The WIRED article that Verge references points out a few ways where securitized debt could provide perverse incentives, particularly in terms of cost/quality of

The WIRED article that Verge references points out a few ways where securitized debt could provide perverse incentives, particularly in terms of cost/quality of the teaching: https://www.wired.com/story/how-we-learn-lambda-income-sharing-agreements/ https://www.wired.com/story/how-we-learn-lambda-income-shari... > Still, that points to a more complicated “incentive alignment” than is often described. Deference to outside investors might encourage a school to issue lots of ISAs and keep instructional costs low, for example, betting high margins on a few successful students will subsidize the other agreements, says Julie Margetta Morgan, a fellow at the Roosevelt Institute who studies student debt. That’s especially true if it proves difficult to link students with jobs. But Allred insists the incentive structure that aligns the interests of individual students with the school’s isn’t broken. “We still hold the bulk of the risk,” he says. Allred doesn’t tell staff which student’s contracts have been financed. That said, I don’t know enough to think that CDOs in themselves are bad, or in any way unusual or suspect. But Lambda and Edly refusing to comment and taking down pages about the CDOs and investments, as DHH tweets about them, makes me very confused and suspicious.