Students of BloomTech, FKA Lambda School, file class-action lawsuit

https://www.businessinsider.com/lambda-school-bloomtech-class-action-lawsuit-2023-3

97 82 3 years ago

paulpauper2• 3 years ago

good. I hate how these coding camps prey om people's desperation and anger/fear over student loan debt. It's great marketing on the part of the media and coding camps to try to make college seem like a crisis or a waste of money, when coding camps are worse. You see the commercials which is a very persuasive marketing pitch: "get a good job in 6 months while you learn valued, technical skills part time" Except you hardly become proficient, you pay a lot, and good jobs are not assured.

bpodgursky2• 3 years ago

to make college seem like a crisis or a waste of money, when coding camps are worse

You really have no comparative data here. College is a life-crushing mistake for millions of people. I'm not trying to defend or condemn BloomTech (I really don't know if the allegations are true) but it's 100% true that two competing things can both be extremely bad.

paulpauper2• 3 years ago

It can also be 100% true that one competing thing can be worse than the other even if they are both bad

Coding camps charge $10k of more, some require a certain percentage of income, and you don't even get a credential. How many companies are looking for coding camp graduates, compared to companies that are looking for college grads?

College is a life-crushing mistake for millions of people.

It is a mistake if you do not graduate, but the data shows grads earn way more and have half the unemployment rate of high school grads.

bastawhiz2• 3 years ago

I don't think the person you're replying to thinks that college is a fantastic choice, just that coding bootcamps are often materially and objectively worse for most participants. If nothing else, colleges give you a diploma at the end, which is at least good for bypassing a minimum requirement at many companies. That's not to say that both are not bad, just that one preys on people distrustful (or regretful) of the other.

sublinear3• 3 years ago

I find it strange that many people don't know that building a career is a lot of work. I do understand some people are in a situation where they're never given a chance to focus on it, but that can't be all, or even most of these cases. I grew up below the actual poverty line to a single mother with a low paying job, not just regular "poor". I still managed to screw up and lose financial aid for a couple of years.

My own experience was that getting into software development took up about half of my free time from around age 12 to 18 and after some fumbling around some friends and I were at an intermediate hobbyist level before graduating high school (probably at or just barely beyond the level of the best bootcamp students). We even ran a couple of clubs. I didn't do an internship, but just found part time work building simple CRUD apps for a few local small businesses (low stakes contracts of a few thousand bucks were awarded thanks to a friend who was playing with daddy's money while finishing his business degree). Then I got my first "real job" (salaried, benefits, etc.) a few months after finishing an accredited bachelor's degree in CS at my state school. The rest has been my actual career until now (I finished college about a decade ago).

I'm pretty sure this is the only "reliable" way and it wasn't easy. I had a couple of mental/ego breakdowns along the way because I found out I'm just kinda smart and not a genius, I didn't grow up to be a millionaire game designer like Carmack or Romero, and I became somewhat out of shape. I think this is... such a painfully average life story?

nevertoolate3• 3 years ago

Thanks for sharing your story!

I mentored people at a coding bootcamp in Europe, there were some students with unrealistic expectations. Sharing real-life programmer careers help to stay grounded.

Coding is a job, like the other kinds of jobs. It is sometimes closer to craftsmanship than engineering. Maybe we won’t change the world, but arguably we might change it to the worse anyways :-)

gnicholas• 3 years ago

The students are asking for equitable relief, such as canceling their income-share agreements or getting a refund.

In law, a plaintiff can seek monetary damages or equitable relief. The latter is generally only available when money damages are insufficient, and it is harder to win equitable relief than money damages.

For example, in the Twitter/Elon case, there was a question as to whether Twitter could successfully sue Elon for the equitable remedy of "specific performance" (making someone perform a specific action). It would have been perhaps unprecedented to force a reluctant bidder to purchase a company against his will.

I find it interesting that these plaintiffs are going for equitable relief, when money damages would seemingly suffice. Just give the plaintiffs whatever money is due on their loans, which would then be used to extinguish the loans. I don't understand why they're going for an equitable remedy, which is harder to get. (For example, there is the "clean hands doctrine", which requires that one “who comes into equity must come with clean hands.” [1] This doctrine does not apply when plaintiffs merely seek money damages.)

