21 ms·

Lambda School agrees to end deceptive educational financing practices

448 points by markplindsay 5y ago

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ChicagoDave 5y ago
Lambda also actively argues that traditional four-year colleges are outdated and unnecessary. 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. 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.
mathattack 5y ago
How much will this cost them? Are they on the hook for losses to investors who bought the revenue streams attached to the ISAs?
yawnxyz 5y ago
"contains a provision that falsely asserts that the Contract is a “qualified educational loan” ..." Did University of Phoenix qualify for "educational loans"? I'm constantly surprised why this sector gets a pass like this from bankruptcy.
- renewiltord 5y ago
  The reason is that the applicants would not be loaned anything if they could discharge debt in bankruptcy. i.e. student loans would not exist unless collateralized and we don't want people to have to put up collateral equal to the value of the loan. This is because if I were a student, the optimal route would be to take the largest loan possible while on no assets, then go to the most expensive university, then declare bankruptcy on graduation. The lender knows this, so they won't give me any loan unless I can put up collateral equal to the value of the loan. The government knows this, and they also want kids to go to college, so they provide a mechanism by which kids can promise to pay back the money.
  - yawnxyz 5y ago
    So this just creates an incentive to push as many kids through school as possible and to take out the biggest loans, right? Shouldn't there be a metric built in that says something like "the quality of education didn't meet the expectations of the loan, so the loan can be discharged"? Where's the warranty for the lender?
    - gruez 5y ago
      >Shouldn't there be a metric built in that says something like "the quality of education didn't meet the expectations of the loan, so the loan can be discharged"? How do you prove whether the failings are because of the student or the school? The fact that there are three parties involved (the student, the school, the lender) also complicates things. Finally, lenders would bake this risk into the loan itself, which means higher interest rates for people going to non-famous institutions.
    - dragonwriter 5y ago
      > Shouldn't there be a metric built in that says something like "the quality of education didn't meet the expectations of the loan, so the loan can be discharged"? There are, in fact, several policies in this area, the most significant is Borrower Defense to Repayment: https://studentaid.gov/borrower-defense/ https://studentaid.gov/borrower-defense/
  - nrmitchi 5y ago
    For what it's worth (I learned this recently and was equally surprised by it) student loans were not non-dischargable until 2005. Ie, for all time before 2005, a student could do what you describe, and as far as I know it wasn't a widespread practice. It is a relatively new thing that really only came in to existance coincidentally around the same time that education became so expensive that going through the effort of bankrupcy became "worth it".
    - tedivm 5y ago
      Bankruptcies have to get approved by a judge, and often debt is restructured instead of being discharged. The scenario where someone takes on a bunch of debt then declares bankruptcy on graduation is a joke because judges wouldn't allow it. They may get their loan deferred or restructured to help buy time to get a job, but they wouldn't just discharge it like that. These kind of made up "what if" scenarios to justify broken laws are always weird to me especially when there aren't so far from reality.
threatofrain 5y ago
Recent discussion on Lambda School. https://news.ycombinator.com/item?id=26802601 https://news.ycombinator.com/item?id=26802601 https://news.ycombinator.com/item?id=25415017 https://news.ycombinator.com/item?id=25415017 Interview with Austen Allred, CEO of Lambda School. https://soundcloud.com/vwoo/interview-with-austen-allred https://soundcloud.com/vwoo/interview-with-austen-allred
beckingz 5y ago
'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. '
srndsnd 5y ago
I'm confused as to why this headline has to be so close to clickbait. I'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). It is definitely important to note that that these loans can be discharged in bankruptcy. But as far as I know, isn't this less stringent than typical student loans, which can't be discharged in bankruptcy? Is the point here that there was a population of Lambda students who weren'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. On the whole this doesn't scream "deceptive educational financing practices" 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. Edit: after reading how dischargeability impacts people's ability to take out the loan in the first place, yeah, this matters quite a bit, and I was wrong because I didn't understand how education financing works. I'll own that. Seems Lambda was being less than equitable in how they approached the matter, and hoping no one would notice.
