[HN Gopher] Lambda School agrees to end deceptive educational fi...
___________________________________________________________________
Lambda School agrees to end deceptive educational financing
practices
Author : markplindsay
Score : 195 points
Date : 2021-04-26 19:34 UTC (3 hours ago)
(HTM) web link (dfpi.ca.gov)
(TXT) w3m dump (dfpi.ca.gov)
| tunesmith wrote:
| Reading this, I'm actually not sure if Lambda implied the tuition
| _wasn 't_ dischargeable in bankruptcy when it actually is, or the
| other way around. If you sign up for Lambda and then go bankrupt,
| do you still have to pay them back?
| pseudalopex wrote:
| They implied it couldn't be discharged. It can apparently.
| tims33 wrote:
| That is a blustery title for what seems like a pretty simple
| regulatory review. Good job by the state for enforcing laws and
| Lambda for adapting to new rules. Obviously this CA state agency
| felt like they needed to pat themselves on the back for doing
| their job.
| nrmitchi wrote:
| This headline feels overly clickbait:
|
| > The settlement is the result of a DFPI investigation that found
| that Lambda was engaged in conduct that violated the new law.
|
| So a new law was created, that Lambda was in violation of, and
| agreed to update their materials to comply with the new law?
|
| This is kind of implying that Lambda was previously breaking the
| law, which doesn't really seem to be the case?
|
| As well, Lambda stating that ISA's are not dischargable in
| bankrupcy when they actually are is probably the least shady
| "deceptive" marketing practice I've heard of from bootcamps and
| code-schools.
| pseudalopex wrote:
| The headline implies the practices were deceptive before they
| were illegal. It doesn't imply they were breaking the law
| previously.
| nrmitchi wrote:
| I didn't realize the HN headline was different than the
| linked article, which is "Lambda School Reaches Settlement
| with DFPI, Agreeing to End Deceptive Educational Financing
| Practices".
|
| "Reaching a settlement" with an enforcement agency implies,
| at least to me, that you were acused of breaking a law.
| pseudalopex wrote:
| Lambda School engaged in deceptive but apparently legal
| practices. A new law made them illegal. Lambda School
| continued to engage in the now illegal practices. The state
| began enforcement proceedings. The parties settled.
| nrmitchi wrote:
| Part of my point, that I did not make clear, is that this
| law came into effect January 1st. A 3 month turn-around
| between something becoming illegal, and a "settlement"
| being reached, feels awfully fast to me, and implies that
| everyone involved was actually trying to follow this new
| law.
| nicklecompte wrote:
| I don't know why you're being so pedantic:
|
| - the conduct Lambda School engaged in became unlawful on
| Jan 1
|
| - Lambda School continued engaging in that contact well-
| past Jan 1
|
| - The state called them out and a settlement (favorable
| to CA) was quickly reached
|
| It is far more likely that a settlement was reached
| because the conduct was clearly unlawful but not deeply
| damaging - so worth enforcing but not worth an ugly legal
| brawl.
|
| I sincerely don't know why you're pretending Lambda was
| "actually trying to follow this new law" and insinuating
| there's something suspicious about anything here - it is
| not an onerous regulation and Lambda had plenty of
| warning. Clearly they weren't trying to follow the law!
| (probably more out of bad management than nefariousness)
|
| Regardless: companies do not get an implicit grace period
| between when a law comes into force and when the company
| is actually required to obey it. In certain cases the law
| can be unconstitutionally coercive or unfair but
| obviously not here.
| detaro wrote:
| Wouldn't someone truly "trying to follow the new law"
| have started following the law beginning from the date
| it's in effect? (Of course mistakes happen, and yes it is
| probably a sign that they weren't trying to fight it too
| much, but that's a low bar assuming it is legally clear)
| pseudalopex wrote:
| The law passed in August. It took effect in January so
| businesses could fix violations before. And the practices
| were always deceptive.
| dang wrote:
| HN limits titles to 80 chars, so the submitter had no
| choice but to use a different title. The edit looks to me
| like it was done in good faith, i.e. was just trying to
| neutrally fit the limit. If someone comes up with a better
| (more accurate and neutral) title, we can change it again.
| kevinpet wrote:
| Oh sweet summer child...
| sicromoft wrote:
| See also Lambda School's Misleading Promises:
| https://nymag.com/intelligencer/2020/02/lambda-schools-job-p...
| maximilianroos wrote:
| TBH this article makes me _more_ confident that Lambda is
| overall Good. They found a single program that was
| substantially deficient, some disorganized operations, and some
| exaggerated marketing claims.
