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If anyone's interested, I'm a bootcamp grad with a current ISA. The ISA I currently have: *pros*: - zero interest - whatever hasn't been paid after 5 yea

• culi 5y ago
  To be clear, this essentially means if I go through this program and end up working at McDonalds for 5 years, all I have to pay is through the labor of bureaucracy
  • dwattttt 5y ago
    Only if the program doesn't teach you the meaning of the term "opportunity cost"
    • wutbrodo 5y ago
      The unqualified word "pay" is universally understood among English speaker not to include opportunity cost. When someone asks "how much did you pay for that big Mac", people answer "$3", not "$3 plus twenty minutes to walk there and five minutes in the store"
  • imtringued 5y ago
    What if you go to a bootcamp, get saddled with an ISA and then work at mcdonalds and somehow get a better job that has nothing to do with the bootcamp? The bootcamp gets your money. Quantity over quality.
    • Dylan16807 5y ago
      > get a better job that has nothing to do with the bootcamp I'll take it.
    • s1artibartfast 5y ago
      Contrast that with a private loan for tuition. You pay if you have no job, or any job. Debt has no expiration and is not disc arable in bankruptcy. It is clear that ISAs are worse if you will be successful. It is also clear that traditional loans are worse if you are wildly unsuccessful. The tradeoff is the tricky part.
      • munk-a 5y ago
        Debt does generally have an expiration and is discardable in bankruptcy... unless you live in America. ISAs might be an attractive alternative to how terrible American laws about student debt are, but the real solution is to fix the awful laws. A better alternative that you can pursue today is just to seek education abroad, Canadian universities are a fraction of the cost for an equivalent service - or be careful about the education you choose, most state colleges are very reasonable for in-state tuition and you can potentially save on room and board. Ivy-league schools are overpriced and a waste of money.
        • s1artibartfast 5y ago
          If we are talking about higher education in general, the US also has a plethora of affordable colleges. In California, tuition at community colleges is $1,300/year and $5,700/yr for state colleges. Even the expensive Universities of California are 14k/year. The real costs are room, board, and entertainment. For example, a shared dormitory room and food plan is easily 20k/year
  • sandofsky 5y ago
    They removed the "you must get a job in software" clause of their ISAs. A general manager at McDonalds in California makes $58k a year. So if you think you will work your way to manager within five years, you can expect to pay them a cut of your salary.
• actually_a_dog 5y ago
  You can call it "zero interest" if you want, but, if you're paying back 150% of principal over 5 years, that's a 19% APY. https://www.calculator.net/loan-calculator.html?cloanamount=10000&cloanterm=5&cloantermmonth=0&cinterestrate=19&ccompound=annually&cpayback=month&x=51&y=26#amortized-result https://www.calculator.net/loan-calculator.html?cloanamount=...
  • culi 5y ago
    To clarify, you can either pay the principal amount (e.g. 20k) or use the ISA which maxes out at 150% of the principle amount. By "zero interest" I just mean it's a fixed amount that won't ever change. This might seem like a frivolous distinction, but it means that you'll never have to worry about getting trapped paying just the interest so I think it makes a big difference
  • deleted 5y ago
    [deleted]
  • ummonk 5y ago
    It’s not helpful to calculate APY that way. After all, if they had made the maximum repayment period 50 years instead of 5 years that would result in a lower APY according to your calculation. In reality the APY will be heavily dependent and on your income (as a high income will result in repayment period less than 5 years, while a low income will result in only partial repayment by the end of the 5 years).
• nemothekid 5y ago
  I don't understand, how do you end paying 150% of the principal loan if it's zero interest?
  • shagie 5y ago
    You can either spend $20k up front for the bootcamp, or pay $30k as part of an ISA over 5 years.
    • willcipriano 5y ago
      That just sounds like interest with extra steps.
      • getcrunk 5y ago
        actually its interest with the least amount of steps. Amount due isn't variable and no compounding.
      • imtringued 5y ago
        Non compounding interest? I think there is a better word for this.
        • btdmaster 5y ago
          https://en.wikipedia.org/wiki/Interest#Simple_interest https://en.wikipedia.org/wiki/Interest#Simple_interest
          • rootusrootus 5y ago
            Still has a time component, though. A flat 50% that is due whether you pay it off in 1 month or 60 months is a fee, not interest.
