Thread by @VikParuchuri

1/ In this thread, I'll discuss @LambdaSchool, a bootcamp that charges 17% of your pre-tax income for up to 2 years (ISA).

tl;dr Lambda is much more expensive than the average bootcamp, and has similar outcomes. 75% of Lambda students could pay an avg of $9k less elsewhere.

2/ First, outcomes.

85.9% of Lambda graduates get a job within 180 days, with a median 60k salary.

A survey across multiple bootcamps found that 79% of all bootcamp grads were employed within 120 days, with a median 65k salary.

3/ Students at Lambda pay 17% of their pre-tax income for 24 months in which they make more than $4,166 (50k a year). The ISA expires after 60 months.

76% of employed Lambda grads get a first job paying > 50k. Assuming no salary increases, their tuition will be 23.2k on average.

4/ 24% of employed Lambda grads make <50k.

An avg second job post-bootcamp pays 15k more than the first, so ~1/2 of these students will make 55k within 5 years, and will repay 18.7k.

The rest will pay nothing, since their pay will never go above 50k.

5/ Of the 14.1% who don't get a job within 180 days, assume 8.7% never do (matching avg bootcamp numbers).

The students who get a job will avg 20.4k in tuition, the others will pay nothing.

4/ 21.5% of Lambda students drop out during the program.

Let's assume that half of these students drop out before the ISA repayment kicks in, and the rest drop out when they have to repay 100% of the ISA.

The students who have to repay will repay 18.7k on average.

5/ So, we have 4 groups:

* 63.6% - graduated, will have a job making >50k. $23.2k avg tuition.
* 14.9% - graduated, won't make >50k in 5 years. No tuition.
* 10.75% - Drop out early. No tuition.
* 10.75% - Drop out late. $18.7k tuition.

6/ If we blend this all together, the average tuition for a student at Lambda who doesn't drop out early is $18.8k.

For a typical bootcamp with similar outcomes, the tuition is $13.5k.

7/ How good of a deal Lambda is depends on the group you're in:

* Graduates making >50k - bad deal
* Graduates making <50k - great
* Drop out early - a wash
* Drop out late - bad

74.35% of graduates - bad deal
14.9% - great deal
10.75% - drop out early

8/ 75% of Lambda students could have paid less elsewhere.

Grads who make >50k could pay ~$10k less on avg by going to another bootcamp.

Students who drop out late could pay ~$5k less on average elsewhere.

9/ From what I can tell, Lambda sells off their loans through Leif, so they get paid upfront.

This means that they're not tied to the long-term outcomes of students.

They likely do an analysis similar to this one and use it to pitch/sell their loans to investors.

10/ To Lambda, the ISA functions exactly like upfront tuition.

For most students, the ISA is the same as a loan where you have to pay off monthly installments.

The marketing makes it seem drastically different, but that's only true for a minority of students.

11/ One misaligned incentive is that if Lambda generates better outcomes, it becomes a worse deal for students (up to the cap at $88k salary).

If you come out averaging $80k in salary, Lambda is a much worse deal than if you make $50k ($10k more tuition).

12/ I made assumptions in this, since data is spotty. I tried to make them in favor of Lambda (like graduate salaries not rising).

Resources I used:
* bit.ly/2MJPmMk
* bit.ly/2Bfvnje
* bit.ly/2IVQdZg
* bit.ly/2HMYFLA
* bit.ly/33BjP5M

13/ To editorialize a bit, the marketing around Lambda makes it sound like an "end to student debt" (Wired headline), but the numbers show that it's just another player in the bootcamp space. ISAs are also more similar to traditional debt than they seem.

14/ For some students (15% at Lambda), ISAs are a good value.

But for most (75% at Lambda), the ISA disguises what the actual cost of education will be, enabling institutions to charge far more than market price.

I hope that we see regulation in this space to counteract this.