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> After the program graduates pay 15% of their income for 2 years if they are earning over $40,000, capped at $30,000 total paid back to Modern Labor. Somethin

> After the program graduates pay 15% of their income for 2 years if they are earning over $40,000, capped at $30,000 total paid back to Modern Labor. Something about taking a cut of someone's salary doesn't feel right to me. If you were to borrow the $10k that they give you, over a 2 year period at a 10% rate (maximum allowed by law in CA), you'd pay a little over $11k. Modern Labor will charge you up to $30k over that same 2 year period, for an interest rate north of 100%. How is this initial $10k different from a loan? Just because it's coming out of your salary doesn't mean it's not usurious.

mediocrejoker 8y ago
If someone can get a loan, then they should clearly do that instead of using this company. If not, then their options are this company or no education (assuming education costs this much).
- everdev 8y ago
  That's loan shark mentality: "Sure the rate is high, but you should take this money because you're in a tight spot and it's the best offer you'll get."
advisedwang 8y ago
At least it means if you are not doing well later, you aren't bogged down by repayments or the threat of default.
humbleMouse 8y ago
> Something about taking a cut of someone's salary doesn't feel right to me. Ummm, that's how the whole tech industry works. Ever work for a recruiter? They're taking a cut of your salary.
- everdev 8y ago
  The company that hires you pays it, not you.
  - humbleMouse 8y ago
    How is it any different? Everybody is getting pimped out in this industry.
    - everdev 8y ago
      It's multiple orders of magnitude different. A company making a $100k/year hire might have $1M ARR. To them, the $15k commission is 1.5% of their annual budget. If the employee pays, it's 15% of their annual income. If recruiters charged 15% of a company's annual income no one would pay it, or it would bring a company to its knees.
  - tuesdayrain 8y ago
    It's amusing that you believe there's a significant difference between those two scenarios.
mstade 8y ago
Being an alumni of a particular institution might in itself provide value though. It doesn't now obviously – it's too young – but over time if it turns out this organization produces quality devs then employers may very well use that as signal when singling out CVs for interview calls.
klipt 8y ago
At least it aligns incentives: the bootcamp wants you to have a high paying job. A bank who gives you a loan doesn't care if you have a decent job so long as they can squeeze loan payments out of you.
- everdev 8y ago
  If this 3x return is legal, imagine the rush on home loans like this. Mortgage Company A is feeling virtuous and really wants people who can't afford down payments to be able to afford houses too. So, they offer up $300k and simply take 15% of your paycheck for 30 years until they've collected $900k. A 30 year fixed at 4.5% would cost you $547k total over the life of the loan. Mortgage Company A is instead making $900k where they used to make $547k. The problem with these loans is that desperate people accept them. It's the person who can't save enough for a downpayment and is getting kicked out of their rental that will agree to such a usurious loan. It's the reason why we have a maximum interest rate to begin with. Because without it, it's possible to find someone in a tight spot and make a ton of money off of their temporary misfortune.
talawahdotnet 8y ago
In this equation you are valuing the bootcamp and career placement portion of their offering at $0. If you were to value it $10-15k then it is a different story. At the end of the day they are offering a lot more than just 10k. They are offering training AND placement assistance. They are also assuming the costs of the people who fail to complete the program of get a job.
soneca 8y ago
If you do not have the money to pay back (i.e. low salary or unemployment), you are forgiven the debt. That's the difference from a loan.
niklasd 8y ago
Well, the difference is that you are not obligated to pay the loan back if you don't earn any substantial amounts of money. And if you have to pay, the amount is adjusted to your salary, so you can be sure that you can afford paying back. I'm not defending this actual offer, I haven't really looked at the specific terms. But in general I find this quite a compelling model. My alma mater in Germany, which was a private university, offered a similar model. Instead of tution (~42'000) you could choose to pay back 10 years 9% of your salary (if it exceeds a certain threshold), capped to 2x of the tution. Basically, it is a bet on your employability. It only works out if your graduates succeed in searching and keeping a job. Additionally the model gives to the gradudate the freedom to choose a job without looking at the salary, because the payback is adjusted to your salary. I think offering this option at American colleges would rather help, and generally I think its not usurious, and quite different to a loan. But then again it depends on the specific terms.
- everdev 8y ago
  I just can't get passed the 300% return rate. I don't understand how charging that much is legal. I feel like it's somewhat predatory because only people who are struggling to make ends meet would accept such an offer. It's specifically designed and marketed towards people who can't save $10k. Nobody who can save $10k would take this offer IMO.
  - smokeyj 8y ago
    > I just can't get passed the 300% At least you understand your mental limitations. But this is also a form of false charity, where you make decisions on behalf of others in order to signal virtue. This is a business model that should be supported - because those of us with basic economic literacy know that competition will reduce corporate profits to market rate. College is a misplaced job training program that is a self perpetuating status symbol. The poor NEED this model to be disrupted.
    - everdev 8y ago
      Yeah, not a fan of college either, but I'm also against marketing high repayment loans to the poor. Students already struggle with 5-7% student loans. Sure, this is less total money, but just bring the repayment down to something reasonable like $30k over 10 years to offer a rate that doesn't exceed maximum interest rate laws.
AnimalMuppet 8y ago
Because, what if they don't earn over $40,000? It's a numbers game. Out of N graduates, some will pay back $30K, some will pay back $0, some will pay back something in between. For those who pay back $30K, it may be a bad deal... except they're the ones who made the most in salary, too. I'm not sure whether that's a fair deal or not. It seems to me, though, that the hotter I thought I was, the less I should be willing to take this deal, because the more I thought it would cost me...
- everdev 8y ago
  Yeah, I get from the company perspective how the risk is spread across multiple candidates. But from the individual perspective, it seems to be way higher than the max interest rates allow. Now imagine colleges saying you can pay your $300k 4-year tuition up front or pay us 15% of your salary until you pay us $900k. Already wealthy kids will have an even bigger leg up in life because they'll pay their tuition up front. While those who had to choose between an aggressive loan or no education will have to pay an extra $600k. Right now, with student loans capped at 5-7% it's still a huge disadvantage to those that need to borrow. I can't imagine if this lending model is extended to classical universities how much a 300% repayment rate will drag down those who are already struggling with 5-7%.
dragonwriter 8y ago
> If you were to borrow the $10k that they give you, over a 2 year period at a 10% rate (maximum allowed by law in CA) 10% is the maximum allowed in CA for non-exempt lenders. However, a seller of services to the public financing the services they sell is exempt as a retail installment lender, and has no maximum (most actual lending other than informal person-to-person lending is exempt.) > Modern Labor will charge you up to $30k over that same 2 year period, for an interest rate north of 100%. They aren't charging you $30,000 to repay the stipend, but the stipend plus the training, which they compare to a $15,000 cost coding bootcamp; $30,000 over over about 2¼ years (roughly the time from the midpoint of the stipend and training) for $25,000 is a little north of 15% annual interest rather than over 100%. And that's assuming a minimum income of $200K in the two years immediately following the program; any lower and the payback is lower, too.

