, and cultures, for instance. What will happen to those disciplines under this model? Is this a model that's more appropriate for trades and not all areas of education? Seems like a very good change, potentially, but it will probably a lot of effects if its adopted nationwide, on both an economic and cultural level.
make3 8y ago
Quebec (Canada) has a system like that, it's called free higher education, and you pay with a fraction of your salary called "income tax" (it's actually 2k$ per session, not completely free)
- jon889 8y ago
  But some of that income tax gets lost in the education system. It would be much efficient to just pay back to the school you went to. Then there’s no chance of it getting spent at levels above the school.
1999 8y ago
Congrats to Lambda School on finding a way to get companies to pay for employee training.
- austenallred 8y ago
  :) basically
twblalock 8y ago
> At Lambda, students pay nothing upfront. But they are required to pay 17 percent of their salary to Lambda for two years if they get a job that pays more than $50,000. This appears to create a cliff: If you make $50000 a year, you keep $50000 a year. If you make $51000 a year, you pay 17% ($8670) and you keep $42330. That extra dollar cost you a ton of money. It really ought to be a marginal rate like tax brackets.
- austenallred 8y ago
  In an ideal world that would be possible/simple. The real solution is to get someone a job that pays more than $50k/yr.
- ibeckermayer 8y ago
  There is a cliff, as a person with an ISA with a similar program (Holberton School), there's really no disincentive to seek a high paying job. The ISA doesn't expire, if I'm making below the threshold then it just gets deferred until I make above the threshold.
  - CapnCrunchie 8y ago
    At Lambda School, the ISA does expire after 5 years of not meeting the income threshold.
- rossjudson 8y ago
  It turns out that people usually work more than a few years, and their salaries rise over time. It would be counterproductive not to negotiate the highest salary you could (because you'll probably go upwards from there).
  - twblalock 8y ago
    > It turns out that people usually work more than a few years, and their salaries rise over time. It also turns out that people know this and don't appreciate your trite condescension. Even more amazingly, it turns out that when people get a raise they expect to actually take home more money, which is only possible when the rate of taxation or whatever this thing is acts on marginal income rather than total income.
throwaway6356 8y ago
indentured servitude. great innovation.
austenallred 8y ago
Hey, co-founder of Lambda School here. Yes, some countries have similar structures, where you pay after a certain threshold. The difference is: 1. In those structures the school gets paid no matter what, the taxpayer just swallows the cost. With Lambda School we will literally go out of business if a large percentage of our students don't get jobs. That causes a lot of stuff. For example, we have an entire sales team dedicated to bringing companies in to hire students, and there are 2-3 that come in every day to hire students. 2. Our minimum is much higher than government minimums ($50k in the US). 3. We only collect a percentage of income if you're hired in field (using the skills you learned) 4. If you don't get a job within 5 years the agreement simply goes away and you owe nothing.Happy to answer any questions, though I'll be in and out.
- malshe 8y ago
  Congrats on the funding! I think that this is a viable model for professions where high paying jobs are available aplenty. How are you planning to scale with this narrow model? Also what is your competitive advantage? I am trying to figure out the valuation as an investor.
  - austenallred 8y ago
    Valuation is in the NYT article :) The model scales very well. We move people from low(er) income to high(er) income. That’s how it should be, and there’s a whole lot of that to be done.
- IMTDb 8y ago
  It might be cynical but it seems you are moving from a bad system to another bad one. In the current system, students are the customers, in your new systems, students are the products. How will you ensure that your private interest are aligned with individuals, and society needs ? You are currently avoiding that issue by targeting high demand/high paying jobs but on a larger scale those issue will arise
  - austenallred 8y ago
deleted 8y ago
[deleted]
vivekd 8y ago
This seems like a good way to focus universities on degrees and skills that are in demand in the work place. There is growing criticism that many academic programs lack rigour and aren't meaningfully related to the job market. Tying the success of the institution directly to the success of the students seems to be the ideal solution to that.
YeGoblynQueenne 8y ago
>> What if there were a way to eliminate student debt? The obvious answer would be "free higher education", like in most EU countries and I believe many non-EU countries, have, and like many US institutions offered in the past. Unfortunately what is being proposed is insted baptising debt by another name, so that it doesn't sound like debt.
cromulent 8y ago
It's jarring as an English speaker to see this North American usage of the word "tuition", as a fee rather than a service. It took a couple of seconds to parse the title.
- mac01021 8y ago
  Yes. It used to be called a "tuition fee". but people are lazy and don't know where their words come from.
deepnotderp 8y ago
You know, it's funny, there's a lot of comments saying something along the lines of "college isn't just to get a job". Which is really funny, since that's absolutely the primary reason why college educations are pushed. E.g. "if you don't go to college you'll end up working at McDonald's" Plus, I have yet to see the evidence that colleges provide this virtuous yet intangible quality of non-economically beneficial "wholesome" education.
- daveFNbuck 8y ago
  > Plus, I have yet to see the evidence that colleges provide this virtuous yet intangible quality of non-economically beneficial "wholesome" education. You could try checking course requirements. Every college I'm aware of requires that students take classes in a variety of subjects outside their major before they can graduate.