- deleted 5y ago
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- threatofrain 5y ago
  https://dfpi.ca.gov/wp-content/uploads/sites/337/2021/04/CFPL-Lambda-School-consent-order.pdf https://dfpi.ca.gov/wp-content/uploads/sites/337/2021/04/CFP...
- luckylion 5y ago
  > But as far as I know, isn't this less stringent than typical student loans, which can't be discharged in bankruptcy? That's the point, I believe. Lambda School was pretending their loans were protected from bankruptcy proceedings so students wouldn't consider it. It's somewhat common for corporations to pretend that laws don't exist. Even if only half of the customers believe them and don't sue, they'll save money.
- elliekelly 5y ago
  “Deceptive practices” is a commonly used legal term in consumer protection. It’s often used in conjunction with “unfair business practices” or “unfair and deceptive practices” depending on the state and what has been alleged.
luckylion 5y ago
Why is it a settlement, were the regulators not sure that they violated the law and sought compromise? It sounds like "Lambda School agrees to comply with the law" which implies that doing so is optional.
- LMYahooTFY 5y ago
  More or less, yes, the regulators have a heavily bureaucratic process that's far more legally rigorous for dealing with large corporate entities and their legal teams than something like a municipal health inspector.
- lupire 5y ago
  The goal of regulation is compliance. Especially for new laws where the meaning may be unclear. Since the permanent harm is minimal (anyone who didn't know their loan was dischargeable, now knows and can discharge it), the informational update solves the problem. Obviously if the defendant did not agree to comply with the law, there would be no settlement and the case would be pursued further.
tunesmith 5y ago
Reading this, I'm actually not sure if Lambda implied the tuition wasn't 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?
- pseudalopex 5y ago
  They implied it couldn't be discharged. It can apparently.
  - hunterloftis 5y ago
    They did more than imply that it was protected from bankruptcy; they made the claim directly in their contract with students: > ...a qualified educational loan…subject to the limitations on dischargeability contained in…the United States Bankruptcy Code.
    - pseudalopex 5y ago
      You're right. I said implied because of "subject to the limitations". But they claimed directly it was a qualified educational loan.
nrmitchi 5y ago
This headline feels overly clickbait: > The settlement is the result of a DFPI investigation that found that Lambda was engaged in conduct that violated the new law. So a new law was created, that Lambda was in violation of, and agreed to update their materials to comply with the new law? This is kind of implying that Lambda was previously breaking the law, which doesn't really seem to be the case? As well, Lambda stating that ISA's are not dischargable in bankrupcy when they actually are is probably the least shady "deceptive" marketing practice I've heard of from bootcamps and code-schools.
- gadf 5y ago
  Lambda School Agrees To Stop Beating Its Wife CA Gov Site Denies Making Deceptive Headline Journalists Covering CA Gov's Headline Deception Deny Using Clickbait HN Commentariat Denies Having Insubstantial Discussion About Title Clickbait
- pseudalopex 5y ago
  The headline implies the practices were deceptive before they were illegal. It doesn't imply they were breaking the law previously.
  - nrmitchi 5y ago
    I didn't realize the HN headline was different than the linked article, which is "Lambda School Reaches Settlement with DFPI, Agreeing to End Deceptive Educational Financing Practices". "Reaching a settlement" with an enforcement agency implies, at least to me, that you were acused of breaking a law.
    - pseudalopex 5y ago
      Lambda School engaged in deceptive but apparently legal practices. A new law made them illegal. Lambda School continued to engage in the now illegal practices. The state began enforcement proceedings. The parties settled.
      - 5y ago
cm2012 5y ago
Lambda school is a much better model for students than normal colleges.
- lupire 5y ago
  Maybe, but stating that with no supporting information is worthless. "Lambda school is a much worse model for students than normal colleges." Maybe? Maybe not?
austenallred 5y ago
Hey everyone, 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 (https://lambdaschool.com/tuition/tuition-options https://lambdaschool.com/tuition/tuition-options) 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!
- akanet 5y ago
  Austen call me we can work through this gaffe
- maximilianroos 5y ago
  I'm inclined to be on your side — the sum total of Lambda's impact on the world is likely highly positive, whatever happens in the details. But that makes this response confusing — I was hoping to see a refutation of the regulator's claims or, failing that, a thoughtful discussion on what went wrong. Is the regulator accurate? If so, were the statements significant? If so, what happened?