1: https://www.law.cornell.edu/wex/clean_hands_doctrine#:~:text....

granzymes• 3 years ago

Monetary damages compensate you for financial losses or harm that has already occurred. The plaintiffs want injunctive relief against future collection as well as restitution for amounts already paid.

Lawsuit here: https://webapps.sftc.org/ci/CaseInfo.dll?SessionID=508D6DF1F...

sandofsky3• 3 years ago

I am not a lawyer, but wouldn't the issue with calculating damages be the nature of income share agreements?

If a student's debt is based on their future income, damages could be $0k right now, only because they're under the threshold where an ISA applies. In a few years they could cross that threshold through their own work, having gained nothing from the bootcamp, and suddenly be on the hook for upwards of $30k.

That said, if a predatory code bootcamp didn't teach me to code, I'd be pretty discouraged from continuing knowing that I'll still have to pay the grifters.

benatkin2• 3 years ago

A big issue is misleading about the success rate. That may be the difference between not having a case and having a case.

chadash• 3 years ago

* For example, in the Twitter/Elon case, there was a question as to whether Twitter could successfully sue Elon for the equitable remedy of "specific performance" (making someone perform a specific action). It would have been perhaps unprecedented to force a reluctant bidder to purchase a company against his will.*

Not only is it not in precedented to force a reluctant bidder to purchase a company against their will, but the very judge who was assigned to Elon Musks’s case forced a company to buy another (i.e. “specific performance”) in 2021. Look up Snow Phipps vs Kcakes.

It’s not a coincidence that Musk suddenly changed his tune and went through with the acquisition. I’m sure that his legal team told him that he was going to lose the case.

bpodgursky2• 3 years ago

"They wouldn't have gone if they didn't know what the true rates are," Elson told Insider.

Does this need an editor? Or is their lawyer just illiterate.

sbdaman• 3 years ago

"They wouldn't have not gone if they didn't not know what they should've not known [sic]"

29athrowaway2• 3 years ago

Is there an interest rate involved?

ghufran_syed2• 3 years ago

“no” in the sense of paying more if you take longer to pay off the amount, but “yes” in the sense that IF you get a decently paying job, you’ll pay more. so it’s more like selling an option on your future income, then using the money to pay for your tuition. If the course helps you make a lot more money, it’s a win-win; if it makes not difference to your income, you lost time but you basically sold the option for a lot more than it was worth; the only time you really lose is if you would have increased your income significantly without the course, but instead you sold that option a lot cheaper than the true value based on your future potential, and then wasted the money on a course that made no difference to your future prospects.

I would be curious about the proportions of the three groups among the plaintiffs - if you did badly afterwards there’s no financial loss, if you did well financially afterwards, I think it’s hard to argue that the course didn’t help?

29athrowaway2• 3 years ago

There is a $40,000 cap, therefore the gamble does not sound that bad.

I guess the contention point is companies promising a 6 figure base salary with no experience or college degree. While there is precedent for this, it's not the median income for bootcamp graduates, and if it was, it would be restricted to specific geographic locations.

endisneigh3• 3 years ago

what a shame. income sharing agreements are a good idea, but this was poorly implemented and to make matters worse was done during boom teams, so it's no surprise what's happening now.

tempsy3• 3 years ago

federal student loans have always had income based repayment options

endisneigh3• 3 years ago

That’s not the same as an income share agreement, as the school gets all the money regardless.

npalli3• 3 years ago

Now that the tech bubble and hoarding of tech talent by big tech has ended, what is the future of these coding bootcamps? It seems just like many businesses that get started during low/zero interest times, this was clearly a boom time phenomena - take advantage of the desperate need of companies to hire talent and match that with talent who didn't want to spend a long time learning (college or otherwise) and wanted to fast track a high paying job.

Demand (companies) has dried up and turns out you cannot easily get into a tech job doing some simple cookie cutter courses.

giraffe_lady• 3 years ago

I was involved with one of the more reputable code schools a few years ago, my information is out of date and not necessarily representative but firsthand.

It's not really true that the students at these were trying to fast-track into highly paid jobs per se. Half or more were skilled professionals with masters degrees. A lot of high-burnout fields represented: disproportionate (and alarming) number of teachers and nurses in there, as well as like ex-goldman analysts, tons of mechanical and civil engineers as well.

