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Thanks for being inquisitive. It's easy to look at this as giving education to those who wouldn't get it otherwise. But there is a dark side: https://medium.c

Thanks for being inquisitive. It's easy to look at this as giving education to those who wouldn't get it otherwise. But there is a dark side: https://medium.com/@kevgardner83/the-true-cost-of-income-sharing-agreements-f43418265d35 https://medium.com/@kevgardner83/the-true-cost-of-income-sha... > The average up-front tuition amount for coding bootcamps is $10,000 to $15,000, according to Course Report, which collects data and reviews on coding bootcamps. The idea to not pay thousands of dollars at the start of the program may be attractive. But, let’s say you agree to an ISA. And after completing the a coding bootcamp, you’re hired with a salary of $60,000 a year. If you pay 20 percent of your salary for four years, you’ll end up paying $48,000. That’s more than four times the average cost for an up-front payment to a coding bootcamp. It's basically charging those with the least money more tuition. It would be fine if they capped it at the tuition price or even a nominal interest rate, but some programs make 400% more from students that can't afford upfront tuition. It's fine if you want to charge everyone in your bootcamp under the ISA model, but if you offer a $10k tuition and a $40k ISA you're basically offering the same product at vastly different prices to two different economic groups.

dragonwriter 7y ago
> It's basically charging those with the least money more tuition. It's charging those who are less risk accepting more money, but risk aversion is a reasonable thing to pay a premium for. Its perfectly reasonable to view $48,000 if it gets me a job paying $60,000 a year for four years as being a better deal than $10,000 unconditionally. OTOH, a high ISA multiplier should be a sign of a low expected successful placement rate.
- everdev 7y ago
  > Its perfectly reasonable to view $48,000 if it gets me a job paying $60,000 a year for four years as being a better deal than $10,000 unconditionally. True, but I doubt you could find hiring data that supports a 4x higher employment rate among ISA cohorts. If bootcamps wanted to publish they're employment rate and average salary for both cohorts so students could do the math that would be better. My guess is employment and salary are much more tied to ability and location than thyey are to wether you opt in to an ISA.
  - dragonwriter 7y ago
    > True, but I doubt you could find hiring data that supports a 4x higher employment rate among ISA cohorts Sure, but the disutility of a $12,000 bill for four years when making $60,000 may be much less than five times a single $10,000 bill when making whatever you’d make if the bootcamp didn't payoff. The impact of $1 isn't equivalent across different income circumstances. You have to account for both success rate and declining marginal utility of income with greater income.
peripitea 7y ago
This seems to be more a concern on the terms rather than the instrument. You can structure any financial instrument (ISA, loan, whatever) to be predatory if you're willing to play with the variables sufficiently. I don't know if those are real terms in your example, but they do seem pretty bad. (Although still better than a predatory loan IMO, since they are contingent on the student actually having a somewhat successful outcome). By contrast, something like Lambda's ISA ($30k max payment vs $20k upfront tuition; 15% of income for two years; min $50k/y salary as software engineer) strikes me as not predatory in any way -- I would guess they make less money from their ISA students on average than from their tuition-paying students.
- everdev 7y ago
  Yeah 50% more is still high but not as bad as 400+%.

dragonwriter 7y ago

> It's basically charging those with the least money more tuition. It's charging those who are less risk accepting more money, but risk aversion is a reasonable thing to pay a premium for. Its perfectly reasonable to view $48,000 if it gets me a job paying $60,000 a year for four years as being a better deal than $10,000 unconditionally. OTOH, a high ISA multiplier should be a sign of a low expected successful placement rate.

everdev 7y ago
> Its perfectly reasonable to view $48,000 if it gets me a job paying $60,000 a year for four years as being a better deal than $10,000 unconditionally. True, but I doubt you could find hiring data that supports a 4x higher employment rate among ISA cohorts. If bootcamps wanted to publish they're employment rate and average salary for both cohorts so students could do the math that would be better. My guess is employment and salary are much more tied to ability and location than thyey are to wether you opt in to an ISA.
- dragonwriter 7y ago
  > True, but I doubt you could find hiring data that supports a 4x higher employment rate among ISA cohorts Sure, but the disutility of a $12,000 bill for four years when making $60,000 may be much less than five times a single $10,000 bill when making whatever you’d make if the bootcamp didn't payoff. The impact of $1 isn't equivalent across different income circumstances. You have to account for both success rate and declining marginal utility of income with greater income.

peripitea 7y ago

This seems to be more a concern on the terms rather than the instrument. You can structure any financial instrument (ISA, loan, whatever) to be predatory if you're willing to play with the variables sufficiently. I don't know if those are real terms in your example, but they do seem pretty bad. (Although still better than a predatory loan IMO, since they are contingent on the student actually having a somewhat successful outcome). By contrast, something like Lambda's ISA ($30k max payment vs $20k upfront tuition; 15% of income for two years; min $50k/y salary as software engineer) strikes me as not predatory in any way -- I would guess they make less money from their ISA students on average than from their tuition-paying students.

everdev 7y ago
Yeah 50% more is still high but not as bad as 400+%.