  - vmception 5y ago
    The response isn't confusing when the first duty of the settlement is to notify existing students and everyone else that the bankruptcy dischargeability provision language is not accurate, and thats what they said in the response gigglesnort
- pradn 5y ago
  Your bizarre cheeriness in the face of "Agreeing to End Deceptive Educational Financing Practices" is offputting, especially when coupled with the way college financing has led to generational deadweight, anxiety, and hopelessness.
  - wakeywakeywakey 5y ago
sicromoft 5y ago
See also Lambda School’s Misleading Promises: https://nymag.com/intelligencer/2020/02/lambda-schools-job-placement-rate-is-lower-than-claimed.html https://nymag.com/intelligencer/2020/02/lambda-schools-job-p...
- aerosmile 5y ago
  I would be a lot more inclined to believe anything they said in this article if they didn't show such blatant bias for sensationalist reporting. > His previous work was mostly concerned with “growth hacking,” which is Silicon Valley jargon for finding underappreciated (or, less charitably, underhanded) ways of marketing something. So anyone who put the term "growth hacking" on their resume will now get publicly discredited as being underhanded? If they tried just a little harder to stick to the facts, all of the other research they have done in their reporting would carry a bit more weight.
  - akanet 5y ago
    Listen, I wrote underappreciated first and then had the parenthetical second for a reason. You read the entire piece and this is the bit you reacted to? Jesus Christ. The entire piece is completely factual. Name even one bit of the piece not based entirely in fact, I dare you.
  - kelnos 5y ago
    To me "growth hacking" has for a long time been associated with sketchy, underhanded practices and dark patterns.
  - plorkyeran 5y ago
    > So anyone who put the term "growth hacking" on their resume will now get publicly discredited as being underhanded? Yes? "Growth hacking" has always been basically a euphemism for saying that you're willing to do unethical things for growth.
    - dang 5y ago
      The term has always made me wince but that is not a fair description.
tims33 5y ago
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.
rahimnathwani 5y ago
From what I read, it seems that: 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. 2. The California Consumer Financial Protection Law (CCFPL) is a recent law that gives the DFPI new powers and responsibilities. 3. The introduction of CCFPL did not change the accuracy or inaccuracy of the 'bankruptcy dischargeability provision language'. The CCFPL just made it the DFPI's job to stop any inaccuracies. Is that correct?
jpindar 5y ago
Is Lambda the only school that's using this loan model?
DoreenMichele 5y ago
The language violates the new California Consumer Financial Protection Law (CCFPL), which took effect this year 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't exist when they wrote the language that's being updated.
- kelnos 5y ago
  True, but I think it's important to acknowledge that those practices, regardless of their prior legality, were predatory. If it was an honest mistake about something that wasn't a big deal, I don't think many people would be up in arms about it. But these particular circumstances lead me to believe Lambda is a pretty scummy organization. They're only agreeing to change their language because they were previously lying, and now there could be regulatory and financial consequences for them if they don't change it.
- tomnipotent 5y ago
  > probably didn't exist Except the language in the contract had always been deceptive, regardless of whether they were legally compelled to remove it. Lambda made a conscious decision to mislead customers for their own financial benefit, knowing full well that they were not covered by Section 523(a)(8). They don't deserve credit for removing the language.
- threatofrain 5y ago
  It's true, before it was legal to be dishonest about whether loans could be discharged under federal law.
- pseudalopex 5y ago
  See [1] for further discussion of this. [1] https://news.ycombinator.com/item?id=26947875 https://news.ycombinator.com/item?id=26947875
  - deleted 5y ago
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DangitBobby 5y ago
Isn't lying to trick people for financial gain to their detriment fraud? > 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. Seems to me like lying on this contract should constitute fraud.
- pbreit 5y ago
  Not clear to me that they were lying. Also not clear they had anything to gain.
  - DangitBobby 5y ago
    My reading of it is that their contract claimed student debt with the school could not be discharged with bankruptcy similar to federal student loans. This is not true, and it's doubtful that the people writing the contract didn't know that it wasn't true. If they were being intentionally deceitful, which I believe is the claim here, it would be to prevent loss of loan-repayment in the case that a student finds the debt to be too burdensome and wishes to instead file for bankruptcy. Why else would they include it in the contract if it weren't to their benefit to discourage the student from discharging their debt? All that's left is to prove the intent to decieve.