Everyone assumes these were full of like, bartenders chasing money (which there is nothing wrong with that either) but in my experience it wasn't true at all. It was mostly late 20s-early 30s professionals who were looking to change to another skilled career, mostly due to burnout, poor fit in the first one, or more autonomy.

turns out you cannot easily get into a tech job doing some simple cookie cutter courses.

No, you can't easily get into a tech job from these courses. But more interesting to me it showed that you can do a tech job from doing these courses. I've worked with code school grads a lot after that as well, in fact I seek them out when hiring. It's true that a fresh code school grad has a narrow slice of competence and needs more and different kinds of support than other junior devs. But they can succeed if given it, and ones a couple years or more into their careers tend to punch well above their weight in my experience. It's a group that is basically self-selecting for confidence and calculated risk-taking. They do well.

npalli3• 3 years ago

Thanks for sharing, good to know. I think it also speaks to the shady underside of the coding camps that they always seem to advertise some random person doing some side jobs, then they do a coding bootcamp and boom! they are into tech. Literally a couple of days ago[1], Austen Allred (the guy running BloomTech getting sued) was tweeting how some housewife has landed a tech job after being out of the workforce for 15 years. People would be lot more careful if they knew that 1/2 the cohort is people with Master's degrees.

[1] https://twitter.com/Austen/status/1636176434380296194

Karrot_Kream• 3 years ago

Everyone assumes these were full of like, bartenders chasing money (which there is nothing wrong with that either) but in my experience it wasn't true at all. It was mostly late 20s-early 30s professionals who were looking to change to another skilled career, mostly due to burnout, poor fit in the first one, or more autonomy.

Yeah I was surprised when I realized most of the bootcamp grads I met were elite school graduates in things like BioE or Industrial Engineering who wanted to transition to tech. They had worked in their fields and wanted a change so they had the money saved up to do a bootcamp. It was no surprise to me that they did well in tech as they were already from STEM programs in great schools anyway.

I've heard anecdotally (no real proof) that later cohorts started drawing more of the "bartender chasing money" types (again nothing wrong with them) which made the competition for the schools a lot harder.

waboremo• 3 years ago

easily get into a tech job doing some simple cookie cutter courses.

This is still done. It's called college, only takes 3 years.

arroz3• 3 years ago

A college is much better than a bootcamp

peanuty1• 3 years ago

Don't bachelor's degrees take four years unless you bring AP credits in with you?

thenerdhead3• 3 years ago

How has it ended? Companies are going through a strategic inflection point with AI. When that stabilizes over the next decade(couple years probably), hiring will boom again. Demand is only temporarily dried up due to navigating rough seas and aligning internally. Read Only the Paranoid Survive and you’ll see the same thing happening today.

Bootcamps will still be needed as new tech needs to be learned quickly to fill vacant positions.

candeira• 3 years ago

The failure mode of educational systems and institutions is to perform selection of students more likely to require less help in learning, rather than bear the burden of having to perform actual instruction.

Survivor bias takes care of promoting the educational system or institution with successful alumni, whether the alumni were taught while they were students, or merely selected during the application process.

berjin• 3 years ago

A lot of qualifications serve as a very expensive proof of cognitive abilities. I guess it would be discrimination to just test IQ directly.

juujian• 3 years ago

Just saw on Wikipedia that they joined Y Combinator in 2017. You always learn interesting stuff from reading the news on this site...

benatkin2• 3 years ago

How big were they when they were in YC? Would they not have been eligible for YC if they had the policy they just announced of only investing in early stage startups? If so it might be nice for YC not to be tempted to invest in things like this.

Edit: https://www.ycombinator.com/blog/changes-at-yc Oh it just says they're doing less late stage investing. They didn't announce a specific policy. And LambdaSchool wasn't late stage since they started the same year YC invested in them (but depending on what happened that year maybe not super early stage). Still, YC may miss a LambdaSchool by focusing on the archetype of founder they had in the early days.

thenerdhead3• 3 years ago

Knowing the founder’s history, I feel like every article about them is somehow making them more money or being more successful. Perhaps not the business, but maybe the ability to keep raising money.