mediocrejoker 8y ago

If someone can get a loan, then they should clearly do that instead of using this company. If not, then their options are this company or no education (assuming education costs this much).

everdev 8y ago
That's loan shark mentality: "Sure the rate is high, but you should take this money because you're in a tight spot and it's the best offer you'll get."

advisedwang 8y ago

At least it means if you are not doing well later, you aren't bogged down by repayments or the threat of default.

humbleMouse 8y ago

> Something about taking a cut of someone's salary doesn't feel right to me. Ummm, that's how the whole tech industry works. Ever work for a recruiter? They're taking a cut of your salary.

everdev 8y ago
The company that hires you pays it, not you.
- humbleMouse 8y ago
  How is it any different? Everybody is getting pimped out in this industry.
  - everdev 8y ago
    It's multiple orders of magnitude different. A company making a $100k/year hire might have $1M ARR. To them, the $15k commission is 1.5% of their annual budget. If the employee pays, it's 15% of their annual income. If recruiters charged 15% of a company's annual income no one would pay it, or it would bring a company to its knees.
- tuesdayrain 8y ago
  It's amusing that you believe there's a significant difference between those two scenarios.

mstade 8y ago

Being an alumni of a particular institution might in itself provide value though. It doesn't now obviously – it's too young – but over time if it turns out this organization produces quality devs then employers may very well use that as signal when singling out CVs for interview calls.

klipt 8y ago

At least it aligns incentives: the bootcamp wants you to have a high paying job. A bank who gives you a loan doesn't care if you have a decent job so long as they can squeeze loan payments out of you.