    - imgabe 5y ago
      But Lambda already forgoes loan repayment if the student doesn't get a job making at least $50k. So why would they go about trying to collect loans from people declaring bankruptcy when they already give up on loans in other circumstances where they would be much easier to pursue? It seems like Lambda was just genuinely confused about what the regulations were regarding their loans and whether they could be discharged in bankruptcy. The regulator clarified that they could, and they updated their agreement to reflect that.
      - 5y ago
lsiebert 5y ago
Wanted to clarify two things, since I saw some confusion. The law changed to make a deceptive statement about what can and can't be discharged in bankruptcy illegal, but it was always false to say that it couldn't be discharged in bankruptcy, even before the law changed. This isn't a new California department, it'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't well regulated under California law. They also weren't well regulated federally, but that's a whole other issue. More info on the law here. https://dfpi.ca.gov/california-consumer-financial-protection-law/ https://dfpi.ca.gov/california-consumer-financial-protection...
- jononomo 5y ago
  But they didn't say that the loan couldn't be discharged in bankruptcy -- they said it was a fully qualified educational loan subject to the limitations on being discharged that are contained in the law. It seems like you are relying on people making connections that are not spelled out in the contract.
- throwhalflife 5y ago
  Thank you, if possible, would like some more clarification, since I'm still a bit confused (if not more confused) after reading this. Are you suggesting this isn't an introduction of new regulations per se, since it was always a deceptive statement? Or was the law actually changed by this California department specifically because of what Lambda was doing? I get that the finance agreement was "innovative", but either it's dischargeable under bankruptcy -- or it's not -- and if it IS dischargeable, language implying that it is not dischargeable is deceptive. My understanding is that they have no power over bankruptcy proceedings, so whether they would LIKE it to be dischargeable or not bears no interest here. This isn't some heavy-handed regulator stepping in and stopping innovation -- as a private for-profit business, you simply can't twist existing federal law around student loans to your benefit here, and that's always been the case all along. Deception aside, which I believe the word for is "fraud"; there's been a history of predatory financing around education. I was happy when it was DeVry University getting the book, and I'm also happy when it was some "cool" startup company as well.
musicale 5y ago
> California Consumer Financial Protection Law (CCFPL), which took effect this year and prohibits companies from engaging in practices that are unlawful, ... Sounds like a good idea.
40four 5y ago
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. 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. 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. 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 & help you navigate the application process.” 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. 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.
- ballenf 5y ago
  Similar experience here. The problem I witnessed during my year or so involvement was a race to the bottom in terms of selectiveness of admitting students. The deception was that the screening test was marketed as informing prospective students whether they had the prerequisite skills to succeed in the school. I saw so many students struggling for easy to predict reasons: some didn't even have the basic computer equipment to participate. A few more seemed to struggle with just basic concepts. None of those people were inherently incapable, but they were mislead to believe that they were ready for the program. The bootcamp I went to was pretty good when I started, but even a year later I was starting to get uneasy about my association with it. I've now completely removed it from LinkedIn and resume. I will mention it if it comes up, but I actively discourage prospective students now and don't want to do anything to lend them legitimacy. It's not worth mentioning its name here because my points apply to almost every bootcamp out there, based on discussions at meetups with prospective bootcamp students.
lanecwagner 5y ago
Welp, it seems like this was a good year to create a CS education platform. I've always been disatisfied with boot camps, I feel that for most people online learning is a better route. You can see what I'm building on https://qvault.io https://qvault.io