  - kartickv 8y ago
    Which doesn't provide the evidence the parent was looking for. Just because you take a variety of classes doesn't mean that they have a benefit. If they do, please give us the evidence.
    - puszczyk 8y ago
      Not sure if it’s anyones job to search for evidence for you or the parent.
      - setr 8y ago
        It is, if you have any interest in convincing him otherwise, and successfully holding a conversation. If your goal is to argue aimlessly, and simply make your anti-claim with no new information (thereby convincing no one), then yes, you have no further tasks to be executed. But then you might as well have not spoken in the first place. Otherwise, all you’re claiming afaict is that the posters should argue with themselves — find the counter-evidence to their own claims, which is likely sufficiently convincing that they would not have had any reason to speak in the first place. That is, this idea of “not anyone’s job to search for (counter)evidence” is antagonistic to any form of discussion where parties disagree. If you want to make the opposing claim successfully, its quite useful to have evidence to support it (it’s not their job to find it for you... its not anyone’s job to do anything in an HN thread.)
utdiscant 8y ago
Congratulations on the round Austen and team! One thing I have always thought about when it comes to incentives in this model is that you have an incentive to only take in students that are likely to finish the degree and get a high paying job. This could lead to pattern matching people from backgrounds that are likely to do well due to demographics. How do you think about this and do you have any systems in place for minorities? (copied this comment from https://news.ycombinator.com/item?id=18856135 https://news.ycombinator.com/item?id=18856135)
nonsince 8y ago
I’d like to congratulate the brain trust at silicon valley for inventing public education and taxes
- MartinAlbertsen 8y ago
  I was thinking exactly the same, although a bit less passive agressive in the tone :) In Denmark (where I'm from), there is a system where education is free. There are private schools, but to my knowledge no private universities. Your entry ticket to a university is your grade from high-school. You actually get some money while studying. You can still chose to do a studen loan on top of that, but typically people come out of university with maximum $20k in debt most way less. I have many friends that are absolutely brilliant and successful, who would probably not have been able to afford a university degree. One thing is what that does to the crazy debt many people get in other countries, but think about what it does for low-income areas, immigrant and integration and general inequality of a population. By all means, Denmark is not perfect. But I think we nailed it with access to education. And yes. Our tax pressure is pretty high. But surprisingly not that much higher than for example California and NY. Martin
- mac01021 8y ago
  Except it's not. "Public education and taxes" (1) means everyone pays into the system and then people can enroll without any additional payment (or maybe with diminished additional payment). You could also have publicly insured student loans (2), where the student pays tuition with a loan and then if they later default on the loan then the public eats the cost. But this system (3) is neither. In this system, you get your degree and then you start paying for it when your income is enough to afford it. Importantly, if you never attain that level of income, the _University_ eats the cost. System 2 can lead to ever-ballooning college costs concurrent with gluts of worthless degrees, because universities are incentivized to enroll as many students as they can at as high a tuition rate as they can - they always get paid. In system 3, the university only gets paid if the student's degree turns out to be marketable. It (hopefully) keeps costs down in a way the (1 & 2) cannot. On the other hand, this could be terrible news for departments that issue degrees in literature, anthropology, etc.
safgasCVS 8y ago
So basically you just described income tax
- mac01021 8y ago
  Except the school only gets the money of people who attend the school. And the school is not incentivized to sell worthless degrees because it won't get paid when it does.
  - safgasCVS 8y ago
    Hmm well given how essentially all salaried jobs require a degree today it’s hard to see education as being an optional purchase for most people. Maybe 30 years ago but not today. Hard to say what’s worthless or not - jobs change all the time. Few if anyone would study something like Latin or philosophy if money were an incentive. Also the idea of human knowledge being locked away for only those who can afford it seems cruel to me
rchaud 8y ago
I'm of the class of 2009, graduating at a time when even entry-level office jobs seemed out of reach. I was an Econ major at a top US liberal arts school, with two summer analyst (finance) positions under my belt. But even with all that, the only full time job I was able to get was a book-keeping position that paid $12.50/hr. If you don't have job-ready skills (e.g., Quickbooks expertise at a small business), your prospects are limited to big corporations that hire on the basis of a regular recruiting schedule, provide training, onboarding etc. And those firms ghosted completely that year. I'm not from a rich family, so I would have much preferred to have done school in a short-term program like this that was incentivized to help me hit the ground running when it came to job-ready skills. That said, what is to stop Lambda-like firms to crop up everywhere, like bootcamps did, and promise 6-figure salaries that will never materialize? The VC money required to finance such schools is certainly out there, but are the jobs?
popcorn49 8y ago
App Academy was the first company to do this, many years ago. https://twitter.com/appacademyio/status/1082723232782868481 https://twitter.com/appacademyio/status/1082723232782868481