I can’t understand how you’d need 130 million to operate over 5 years. Someone is losing at the end of the day and it is probably the investors.

Like if you raised 74 million in 2020 and lay off half your staff a year later, then lay off half your staff again another year later, what in the world are you spending money on? Legal fees?

npalli3• 3 years ago

Well, the business model, without any controversy, requires a lot of upfront investment. You essentially provide training (hence the educators, materials etc..) for 'free' and recoup the investment later when the coding camp graduates get jobs and make income.

sandofsky3• 3 years ago

According to leaked decks: https://www.businessinsider.com/lambda-school-promised-lucra...

Total cost per student was $13,000, of which $2,500 went to student acquisition (online ads?). Average revenue per students was $5,750.

Since 2021, they've lost a ton of their executive team, including a cofounder. I find that a pretty clear sign of where things are going.

edmundsauto• 3 years ago

One of the most interesting things, to me, is that Customer Acquisition Cost is ... not bad at all! Most places that sell online are spending much more than that per customer. Different issues at play here with uncertainty around getting a job and a timeline, but for a company trying to grow, spending < 25% of your revenue on acquisition is exciting.

chzblck• 3 years ago

That CAC is surprisingly low.

abdullahkhalids• 3 years ago

They executed badly on, what was perhaps, the easiest part of this whole project - creating an airtight six month bootcamp curriculum. This just involved paying a bunch of professors (with good teaching record) and industry professional to sit down for a few months and figure it out.

Instead, they launched way too early and produced, by all accounts, mismanaged courses, with constantly changing content.

If they can't get that right, would you really expect them to get the other stuff right?

thenerdhead3• 3 years ago

The model they use is similar to other bootcamps. You pay people who are already well known for teaching the technology to develop a base curriculum and then you "hire" people from the first cohort to replace them and then continue that cycle with each new cohort.

It's like a ponzi scheme/MLM in a sense because the cohorts who learn the material don't really know "why" they are teaching it. It's like having professors teach theory and then TAs taking over while the professors move on with life. Is that the right way to do education? To learn from someone who is one cohort ahead of you? Then they pad resumes and LinkedIn endorsements with everyone in the cohorts, not actual professional work.

I saw this happen at places like DevMountain (Utah) where I think the cofounders picked it up. It made for very confused students who couldn't get answers to basic questions about iOS controls. I saw a lot of this type of activity in the Utah tech scene. I don't know how to feel about it.

PragmaticPulp• 3 years ago

The school, known as BloomTech for short, offers students the option to pay up-front tuition, or to pay no up-front tuition fees and instead pay back their tuition through an income-share agreement, meaning that when a student lands a job paying $50,000 or more, they must pay back 14% of their income for four years or until they hit a cap of $40,000.

One of the saddest parts of this whole debacle is that a lot of bootcamp students are unaware that most normal colleges have sliding scale tuition.

They see the “sticker price” of private college tuition being $50-$60K per year and think that a $40K boot camp is a bargain. What they don’t know is that $40K could actually be more than what they’d have to pay for a lot of universities, given their financial situations. There’s an argument that a 1-year boot camp could get someone into industry faster, but given all of the terrible anecdotes coming out of this particular bootcamp it’s hard to argue that it’s anything other than a terrible deal for students.

bruceb3• 3 years ago

And they could drop out in 2 years and owe $30k and have no job prospects at a regular university.

For some students if they do a year at a bootcamp and then manage to get a $100k job, paying back $40k isn't hard and better than 4 year university.

arroz3• 3 years ago

I don’t get your point. They can also not get a job. You know, bootcamp is not typically considered something good.

yellow_lead• 3 years ago

Plus, you can lower your tuition with community college credit transfers (at least for some states' public uni's)

diebeforei485• 3 years ago

If they didn't land a tech job, the ISA wouldn't apply - correct? Why do they want it cancelled? I'm not sure I understand their lawsuit.

apozem• 3 years ago

If you click through to the PDF of their lawsuit, it lists the personal situation of each litigant.

Gatsky• 3 years ago

A class action lawsuit with only 4 students? Ok.

Universities charge more and guarantee nothing in terms of job placement, but nobody sues them. Just goes to show how much people will happily pay for a status symbol.