448 points by markplindsay 5y ago

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ChicagoDave 5y ago

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

mathattack 5y ago

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

yawnxyz 5y ago

"contains a provision that falsely asserts that the Contract is a “qualified educational loan” ..." Did University of Phoenix qualify for "educational loans"? I'm constantly surprised why this sector gets a pass like this from bankruptcy.

renewiltord 5y ago
The reason is that the applicants would not be loaned anything if they could discharge debt in bankruptcy. i.e. student loans would not exist unless collateralized and we don't want people to have to put up collateral equal to the value of the loan. This is because if I were a student, the optimal route would be to take the largest loan possible while on no assets, then go to the most expensive university, then declare bankruptcy on graduation. The lender knows this, so they won't give me any loan unless I can put up collateral equal to the value of the loan. The government knows this, and they also want kids to go to college, so they provide a mechanism by which kids can promise to pay back the money.
- yawnxyz 5y ago
  So this just creates an incentive to push as many kids through school as possible and to take out the biggest loans, right? Shouldn't there be a metric built in that says something like "the quality of education didn't meet the expectations of the loan, so the loan can be discharged"? Where's the warranty for the lender?
  - gruez 5y ago
    >Shouldn't there be a metric built in that says something like "the quality of education didn't meet the expectations of the loan, so the loan can be discharged"? How do you prove whether the failings are because of the student or the school? The fact that there are three parties involved (the student, the school, the lender) also complicates things. Finally, lenders would bake this risk into the loan itself, which means higher interest rates for people going to non-famous institutions.
  - dragonwriter 5y ago
    > Shouldn't there be a metric built in that says something like "the quality of education didn't meet the expectations of the loan, so the loan can be discharged"? There are, in fact, several policies in this area, the most significant is Borrower Defense to Repayment: https://studentaid.gov/borrower-defense/ https://studentaid.gov/borrower-defense/
- nrmitchi 5y ago
  For what it's worth (I learned this recently and was equally surprised by it) student loans were not non-dischargable until 2005. Ie, for all time before 2005, a student could do what you describe, and as far as I know it wasn't a widespread practice. It is a relatively new thing that really only came in to existance coincidentally around the same time that education became so expensive that going through the effort of bankrupcy became "worth it".
  - tedivm 5y ago
    Bankruptcies have to get approved by a judge, and often debt is restructured instead of being discharged. The scenario where someone takes on a bunch of debt then declares bankruptcy on graduation is a joke because judges wouldn't allow it. They may get their loan deferred or restructured to help buy time to get a job, but they wouldn't just discharge it like that. These kind of made up "what if" scenarios to justify broken laws are always weird to me especially when there aren't so far from reality.

threatofrain 5y ago

Recent discussion on Lambda School. https://news.ycombinator.com/item?id=26802601 https://news.ycombinator.com/item?id=26802601 https://news.ycombinator.com/item?id=25415017 https://news.ycombinator.com/item?id=25415017 Interview with Austen Allred, CEO of Lambda School. https://soundcloud.com/vwoo/interview-with-austen-allred https://soundcloud.com/vwoo/interview-with-austen-allred

beckingz 5y ago

'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. '

srndsnd 5y ago

I'm confused as to why this headline has to be so close to clickbait. I'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). It is definitely important to note that that these loans can be discharged in bankruptcy. But as far as I know, isn't this less stringent than typical student loans, which can't be discharged in bankruptcy? Is the point here that there was a population of Lambda students who weren'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. On the whole this doesn't scream "deceptive educational financing practices" 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. Edit: after reading how dischargeability impacts people's ability to take out the loan in the first place, yeah, this matters quite a bit, and I was wrong because I didn't understand how education financing works. I'll own that. Seems Lambda was being less than equitable in how they approached the matter, and hoping no one would notice.

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threatofrain 5y ago
https://dfpi.ca.gov/wp-content/uploads/sites/337/2021/04/CFPL-Lambda-School-consent-order.pdf https://dfpi.ca.gov/wp-content/uploads/sites/337/2021/04/CFP...
luckylion 5y ago
> But as far as I know, isn't this less stringent than typical student loans, which can't be discharged in bankruptcy? That's the point, I believe. Lambda School was pretending their loans were protected from bankruptcy proceedings so students wouldn't consider it. It's somewhat common for corporations to pretend that laws don't exist. Even if only half of the customers believe them and don't sue, they'll save money.
elliekelly 5y ago
“Deceptive practices” is a commonly used legal term in consumer protection. It’s often used in conjunction with “unfair business practices” or “unfair and deceptive practices” depending on the state and what has been alleged.

luckylion 5y ago

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

LMYahooTFY 5y ago
More or less, yes, the regulators have a heavily bureaucratic process that's far more legally rigorous for dealing with large corporate entities and their legal teams than something like a municipal health inspector.
lupire 5y ago
The goal of regulation is compliance. Especially for new laws where the meaning may be unclear. Since the permanent harm is minimal (anyone who didn't know their loan was dischargeable, now knows and can discharge it), the informational update solves the problem. Obviously if the defendant did not agree to comply with the law, there would be no settlement and the case would be pursued further.

tunesmith 5y ago

Reading this, I'm actually not sure if Lambda implied the tuition wasn't 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?

pseudalopex 5y ago
They implied it couldn't be discharged. It can apparently.
- hunterloftis 5y ago
  They did more than imply that it was protected from bankruptcy; they made the claim directly in their contract with students: > ...a qualified educational loan…subject to the limitations on dischargeability contained in…the United States Bankruptcy Code.
  - pseudalopex 5y ago
    You're right. I said implied because of "subject to the limitations". But they claimed directly it was a qualified educational loan.