        • ummonk 5y ago
          The term is “fee”. It’s a 50% lending fee.
• PragmaticPulp 5y ago
  > - tuition was definitely overpriced IMO, this is the essence of why ISAs have become so scammy. ISA-based bootcamps are doing a fantastic job of competing against the perceived cost of a college education. We've all seen news headlines about how private college tuition is reaching $200K. What most people miss is that almost nobody pays full price for college. They have a high headline number for the wealthiest families, but virtually everyone else pays a fraction of this cost or some times nothing at all. People see the "$30K" price tag for Lambda School and other programs and assume it's a steal, yet most in-state tuitions are in the same range and provide substantially more education. I've also been completely stunned by how bad some of these programs are. I took the bait about Lambda School back when PG was promoting it all over Twitter, but it has been a terrible disappointment for the small handful of bright students I've known who went through it. Maybe it's changed, but at the time it felt like they were paying $30K of future earnings to have an inexperienced person point them to simple tutorials that they could have found by themselves online. They were basically paying for the certificate that said they completed the program, which is ironically the stereotype that people were using for 4-year colleges at the time.
  • culi 5y ago
    I totally agree. A lot of people talk about ISA being scams and I basically agree. But I don't think it's a scam in how they assume. If you do your research most ISA agreements are good about being more straightforward than most other types of loans. The scam is usually solely in the principle amount being charged. That being said, I think ISAs are actually partially successful in that they provided a way for someone broke like me to try something and not have to worry too much about the impact if it doesn't end up succeeding. I wish people in my position had more negotiating power to avoid being overcharged, but that's not a problem unique to ISAs
    • catlifeonmars 5y ago
      To put it another way, it’s a high risk loan from the perspective of the ISA lender — which they offset with a high premium to get around the adverse selection are problem. It’s basically a mirror image of the problem that insurance providers face.
• dannywarner 5y ago
  Interesting. What kind of bureaucracy?
• happyopossum 5y ago
  - zero interest - {snip} you end up having to pay 150% of the principal loan (assuming you have a high enough paying job for long enough within those 5 years) Those two things don't line up, and repeating the 'zero interest' line in an edit doesn't change that. If your repayment is 150%, you've paid interest.
  • yuliyp 5y ago
    It doesn't really behave like interest though: the amount paid doesn't depend on compounding or your repayment schedule.
    • aahortwwy 5y ago
      That it doesn't compound doesn't mean it's not interest. That just means it's not compound interest.
      • ummonk 5y ago
        It’s a fee, not interest. Interest is charged over time (either compounded or uncompounded, either way you pay more interest if you take longer to pay off the loan). Here they’re charging a onetime 50% fee.
        • whakim 5y ago
          I think the point here is that "zero interest" isn't particularly compelling when the cost of credit is being driven up (to exorbitant levels) by another mechanism. An equivalent loan with a 5-year term would have an interest rate of almost 18% and in this case you don't have the option to save money through early repayment.
          • afiori 5y ago
            Debit is not just big digit, it is an ever deepening well. There are many people that have paid ten of thousand of dollars of their student loans and still saw the total due amount increase. A loan with a very reasonable 5% overall interest if paid on time can have unbounded interest if paid late enough. The student dept crisis is dominated by the latter kind of situations. (still yes, it is zero compound interest + 50% fixed interest)
• csomar 5y ago
  -> tuition was definitely overpriced + having to pay 150% of the principal loan So the actual interest is like 100%? Though it's fixed over a 5 year period, so that turns to around 30% yearly interest rate. Hardly zero. -> Most people that get jobs in tech will have paid the 150% before the 5 year mark That's even higher interest for these people. But I guess it's an incentive for the program to get people good jobs.
  • bretpiatt 5y ago
    That's not 30% unless you repay real quick, if you paid it at the end of 5 years in a single payment that's 8.5%, 1.085^5 = 1.50. In straight amortization using $30k tuition, $45k repayment, over 60 months is $750/mo which works out to 17.25% rate. It isn't a great deal but it's not terrible vs. other low recourse private loan options.