CydeWeys2• 3 years ago

A degree from an accredited university is a real valuable thing to have with a wide degree of potential applications. A boot camp doesn't give you anything like that.

bruceb3• 3 years ago

accredited is not much of marker of quality. Plenty of people get a bachelors in psychology that cost them $80k and 4 years of time and no job prospects.

jdminhbg• 3 years ago

A degree from an accredited university is a real valuable thing

Uh… sometimes.

barry-cotter4• 3 years ago

At best a boot camp gives you job skills. A degree is proof you could afford to spend four years (mostly) not working. The latter is a much more effective way of keeping out the wrong sort.

morpheuskafka• 3 years ago

A class action lawsuit with only 4 students? Ok.

Do you know how a class action works? A comparatively small group of people file a suit and ask the court to certify a class of plaintiffs, i.e. a set of people that meet some definition. If the court certifies it, then the ultimate settlement or judgement will bind all members of that class even without any participation on their part (unless they opt out).

The proposed class does not consist of 4 people. There are just 4 lead/representative plaintiffs.

Gunax• 3 years ago

The lawsuit makes two claims: - The bootcamp lied about past student outcomes - It was not properly registered to offer ISA loans

It's not that the bootcamp is bad per se, or even that it's worse than a university. Schools (including universities) cannot lie about outcomes.

frankfrank13• 3 years ago

I would not want to be in the bootcamp biz right now.

readonthegoapp• 3 years ago

maybe a new one designed for the upsurging SVB/GPT/RTO techno-apocalypse?

i wonder Lambda they have settled in the past.

i figure, how much would it cost them to let these kids out of their contracts - most of which were presumably worthless anyways? unless they had already sold them to SVB or similar? also, give the lawyers some money, and keep it all quiet? prob less than this latest round of bad press.

but maybe a couple of things stopped this:

1) lambda / bloom was not confident this would be the last lawsuit, and

2) all press is good press. any time you're running what is at heart, in my estimation, a scam, there is really no amount of bad press that is going to stop a certain subset of people for signing up -- and, really, maybe the bad press actually lends you some credibility as a business -- i.e. if you have _no_ haters at all, are you really even a business today? like nascar and baseball and chelsea and so many others -- if you ain't cheatin', are you even tryin'? everyone has to bite on an MLM at least once in their lives to _really know_ that it's a scam. and, if you're broke and desperate, 'they' can't get money from you anyways, and maybe you'll win the lottery. lambda school or crypto -- go ahead and buy that lottery ticket.

petesergeant• 3 years ago

This seems like the important point:

they enrolled because they were attracted by the high job-placement rates in tech. They allege that the school had false and misleading information about job-placement rates on its website and on CEO Austen Allred's Twitter account

fwlr• 3 years ago

I did App Academy in January 2018, so I can only speak to their curriculum, not Lambda School’s. I have done about 2.5 years’ worth of computer science degrees (mostly the first half, I dropped out and restarted) so I can speak to how coding bootcamps stack up against college.

At that time it was an incredible job market for new developers, so the “pay us once you get a job” model made a lot more sense back then (obviously, the current job market makes it seems borderline insane). I chose to pay upfront for my course because a job search would have been significantly less fruitful for me due to visa requirements, and as it played out, it was a good decision for me. In the current market, paying upfront with alternate financing probably makes sense for a lot more people.

The curriculum was definitely solid. A highly motivated person with some prior tech experience could maybe cover the same ground in their own 3 months of self-directed study for 8-10 hours a day, but the expert guidance on-hand and the boatload of testing to validate the learning doesn’t seem reproducible for an individual. In my opinion, computer science degrees are simply not in the same game as either focused individual learning or a bootcamp - they do not teach nearly as much of the day-to-day developer skills like the shell, git, React, Rails, etc., their theoretical learning of data structures and algorithms is less focused on practical early career content, and the pace is much slower so the total content is less. (I think this understanding that compsci degrees aren’t lined up with junior developer roles is borne out by the general view in tech hiring, that a compsci degree is neither necessary nor sufficient to make a hire, though it is a positive.)

lambda_alum• 3 years ago

JUSTICE. - Lambda alum, 2019. Never again!

Students of BloomTech, FKA Lambda School, file class-action lawsuit

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