nrmitchi 5y ago

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

gadf 5y ago
Lambda School Agrees To Stop Beating Its Wife CA Gov Site Denies Making Deceptive Headline Journalists Covering CA Gov's Headline Deception Deny Using Clickbait HN Commentariat Denies Having Insubstantial Discussion About Title Clickbait
pseudalopex 5y ago
The headline implies the practices were deceptive before they were illegal. It doesn't imply they were breaking the law previously.
- nrmitchi 5y ago
  I didn't realize the HN headline was different than the linked article, which is "Lambda School Reaches Settlement with DFPI, Agreeing to End Deceptive Educational Financing Practices". "Reaching a settlement" with an enforcement agency implies, at least to me, that you were acused of breaking a law.
  - pseudalopex 5y ago
    Lambda School engaged in deceptive but apparently legal practices. A new law made them illegal. Lambda School continued to engage in the now illegal practices. The state began enforcement proceedings. The parties settled.
    - 5y ago

cm2012 5y ago

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

lupire 5y ago
Maybe, but stating that with no supporting information is worthless. "Lambda school is a much worse model for students than normal colleges." Maybe? Maybe not?

austenallred 5y ago

Hey everyone, 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 (https://lambdaschool.com/tuition/tuition-options https://lambdaschool.com/tuition/tuition-options) 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!

akanet 5y ago
Austen call me we can work through this gaffe
maximilianroos 5y ago
I'm inclined to be on your side — the sum total of Lambda's impact on the world is likely highly positive, whatever happens in the details. But that makes this response confusing — I was hoping to see a refutation of the regulator's claims or, failing that, a thoughtful discussion on what went wrong. Is the regulator accurate? If so, were the statements significant? If so, what happened?
- vmception 5y ago
  The response isn't confusing when the first duty of the settlement is to notify existing students and everyone else that the bankruptcy dischargeability provision language is not accurate, and thats what they said in the response gigglesnort
pradn 5y ago
Your bizarre cheeriness in the face of "Agreeing to End Deceptive Educational Financing Practices" is offputting, especially when coupled with the way college financing has led to generational deadweight, anxiety, and hopelessness.
- wakeywakeywakey 5y ago

sicromoft 5y ago

See also Lambda School’s Misleading Promises: https://nymag.com/intelligencer/2020/02/lambda-schools-job-placement-rate-is-lower-than-claimed.html https://nymag.com/intelligencer/2020/02/lambda-schools-job-p...

aerosmile 5y ago
I would be a lot more inclined to believe anything they said in this article if they didn't show such blatant bias for sensationalist reporting. > His previous work was mostly concerned with “growth hacking,” which is Silicon Valley jargon for finding underappreciated (or, less charitably, underhanded) ways of marketing something. So anyone who put the term "growth hacking" on their resume will now get publicly discredited as being underhanded? If they tried just a little harder to stick to the facts, all of the other research they have done in their reporting would carry a bit more weight.
- akanet 5y ago
  Listen, I wrote underappreciated first and then had the parenthetical second for a reason. You read the entire piece and this is the bit you reacted to? Jesus Christ. The entire piece is completely factual. Name even one bit of the piece not based entirely in fact, I dare you.
- kelnos 5y ago
  To me "growth hacking" has for a long time been associated with sketchy, underhanded practices and dark patterns.
- plorkyeran 5y ago
  > So anyone who put the term "growth hacking" on their resume will now get publicly discredited as being underhanded? Yes? "Growth hacking" has always been basically a euphemism for saying that you're willing to do unethical things for growth.
  - dang 5y ago
    The term has always made me wince but that is not a fair description.

tims33 5y ago

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.

rahimnathwani 5y ago

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

jpindar 5y ago

Is Lambda the only school that's using this loan model?

DoreenMichele 5y ago

The language violates the new California Consumer Financial Protection Law (CCFPL), which took effect this year 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't exist when they wrote the language that's being updated.

kelnos 5y ago
True, but I think it's important to acknowledge that those practices, regardless of their prior legality, were predatory. If it was an honest mistake about something that wasn't a big deal, I don't think many people would be up in arms about it. But these particular circumstances lead me to believe Lambda is a pretty scummy organization. They're only agreeing to change their language because they were previously lying, and now there could be regulatory and financial consequences for them if they don't change it.
tomnipotent 5y ago
> probably didn't exist Except the language in the contract had always been deceptive, regardless of whether they were legally compelled to remove it. Lambda made a conscious decision to mislead customers for their own financial benefit, knowing full well that they were not covered by Section 523(a)(8). They don't deserve credit for removing the language.
threatofrain 5y ago
It's true, before it was legal to be dishonest about whether loans could be discharged under federal law.
pseudalopex 5y ago
See [1] for further discussion of this. [1] https://news.ycombinator.com/item?id=26947875 https://news.ycombinator.com/item?id=26947875
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DangitBobby 5y ago