217 points by dhh2106 8y ago

So this is converting education funding from "debt" to "equity", by demanding a chunk of the salary of its graduates. It's not completely unheard of; airline pilots often have a similar this arrangement because their training is so expensive. However this is the dark side of a "human capital" approach - the educational capital exists in one person's head, but the return on capital is partly owned by someone else. It does however share risk back to the educational institution, which has become a problem of people being left stranded by imcomplete courses or worthless degree-mills. > Critics of such programs have argued they are a form of indentured servitude. The percentage of income that Lambda takes — 17 percent — is high, and has even been described as predatory. And Purdue’s program is even more aggressive: It is a loan-like arrangement that could charge high-earning students 250 percent of the cost of their education. Hmm.

mdasen 8y ago

How is this different from income-based repayment of federal student loans? While there are different programs, the general idea is that you pay 10% of your "discretionary" income for 20 years with the guarantee that your payments aren't higher than the 10-year payoff rate. The article doesn't really have information on the Purdue system other than saying that it might cost high-earning students 250% of the price of their education. Of course, a 30-year loan at 6% will have the borrower repaying 216% of the original amount and around $24k/year so it would only cross 10% for people earning a quarter million a year (and it doesn't generally seem bad for people earning a quarter million to pay more back). The big issue is for universities is how they would handle marriage. For federal IBR, I believe you have to file your taxes separately. That isn't a big issue in 2018 due to the Tax Cuts and Jobs Act of 2017 which meant that the tax brackets for "married filing separately" are the same as "single" up to $300,000 in individual income. However, in 2017 "married filing separately" had higher taxes starting at $76k. The federal government has a big hole in their IBR calculations in that it doesn't consider the fact that spousal income can change what another spouse might earn. But it's the federal government and they can afford to lose a bunch of money. How would a private university with a much more limited budget handle this? Would they be happy with someone deciding to leave the job market because they married a high-earning spouse? Would they require payments based on household income? Likewise, the article really doesn't answer how a university is going to do this. With the Lambda school, it's easy: VC. Lambda has quite low costs (their programs aren't 4 years), they only teach high-earning fields, and they have a 2-year payoff window. It's easy for them to say that their students average $70k/year and 17% of that for two years is $23,800. Likewise, the two-year payoff period means that things like marriage and leaving the job market aren't as likely. While universities have a bunch of money, can they essentially float tuition for a decade or two? Probably not. If they could, they could have just offered loans themselves rather than having the federal government lend to students. Plus, while the cost of university is terrible, most students don't graduate with a mountain of debt - more like a hill of debt. $22,000 is a lot of money, but a middle-income job can tackle $22,000 in debt. That's well below the cost of the average car sold in the US. More importantly, 10% of your income would likely be quite a bit more than the regular payments on a $22,000 loan. Are universities just going to use income sharing agreements to replace grants? Will students be graduating with $22,000 in loans plus an income sharing agreement to cover what the university scholarships/grants? Generally speaking, universities in the US price themselves as, "how much can you afford to pay?" If you are receiving need-based aid and get a merit scholarship, usually your price goes up because that merit scholarship means you can afford to pay more. Is the income sharing agreement going to mean that students can afford to pay more? "I know that you can't afford more than $X today, but this agreement ensures that you pay $X and then Y% of your income after graduation." Is that the future? One of the things that makes education financing so difficult is that steps taken to reduce student hardship can simply increase prices. If you give every university student a $10,000/year grant, every university knows that they can raise their prices by $10,000/year. The students (and families) were paying the price before given their means. If the government gives them an extra $10,000, the university knows they can ask for it with little to no options for the student. Universities can capture most or all of programs designed to help students afford them (rather than helping the students).

austenallred 8y ago
In a word: incentives. It’s not about the payment structure alone, it’s about a school that is incentivized to make its students successful. IBR is just taxpayers swallowing the bill when schools fail.
- soham 8y ago
  But then such schools that predominantly work on ISAs, will pre-select for good students, who are most likely to succeed and also for industries where the compensation is higher. Remainder (which is arguably 90%+) of the students will still be at the mercy of other schools + taxpayer. It seems, this just provides one more payment option to students who are likely to succeed anyway and a refreshing business model for schools that move early into the space. It doesn't address the real problem with schools i.e. making the 20th%le student successful and not a taxpayer burden.
  - zeroname 8y ago
    > But then such schools that predominantly work on ISAs, will pre-select for good students, who are most likely to succeed and also for industries where the compensation is higher. That still sounds far better than the current system of selecting for the most popular (instead of valuable) subjects that draw in the most clueless students to get indebted for life for something they are unlikely to succeed in anyway. > It doesn't address the real problem... What does?
    - noetic_techy 8y ago
      Exactly. With a federally garanteed loan no less! The school has incentive to take you and cater to your fanciful wim major, its free money to them up front and your problem (repayment) later.
  - sgeisler 8y ago
    > But then such schools that predominantly work on ISAs, will pre-select for good students, who are most likely to succeed and also for industries where the compensation is higher. That actually sounds like a good incentive structure to me. Most people shouldn't study something that will not give them some advantage (which these schools would select for). If you struggle to make ends meet it wouldn't be a reasonable decision to study something unprofitable in the first place. I wish it was different and everybody could invest an infinite amount of time to learn what they are interested in, but in a resource constrained reality that's not possible and individuals have to make decisions that are advantageous for them.