everdev 8y ago
If this 3x return is legal, imagine the rush on home loans like this. Mortgage Company A is feeling virtuous and really wants people who can't afford down payments to be able to afford houses too. So, they offer up $300k and simply take 15% of your paycheck for 30 years until they've collected $900k. A 30 year fixed at 4.5% would cost you $547k total over the life of the loan. Mortgage Company A is instead making $900k where they used to make $547k. The problem with these loans is that desperate people accept them. It's the person who can't save enough for a downpayment and is getting kicked out of their rental that will agree to such a usurious loan. It's the reason why we have a maximum interest rate to begin with. Because without it, it's possible to find someone in a tight spot and make a ton of money off of their temporary misfortune.

talawahdotnet 8y ago

In this equation you are valuing the bootcamp and career placement portion of their offering at $0. If you were to value it $10-15k then it is a different story. At the end of the day they are offering a lot more than just 10k. They are offering training AND placement assistance. They are also assuming the costs of the people who fail to complete the program of get a job.

soneca 8y ago

If you do not have the money to pay back (i.e. low salary or unemployment), you are forgiven the debt. That's the difference from a loan.

niklasd 8y ago

Well, the difference is that you are not obligated to pay the loan back if you don't earn any substantial amounts of money. And if you have to pay, the amount is adjusted to your salary, so you can be sure that you can afford paying back. I'm not defending this actual offer, I haven't really looked at the specific terms. But in general I find this quite a compelling model. My alma mater in Germany, which was a private university, offered a similar model. Instead of tution (~42'000) you could choose to pay back 10 years 9% of your salary (if it exceeds a certain threshold), capped to 2x of the tution. Basically, it is a bet on your employability. It only works out if your graduates succeed in searching and keeping a job. Additionally the model gives to the gradudate the freedom to choose a job without looking at the salary, because the payback is adjusted to your salary. I think offering this option at American colleges would rather help, and generally I think its not usurious, and quite different to a loan. But then again it depends on the specific terms.

everdev 8y ago
I just can't get passed the 300% return rate. I don't understand how charging that much is legal. I feel like it's somewhat predatory because only people who are struggling to make ends meet would accept such an offer. It's specifically designed and marketed towards people who can't save $10k. Nobody who can save $10k would take this offer IMO.
- smokeyj 8y ago
  > I just can't get passed the 300% At least you understand your mental limitations. But this is also a form of false charity, where you make decisions on behalf of others in order to signal virtue. This is a business model that should be supported - because those of us with basic economic literacy know that competition will reduce corporate profits to market rate. College is a misplaced job training program that is a self perpetuating status symbol. The poor NEED this model to be disrupted.
  - everdev 8y ago
    Yeah, not a fan of college either, but I'm also against marketing high repayment loans to the poor. Students already struggle with 5-7% student loans. Sure, this is less total money, but just bring the repayment down to something reasonable like $30k over 10 years to offer a rate that doesn't exceed maximum interest rate laws.

AnimalMuppet 8y ago

Because, what if they don't earn over $40,000? It's a numbers game. Out of N graduates, some will pay back $30K, some will pay back $0, some will pay back something in between. For those who pay back $30K, it may be a bad deal... except they're the ones who made the most in salary, too. I'm not sure whether that's a fair deal or not. It seems to me, though, that the hotter I thought I was, the less I should be willing to take this deal, because the more I thought it would cost me...

everdev 8y ago
Yeah, I get from the company perspective how the risk is spread across multiple candidates. But from the individual perspective, it seems to be way higher than the max interest rates allow. Now imagine colleges saying you can pay your $300k 4-year tuition up front or pay us 15% of your salary until you pay us $900k. Already wealthy kids will have an even bigger leg up in life because they'll pay their tuition up front. While those who had to choose between an aggressive loan or no education will have to pay an extra $600k. Right now, with student loans capped at 5-7% it's still a huge disadvantage to those that need to borrow. I can't imagine if this lending model is extended to classical universities how much a 300% repayment rate will drag down those who are already struggling with 5-7%.

dragonwriter 8y ago

> If you were to borrow the $10k that they give you, over a 2 year period at a 10% rate (maximum allowed by law in CA) 10% is the maximum allowed in CA for non-exempt lenders. However, a seller of services to the public financing the services they sell is exempt as a retail installment lender, and has no maximum (most actual lending other than informal person-to-person lending is exempt.) > Modern Labor will charge you up to $30k over that same 2 year period, for an interest rate north of 100%. They aren't charging you $30,000 to repay the stipend, but the stipend plus the training, which they compare to a $15,000 cost coding bootcamp; $30,000 over over about 2¼ years (roughly the time from the midpoint of the stipend and training) for $25,000 is a little north of 15% annual interest rather than over 100%. And that's assuming a minimum income of $200K in the two years immediately following the program; any lower and the payback is lower, too.