The Valley's premier financialization scam is going to retool

Everything is working so well, they're laying off 65 people. How'd it come to this, we might ask?

With all the manure these folks spew, it's hard to know for sure, but let's connect some dots

https://lambdaschool.com/the-commons/update-lambda-school-team

So how does Lambda make money?

They "train" people, and in exchange, they take a chunk of their future earnings.

Now, I used to work in for-profit education, so believe me when I tell you it's ALWAYS a system for teleporting people's future earnings into your pocket. However...

In order for the system to work well, you need an intermediary.

The intermediary gives you cash today. In exchange, you give the intermediary rights to put its hooks into students tomorrow and the next day, until they get a pound of flesh that makes the deal worth it.

In Lambda's case, they came up with a strategy where they would bundle together the debt contracts they struck with their students and then sold them off. You can read the details here, but here's the gist:

https://lambdaschool.com/the-commons/announcing-our-new-isa-financing-blueprint-and-100m-in-new-financing

Investing in debt has a sordid history in the United States.

We had a whole generation-defining financial crisis around it. The trouble is, debt isn't created equal. It's an abstraction over messy human lives. So even if on paper it's supposed to return X, there's RISK involved.

So one of the ways you make debt more attractive as an investment is to limit risk. Maybe you make a system to caliper the risk profiles of those you lend to.

OR MAYBE

you make debt non-dischargeable in bankruptcy. How?

Well, it helps if you can make the case that your debt is both helpful to society and very difficult to mitigate risk on. That was the deal struck with federal student loans

But thanks to legislative capture, private loans got rolled into the same bargain https://www.theguardian.com/us-news/2019/dec/02/joe-biden-student-loan-debt-2005-act-2020

What Lambda did was unilaterally decide that their OWN financing was subject to these same protections.

California regulators called bullshit this week, and dropped the hammer. Lambda has to not only cut the shit, but also inform past students they lied

https://dfpi.ca.gov/2021/04/26/lambda-school-reaches-settlement-with-dfpi-agreeing-to-end-deceptive-educational-financing-practices/

So now Lambda, and its investors, are holding a big pile of debt with their asses out in the wind. Any of their students can discharge their obligations through a standard bankruptcy.

Lambda's debt, rather than being pristine and protected, smells closer to subprime.

So, is Lambda done for?

I am old enough to expect a good scammer to have more lives than a cat. But eventually, you have to imagine that Lambda's leaders' greed has outstripped their ability to deliver on promises. Education can only growth hack so far.

https://www.theverge.com/2020/2/11/21131848/lambda-school-coding-bootcamp-isa-tuition-cost-free

My view on Lambda is that they're inept predators, sucking up hopeful people desperate for a chance at the last pseudo-egalitarian growth industry left in the west. They're targeting those in need, chewing it all up into financial slurry, and keeping whatever cream shakes out.

Businesses like these shouldn't be able to exist. Their would-be customers should be able to get a much better bargain through other means.

We should be providing education in technology as a shared investment in public good, not feeding the desperate to the wolves for profit.

As someone who was sucked up by for-profit education in youth, and who later saw how its sausage was made, I have a strong bias against any form of it.

But I think in Lambda’s case, what makes it especially noxious is running it though a ~startup~ lens. https://twitter.com/nomadicdigital/status/1387960294362828800

Startups are about rapidly iterating, discarding what doesn’t work, failing some more, and fishing out a viable model

That’s fine when you’re discarding code and designs

But we’re talking human lives. People with futures. Saddling them with debt and spinning a roulette wheel?

Let’s be really clear

All forms of private education are running some kind of scam.

Some are old enough to have dressed it all up with prestige. But it all comes down to putting a toll booth in front of young people trying to find their way in the world