Shivetya 8y ago

Another sounds too good to be true because of just that. there are only the feel good details in the article and not the nitty gritty that is needed to even make it plausible. so, with regards to not paying it back if they don't land a job. how long are they held to that commitment? do we also look to see if they have another means of support? five years, ten, twenty? with regards to not paying up front, perhaps if we cross that one taboo. not every degree is worth its cost and many not worth having money risked to obtain them. but the big reason education is expensive is because government is free with loaning the money but not putting restrictions on what colleges can charge per course hour nor what those hours encompass. treat it like medicare/medicaid where the government sets the rates per course credit and you can guarantee colleges will fall over themselves to get that government money and loans

austenallred 8y ago
> so, with regards to not paying it back if they don't land a job. how long are they held to that commitment? The agreement lasts up ton5 years. If you haven’t paid back at the end of 5 years it goes away and you owe nothing. You can also pay upfront, but most students don’t have enough cash to do so.
- jki275 8y ago
  it's also possibly cheaper to pay up front -- 20k vs up to 30k if you pay on the installment plan afterwards.
  - austenallred 8y ago
    Yes it likely is cheaper to pay upfront
seem_2211 8y ago
You don't pay anything back until you're making at least $50k a year. Not sure what the life of the contract is, but I've been following the Lambda school guys on Twitter for a while and they seem very focused on a 2-3 year payback. A lot of the criticism of Lambda School seems like unfairly comparing some ideal of education with their model, rather than comparing the current reality, which is colleges that frequently leave people in $30k + worth of student debt with no guarantee of a job afterwards, and that's before we talk about the years you sink into it. Then there are the learn to code bootcamps which seem to be garbage in general. I'd be willing to bet for most of us, paying 17% of our income (once we made $50k) a year, for two years, is a vastly preferable to whatever we've paid.

chrisamiller 8y ago

So you get an education for free, then pay back into the system after you're in the workforce? Congratulations, silicon valley, you've just re-invented public education! Imagine what our public universities could look like with solid funding increases (which would be a fraction of that 17% that this group wants to take). They could be both free and amazing.

mcherm 8y ago
> Congratulations, silicon valley, you've just re-invented public education! There is a key difference. With public education, the excess cost of the education is born equally by ALL taxpayers. With education that is funded by a percentage of future income rather than a fixed up-front cost, that is born only by the graduates. It means that those not fortunate enough to attend college (or not interested) are not expected to subsidize the students, and it also means that students can choose from a range of different qualities (and costs) of school. Also the original article spoke at length about aligning the incentives of the school and the student. If you believe (I do not) that the only or most important role of a school is to prepare the student for a more lucrative job, then this alignment of incentives is a significant value of its own.
- pitaj 8y ago
  Also, it's voluntary. Taxation is involuntary.
austenallred 8y ago
The 17% is capped at $30k and only happens if the student gets a job that pays $50k+. If the student doesn’t get a job that pays $50k+ the school makes $0. If universities had that tuition plan they would be bankrupt.
- marcc 8y ago
  Or, instead of bankrupt, they would likely focus on degrees that were marketable in the current economy. I feel that this option would really reduce the number students in some degree programs that aren't directly employable, or at least not at high wages. Universities could offer this today in some programs (CS, medicine, law, etc). But what about arts programs? Music? Are these employable enough to incentivize a University to to take a chance on students ability to repay?

lordnacho 8y ago

This is replacing student debt with student equity. Here's some thought on debt and equity: https://en.wikipedia.org/wiki/Modigliani%E2%80%93Miller_theorem https://en.wikipedia.org/wiki/Modigliani%E2%80%93Miller_theo... AKA the "capital structure irrelevance principle." My thoughts for some reason wandered that way, but I was actually going to address another issue: as long as it's expensive to go to college, you can't win. There's no free lunch. If college were cheap, you could spend a few years improving your future earnings. If it's fairly priced, you can't. It's as if everyone will be trapped by efficiency, though I haven't quite fleshed this out in my mind. Of course college is not the only thing there is, but it's a fairly big aspiration for a fairly large chunk of the population.

quickben 8y ago
Where do you see "equity"? This is replacing a student loan, with a no barrier of entry, no approval needed, student loan. If the housing market is any example of what happens when entry is eased (low % rates, etc), we are looking at student loans being a lot higher than they are now.
- acchow 8y ago
  The "school" is "buying equity" in the student (which may or may not end up being worth something).

deleted 8y ago

[deleted]

JamSandwich 8y ago

This isn't new, we do this in the UK and it's still rubbish (but arguably better than having a $200k student loan balloon from interest while you're pouring coffee). Someone correct me if I missed something.