Isn't lying to trick people for financial gain to their detriment fraud? > 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. Seems to me like lying on this contract should constitute fraud.

pbreit 5y ago
Not clear to me that they were lying. Also not clear they had anything to gain.
- DangitBobby 5y ago
  My reading of it is that their contract claimed student debt with the school could not be discharged with bankruptcy similar to federal student loans. This is not true, and it's doubtful that the people writing the contract didn't know that it wasn't true. If they were being intentionally deceitful, which I believe is the claim here, it would be to prevent loss of loan-repayment in the case that a student finds the debt to be too burdensome and wishes to instead file for bankruptcy. Why else would they include it in the contract if it weren't to their benefit to discourage the student from discharging their debt? All that's left is to prove the intent to decieve.
  - imgabe 5y ago
    But Lambda already forgoes loan repayment if the student doesn't get a job making at least $50k. So why would they go about trying to collect loans from people declaring bankruptcy when they already give up on loans in other circumstances where they would be much easier to pursue? It seems like Lambda was just genuinely confused about what the regulations were regarding their loans and whether they could be discharged in bankruptcy. The regulator clarified that they could, and they updated their agreement to reflect that.
    - 5y ago

lsiebert 5y ago

Wanted to clarify two things, since I saw some confusion. The law changed to make a deceptive statement about what can and can't be discharged in bankruptcy illegal, but it was always false to say that it couldn't be discharged in bankruptcy, even before the law changed. This isn't a new California department, it'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't well regulated under California law. They also weren't well regulated federally, but that's a whole other issue. More info on the law here. https://dfpi.ca.gov/california-consumer-financial-protection-law/ https://dfpi.ca.gov/california-consumer-financial-protection...

jononomo 5y ago
But they didn't say that the loan couldn't be discharged in bankruptcy -- they said it was a fully qualified educational loan subject to the limitations on being discharged that are contained in the law. It seems like you are relying on people making connections that are not spelled out in the contract.
throwhalflife 5y ago
Thank you, if possible, would like some more clarification, since I'm still a bit confused (if not more confused) after reading this. Are you suggesting this isn't an introduction of new regulations per se, since it was always a deceptive statement? Or was the law actually changed by this California department specifically because of what Lambda was doing? I get that the finance agreement was "innovative", but either it's dischargeable under bankruptcy -- or it's not -- and if it IS dischargeable, language implying that it is not dischargeable is deceptive. My understanding is that they have no power over bankruptcy proceedings, so whether they would LIKE it to be dischargeable or not bears no interest here. This isn't some heavy-handed regulator stepping in and stopping innovation -- as a private for-profit business, you simply can't twist existing federal law around student loans to your benefit here, and that's always been the case all along. Deception aside, which I believe the word for is "fraud"; there's been a history of predatory financing around education. I was happy when it was DeVry University getting the book, and I'm also happy when it was some "cool" startup company as well.

musicale 5y ago

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

40four 5y ago

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. 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. 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. 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 & help you navigate the application process.” 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. 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.

ballenf 5y ago
Similar experience here. The problem I witnessed during my year or so involvement was a race to the bottom in terms of selectiveness of admitting students. The deception was that the screening test was marketed as informing prospective students whether they had the prerequisite skills to succeed in the school. I saw so many students struggling for easy to predict reasons: some didn't even have the basic computer equipment to participate. A few more seemed to struggle with just basic concepts. None of those people were inherently incapable, but they were mislead to believe that they were ready for the program. The bootcamp I went to was pretty good when I started, but even a year later I was starting to get uneasy about my association with it. I've now completely removed it from LinkedIn and resume. I will mention it if it comes up, but I actively discourage prospective students now and don't want to do anything to lend them legitimacy. It's not worth mentioning its name here because my points apply to almost every bootcamp out there, based on discussions at meetups with prospective bootcamp students.

lanecwagner 5y ago

Welp, it seems like this was a good year to create a CS education platform. I've always been disatisfied with boot camps, I feel that for most people online learning is a better route. You can see what I'm building on https://qvault.io https://qvault.io