2 ms·

I guess I'm confused why he calls ISAs a scam. They're remarkably straightforward and making 100k - 25% or whatever seems a hell of a lot better than making 30k

• Bartweiss 7y ago
  His phrasing is pretty strong, but I guess there's a difference between "ISAs are scams" and "shady bootcamps can use ISAs as scams". In particular, harsh ISAs are almost completely dominated by student loans, charging like a loan if you have a bad job and much worse if you have a good one. Say a bootcamp with $15k tuition offers an ISA at 20% of income above $10k for 4 years, capped at $85k income. That's unusually bad, but not a blatant scam. If the bootcamp gets you a good job at or above cap, you pay $60k over 4 years. Much higher than tuition, but on some level who cares - you're still way ahead overall. If the bootcamp doesn't help you at all, and you keep a prior $35k wage job, you'll wind up paying $20k total at $415/month. A 7%, four year student loan for the full tuition would only have cost ~$350/month. So you only really "win" if you're unemployed or down near minimum wage. (Or drop out, perhaps? I don't know what happens to ISAs in that case.) I think most ISAs are better than that, especially wrt salary floor. But paying a double-digits percentage of income even if the program hasn't helped you get a better job isn't necessarily much 'safer' than taking a loan directly. It could still be better with poor credit or high prior debt, but ISAs aren't generally promoted on that basis.