austenallred 8y ago
The school doesn't get paid if the student doesn't get a job. Pretty different.

rland 8y ago

We're asking the wrong questions. A full semester at my local community college is under $1000. Extrapolating to four years of undergrad education, that's $8,000 total. WHY do we need this never ending whirlpool of sophisticated financial schemes to take care of this problem?

austenallred 8y ago
What school is that? That’s very low.
- skywhopper 8y ago
  One that's heavily subsidized by its community, the same way most public universities in the United States used to be. The neverending slashing of education funding at the state level has led to sky-high student debt which leads to bad ideas like this one.
  - austenallred 8y ago
    I still have never seen tuition that low, even subsidized
    - pkaye 8y ago
      In California Community College is $46/unit for California residents. Typically people take 10-15 units. There are a few additional fees probably total under $100/semester.
      - r00fus 8y ago
        They used to be free, too, not too long ago.
applecrazy 8y ago
That’s true, but community colleges can’t award baccalaureate degrees. You would still need to transfer to a more expensive four-year university after 2 years (at least here in California).

seiferteric 8y ago

I thought this was going to be a bit more radical, like a market for students that companies would pay into. I could see something where you could take "aptitude" tests that would get you tuition funding from a company if you showed some signal that you could be useful to them, but I guess that's basically just a scholarship... Also they can't force you to work for them once you are done, so that's a problem. One thing It would be useful for though would be to strongly signal when there is a LACK of demand in a specific area. It might save some people a lot of heart ache and money getting a "useless" degree.

noetic_techy 8y ago

Good. This does exactly what Nasim Taleb argues and forces the college to have "skin in the game." Education needs this sort of revamp badly. Government meddling with student loan guarantees caused the price inflation, more government meddling won't solve the problem. The system needs a reboot, and this sounds like exactly what it needs. Don't pay unless you make over 50k, awesome. Payback lasts 2-3 years, awesome! I'm sure there are nitty gritty details, but this sounds like the model we need. As far as less profitable majors or high risk individuals, they can remain in the traditional system and pay up front. You don't have to totally scrap everything else. If you truly want to study Russian literature that's fine, stay in a traditional system, but don't force the rest of us to accept it just because you want to be a special butterfly edge case. We should not be catering to those types. Eliminate guaranteed federal loans and the price of those majors would come way down anyways. If you truly want to preserve some niche program, some strategic investments on the schools part could set up something that returns enough money to allow a handfull of true scholars who do well but are too poor to pay up front still attend and get their niche major. You may even see the emergence of a school that has radical teaching methods that turn high risk students into earners. Probably a system you can't even fathom yet which involves some level of psychology and counseling along with your education to get you to the finish line.

omegaworks 8y ago
>Good. This does exactly what Nasim Taleb argues and forces the college to have "skin in the game." This philosophy operates under the assumption that colleges should be beholden to an economic system that values individuals solely for their ability to grow existing capital. It's a recipe for cultural stagnation. Where do we develop entirely new modes of thought and expression [and potential new sources of wealth] if we deprioritize every activity other than those that optimize for the growth of existing wealth?
voidhorse 8y ago
This "special butterfly edge case" == anyone who wants to specialize in the humanities attitude will probably lead to a bleak future. Life does not begin and end with technics nor economics. Supporting the continued interest in the historical, artistic, cultural, literary and philosophical development of mankind and likewise supporting the preservation of these fields shouldn't be seen as 'catering to those types'. If you'd like to live in a world devoid of art, culture, and history, but efficient, logical, and completely determined to the apex, be my guest; it sounds like tons of fun. If these systems are to be adopted nationwide they'll have to figure out a reasonable way to fund studying the humanities for more than just 'a handfull[sic] of true scholars'. Traditions and whole fields of disciplines don't live and die off the progress of a few geniuses--they are worldwide human endeavors sustained by a complex of economic, political, and pedagogical interests. Maybe that means this sort of model is only fit for 'trades', but eliminating support for the humanities wholesale wouldn't work.

simplecomplex 8y ago

Why not just let the market do what it wants? That’s how we got Lamda School in the first place. That way there could be income-sharing schools like Lamda School for trades that make financial sense. For degrees that don’t make financial sense, students could pay for them upfront, as many already do. The government never had to be involved with financing higher education to begin with.

twblalock 8y ago
> The government never had to be involved with financing higher education to begin with. The government needed to become involved to make education affordable to students without wealthy parents. If the market was going to take care of that by itself, it would have happened before the government got involved.
- simplecomplex 8y ago
  Affordability has gotten worse since the government started giving loans. The non-wealthy students still have to pay their tuition. I think you might mean accessibility. Government loans do expand access, but so does the private income sharing model. There are market-based ways to serve the poor education, and arguably where it does it’s more affordable, and incentivized to lift them out of poverty.

deleted 8y ago

[deleted]

wbronitsky 8y ago

While interesting, this is not a new approach. I graduated from App Academy in San Francisco over 5 years ago, paid a percentage of my income for 6 months in my first engineering job, and after roles at Stripe and Bain Consulting, have never looked back.

RunawayGalaxy 8y ago
Out of curiosity, does Bain hire a lot of web developers?
- wbronitsky 8y ago
  Great question! I asked myself the same thing initially. Bain now has a design and development lab to help solve problems using software. We add human driven design and development to the traditional Bain toolkit. Its an interesting role to say the least!
popcorn49 8y ago
App Academy has replied back to the New York Times through twitter: https://twitter.com/appacademyio/status/1082723232782868481 https://twitter.com/appacademyio/status/1082723232782868481

bitwize 8y ago

Sounds like Unbounded Solutions/BrighterBrain. I told those scumbags where they can stick it more than once.

atiredturte 8y ago

Australia has a system that, while different, has similar perks to this. We have a government loan system called HELP (formerly HECS). Basically students can get a zero interest government loan (rises with inflation), and only need to pay it off once they make above a certain threshold ($51,957 according to the official website[1]). The payments are deducted as a percentage of your income, with the payments increasing with your wage. This has a number of benefits: 1. Students whose degrees don't work out for them (i.e. can't find meaningful employment) aren't stuck with rising interest on their debts. 2. Allows poorer students to go to uni without parental support (I am currently a student and support myself entirely) 3. Reduces pressure on graduates to find a job just to pay off their debts. They can take their time to find a good job in their industry, rather than working lower-paying, unrelated work to pay off their loans. My degree at UNSW in Australia will cost about $27k AUD (~$19k USD) and I'm unsure about the costs of others in my country. Under the HELP system, Australians are allowed a fair go at an education, and can take their future into their own hands (rather than relying on their parents). [1] https://www.studyassist.gov.au/paying-back-your-loan/loan-repayment https://www.studyassist.gov.au/paying-back-your-loan/loan-re...

nthot 8y ago
Is it stepped at all? Do you owe nothing before 50k and then once you cross that threshold you now owe money? That would seem to incentivise staying below that threshold for a percentage of borrowers. I also have difficulty seeing the first benefit you list as being a benefit. I don't have a problem with people pursuing degrees in fields that aren't big money makers, but I also don't know that the government should be in the business of incentivising people to study in these fields. On the other hand, there is societal benefit to these fields being pursued in general. And the market economy may not adequately pay for the benefits it receives. As a society we wouldn't want everyone to major in poetry, though.
- voidlogic 8y ago
  >That would seem to incentivise staying below that threshold for a percentage of borrowers. That only makes sense if its not implemented like taxes are. For example if when you exceed 50k and your repayment rate for the first 10k of income past 50k is 2%, and you earn 59k, you would take home $58,820. Why would you not want to take home this extra income. Is of course is assuming it works like taxes in the US (which it probably does). The same kind of bad logic occurs in the US when people won't take a raise because they don't want to "jump tax brackets", but they don't realize you only pay the higher bracket rate on the income that was in that bracket!

jtlienwis 8y ago

I like the concept that the mining industry has developed. Its calle NSR ( net smelter return). A company will loan money to another miner that has a deposit but lacks money. The miner will use the money to build the mine and when they send their ore to the smelter, will pay back a percentage of the value of that ore to the company that loaned the money. Replace miner with student. Company issuing the NSR with teachers.

kraig 8y ago

IMO a great idea and could flip the table on ivy league schools and other institutions that favor political connections over an individuals potential.

voidhorse 8y ago

This is an interesting idea and generates a lot of questions. How does this change the dynamic of 'going back to school' for an alternative degree? If the domain I initially studied starts hurting economically and I have to get a different degree, do I still owe the school for my initial degree if I get a job that meets the income threshold off my second degree? How do we determine which degree netted me my current job? (assuming I get the new degree and a job within the N year period during which I owe the initial institution a percentile of my income). Am I able to 'pay out' at any time? Or, if I get a better paying job, does the institutions paycheck increase if I'm still in the payback time interval? Do I simply need to pay the pay cap? Should I be comfortable with the notion that my institution is x% responsible for my wage-earnings and overall economic worth? Are there situations in which this isn't the case? Does this change promote student assessments that are better or worse for the edification of the next generation? As the article states, would schools be tempted not to bother with 'high-risk' students? What does it mean to put a label like 'high-risk' on a student? What does it mean to treat a human being like an investment? Does this reduce interest in students to purely economic terms (a big part of how universities already conceive of their students today, but reputation to some degree still factors in)? Would such a model further exacerbate the gap between the wealthy and poor—would wealthy kids, who grow up in environments that promote study and make them 'low-risk' investments (likely to succeed) have an unfair advantage over kids growing up in poor households? This also seems to imply that one's learning is the majority of what factors into one's getting a job. What about all the additional work it takes to get a job (networking, etc.) Will these institutions assist in these areas as well? What of the notion of scholarship? Is it absent in this model? Does this model actually work for all disciplines? Arguably, it creates a very tight coupling between the 'value' of an education and wage-earnings/income. What of those pursuits that seem to be valuable, in a different light and aren't (today) usually high-income generators ,e.g. the study of history, literature, and cultures, for instance. What will happen to those disciplines under this model? Is this a model that's more appropriate for trades and not all areas of education? Seems like a very good change, potentially, but it will probably a lot of effects if its adopted nationwide, on both an economic and cultural level.

make3 8y ago

Quebec (Canada) has a system like that, it's called free higher education, and you pay with a fraction of your salary called "income tax" (it's actually 2k$ per session, not completely free)

jon889 8y ago
But some of that income tax gets lost in the education system. It would be much efficient to just pay back to the school you went to. Then there’s no chance of it getting spent at levels above the school.

1999 8y ago

Congrats to Lambda School on finding a way to get companies to pay for employee training.

austenallred 8y ago
:) basically

twblalock 8y ago

> At Lambda, students pay nothing upfront. But they are required to pay 17 percent of their salary to Lambda for two years if they get a job that pays more than $50,000. This appears to create a cliff: If you make $50000 a year, you keep $50000 a year. If you make $51000 a year, you pay 17% ($8670) and you keep $42330. That extra dollar cost you a ton of money. It really ought to be a marginal rate like tax brackets.

austenallred 8y ago
In an ideal world that would be possible/simple. The real solution is to get someone a job that pays more than $50k/yr.
ibeckermayer 8y ago
There is a cliff, as a person with an ISA with a similar program (Holberton School), there's really no disincentive to seek a high paying job. The ISA doesn't expire, if I'm making below the threshold then it just gets deferred until I make above the threshold.
- CapnCrunchie 8y ago
  At Lambda School, the ISA does expire after 5 years of not meeting the income threshold.
rossjudson 8y ago
It turns out that people usually work more than a few years, and their salaries rise over time. It would be counterproductive not to negotiate the highest salary you could (because you'll probably go upwards from there).
- twblalock 8y ago
  > It turns out that people usually work more than a few years, and their salaries rise over time. It also turns out that people know this and don't appreciate your trite condescension. Even more amazingly, it turns out that when people get a raise they expect to actually take home more money, which is only possible when the rate of taxation or whatever this thing is acts on marginal income rather than total income.

throwaway6356 8y ago

indentured servitude. great innovation.

austenallred 8y ago

Hey, co-founder of Lambda School here. Yes, some countries have similar structures, where you pay after a certain threshold. The difference is: 1. In those structures the school gets paid no matter what, the taxpayer just swallows the cost. With Lambda School we will literally go out of business if a large percentage of our students don't get jobs. That causes a lot of stuff. For example, we have an entire sales team dedicated to bringing companies in to hire students, and there are 2-3 that come in every day to hire students. 2. Our minimum is much higher than government minimums ($50k in the US). 3. We only collect a percentage of income if you're hired in field (using the skills you learned) 4. If you don't get a job within 5 years the agreement simply goes away and you owe nothing.Happy to answer any questions, though I'll be in and out.

malshe 8y ago
Congrats on the funding! I think that this is a viable model for professions where high paying jobs are available aplenty. How are you planning to scale with this narrow model? Also what is your competitive advantage? I am trying to figure out the valuation as an investor.
- austenallred 8y ago
  Valuation is in the NYT article :) The model scales very well. We move people from low(er) income to high(er) income. That’s how it should be, and there’s a whole lot of that to be done.
IMTDb 8y ago
It might be cynical but it seems you are moving from a bad system to another bad one. In the current system, students are the customers, in your new systems, students are the products. How will you ensure that your private interest are aligned with individuals, and society needs ? You are currently avoiding that issue by targeting high demand/high paying jobs but on a larger scale those issue will arise
- austenallred 8y ago

deleted 8y ago

[deleted]

vivekd 8y ago

This seems like a good way to focus universities on degrees and skills that are in demand in the work place. There is growing criticism that many academic programs lack rigour and aren't meaningfully related to the job market. Tying the success of the institution directly to the success of the students seems to be the ideal solution to that.

YeGoblynQueenne 8y ago

>> What if there were a way to eliminate student debt? The obvious answer would be "free higher education", like in most EU countries and I believe many non-EU countries, have, and like many US institutions offered in the past. Unfortunately what is being proposed is insted baptising debt by another name, so that it doesn't sound like debt.

cromulent 8y ago

It's jarring as an English speaker to see this North American usage of the word "tuition", as a fee rather than a service. It took a couple of seconds to parse the title.

mac01021 8y ago
Yes. It used to be called a "tuition fee". but people are lazy and don't know where their words come from.

deepnotderp 8y ago

You know, it's funny, there's a lot of comments saying something along the lines of "college isn't just to get a job". Which is really funny, since that's absolutely the primary reason why college educations are pushed. E.g. "if you don't go to college you'll end up working at McDonald's" Plus, I have yet to see the evidence that colleges provide this virtuous yet intangible quality of non-economically beneficial "wholesome" education.

daveFNbuck 8y ago
> Plus, I have yet to see the evidence that colleges provide this virtuous yet intangible quality of non-economically beneficial "wholesome" education. You could try checking course requirements. Every college I'm aware of requires that students take classes in a variety of subjects outside their major before they can graduate.
- kartickv 8y ago
  Which doesn't provide the evidence the parent was looking for. Just because you take a variety of classes doesn't mean that they have a benefit. If they do, please give us the evidence.
  - puszczyk 8y ago
    Not sure if it’s anyones job to search for evidence for you or the parent.
    - setr 8y ago
      It is, if you have any interest in convincing him otherwise, and successfully holding a conversation. If your goal is to argue aimlessly, and simply make your anti-claim with no new information (thereby convincing no one), then yes, you have no further tasks to be executed. But then you might as well have not spoken in the first place. Otherwise, all you’re claiming afaict is that the posters should argue with themselves — find the counter-evidence to their own claims, which is likely sufficiently convincing that they would not have had any reason to speak in the first place. That is, this idea of “not anyone’s job to search for (counter)evidence” is antagonistic to any form of discussion where parties disagree. If you want to make the opposing claim successfully, its quite useful to have evidence to support it (it’s not their job to find it for you... its not anyone’s job to do anything in an HN thread.)

utdiscant 8y ago

Congratulations on the round Austen and team! One thing I have always thought about when it comes to incentives in this model is that you have an incentive to only take in students that are likely to finish the degree and get a high paying job. This could lead to pattern matching people from backgrounds that are likely to do well due to demographics. How do you think about this and do you have any systems in place for minorities? (copied this comment from https://news.ycombinator.com/item?id=18856135 https://news.ycombinator.com/item?id=18856135)

nonsince 8y ago

I’d like to congratulate the brain trust at silicon valley for inventing public education and taxes

MartinAlbertsen 8y ago
I was thinking exactly the same, although a bit less passive agressive in the tone :) In Denmark (where I'm from), there is a system where education is free. There are private schools, but to my knowledge no private universities. Your entry ticket to a university is your grade from high-school. You actually get some money while studying. You can still chose to do a studen loan on top of that, but typically people come out of university with maximum $20k in debt most way less. I have many friends that are absolutely brilliant and successful, who would probably not have been able to afford a university degree. One thing is what that does to the crazy debt many people get in other countries, but think about what it does for low-income areas, immigrant and integration and general inequality of a population. By all means, Denmark is not perfect. But I think we nailed it with access to education. And yes. Our tax pressure is pretty high. But surprisingly not that much higher than for example California and NY. Martin
mac01021 8y ago
Except it's not. "Public education and taxes" (1) means everyone pays into the system and then people can enroll without any additional payment (or maybe with diminished additional payment). You could also have publicly insured student loans (2), where the student pays tuition with a loan and then if they later default on the loan then the public eats the cost. But this system (3) is neither. In this system, you get your degree and then you start paying for it when your income is enough to afford it. Importantly, if you never attain that level of income, the _University_ eats the cost. System 2 can lead to ever-ballooning college costs concurrent with gluts of worthless degrees, because universities are incentivized to enroll as many students as they can at as high a tuition rate as they can - they always get paid. In system 3, the university only gets paid if the student's degree turns out to be marketable. It (hopefully) keeps costs down in a way the (1 & 2) cannot. On the other hand, this could be terrible news for departments that issue degrees in literature, anthropology, etc.

safgasCVS 8y ago

So basically you just described income tax

mac01021 8y ago
Except the school only gets the money of people who attend the school. And the school is not incentivized to sell worthless degrees because it won't get paid when it does.
- safgasCVS 8y ago
  Hmm well given how essentially all salaried jobs require a degree today it’s hard to see education as being an optional purchase for most people. Maybe 30 years ago but not today. Hard to say what’s worthless or not - jobs change all the time. Few if anyone would study something like Latin or philosophy if money were an incentive. Also the idea of human knowledge being locked away for only those who can afford it seems cruel to me

rchaud 8y ago

I'm of the class of 2009, graduating at a time when even entry-level office jobs seemed out of reach. I was an Econ major at a top US liberal arts school, with two summer analyst (finance) positions under my belt. But even with all that, the only full time job I was able to get was a book-keeping position that paid $12.50/hr. If you don't have job-ready skills (e.g., Quickbooks expertise at a small business), your prospects are limited to big corporations that hire on the basis of a regular recruiting schedule, provide training, onboarding etc. And those firms ghosted completely that year. I'm not from a rich family, so I would have much preferred to have done school in a short-term program like this that was incentivized to help me hit the ground running when it came to job-ready skills. That said, what is to stop Lambda-like firms to crop up everywhere, like bootcamps did, and promise 6-figure salaries that will never materialize? The VC money required to finance such schools is certainly out there, but are the jobs?

popcorn49 8y ago

App Academy was the first company to do this, many years ago. https://twitter.com/appacademyio/status/1082723232782868481 https://twitter.com/appacademyio/status/1082723232782868481