|
| It's starting a new form of education! There are going to be
| operational headaches and a few misses! While the referenced
| cases aren't good, we can assess Lambda on their overall
| contribution, not their mistakes alone.
| minimaxir wrote:
| Lambda School took off PR-wise because their promises made
| sense on paper.
|
| The reality however is more important, especially when humans
| are adversely impacted if the promises are broken.
| treesrule wrote:
| > While the referenced cases aren't good, not their mistakes
| alone
|
| Check notes: "notify students that the bankruptcy
| dischargeability provision language is not accurate"
|
| Just to be clear this isn't a "mistake" this is fraud.
| aerosmile wrote:
| I would be a lot more inclined to believe anything they said in
| this article if they didn't show such blatant bias for
| sensationalist reporting.
|
| > His previous work was mostly concerned with "growth hacking,"
| which is Silicon Valley jargon for finding underappreciated
| (or, less charitably, underhanded) ways of marketing something.
|
| So anyone who put the term "growth hacking" on their resume
| will now get publicly discredited as being underhanded? If they
| tried just a little harder to stick to the facts, all of the
| other research they have done in their reporting would carry a
| bit more weight.
| sugarwater wrote:
| It's worth mentioning the the CEO Austen had a post on here
| (now deleted) proclaiming to have creating a bot army via
| stealing people's pictures on Instagram.
|
| I would qualify that as "underhanded"
| wheelie_boy wrote:
| Link to the post: https://web.archive.org/web/2019070322461
| 6/https://news.ycom...
| plorkyeran wrote:
| > So anyone who put the term "growth hacking" on their resume
| will now get publicly discredited as being underhanded?
|
| Yes? "Growth hacking" has always been basically a euphemism
| for saying that you're willing to do unethical things for
| growth.
| dang wrote:
| The term has always made me wince but that is not a fair
| description.
| [deleted]
| inopinatus wrote:
| If you put that on your CV, I'll put your CV in the garbage.
| It's one of the major red flags.
|
| Along with: various flavours of monetisation specialists;
| pimps; used car sales; politicians; basically all the same
| category of exploitation-oriented narcissists that will
| poison your brand and your culture, create nothing
| themselves, and ultimately destroy more intrinsic value than
| they vampire from others.
| marvindanig wrote:
| > So anyone who put the term "growth hacking" on their resume
| will now get publicly discredited as being underhanded?
|
| That is good thing! These 'growth hacks' people should be
| viewed in the same light as a 'SEO tricks' people. Both
| damage the quality of results and bring bad faith actors to
| the top.
| TameAntelope wrote:
| I dunno if "underhanded" is the right word, but it feels
| like "growth hacking" is something one does only when the
| higher-than-usual moral cost is worth it.
| austenallred wrote:
| Hey everyone,
|
| Pretty excited to reach settlement on this one. The DFPI is a new
| regulatory agency in California that was tasked with reviewing
| Lambda School's new incentive-aligned tuition
| (https://lambdaschool.com/tuition/tuition-options) in California.
| They came back requesting that we update a bankruptcy provision
| in the agreement to clarify that these agreements are
| dischargeable in bankruptcy, and to do a review of our marketing
| to make that clear. All things we're happy to do, and always
| happy to work with regulators!
| Pyramus wrote:
| I've done and seen quite some 'spin' on things as an
| entrepreneur, but this complete lack of humbleness takes the
| cake for me.
| pseudalopex wrote:
| They requested you stop making false claims about
| dischargeability. And about the program being free. Calling the
| former clarifying is deceptive. So is omitting the latter.
| jamiequint wrote:
| Go whine and be negative somewhere else. You fucking people,
| seriously.
| maximilianroos wrote:
| I'm inclined to be on your side -- the sum total of Lambda's
| impact on the world is likely highly positive, whatever happens
| in the details.
|
| But that makes this response confusing -- I was hoping to see a
| refutation of the regulator's claims or, failing that, a
| thoughtful discussion on what went wrong.
|
| Is the regulator accurate? If so, were the statements
| significant? If so, what happened?
| vmception wrote:
| The response isn't confusing when the first duty of the
| settlement is to notify existing students and everyone else
| that the bankruptcy dischargeability provision language is
| not accurate, and thats what they said in the response
|
| _gigglesnort_
| [deleted]
| sandofsky wrote:
| This is a bizarre response. You were caught putting deceptive
| language in your contracts. You now have to hire a third-party
| to ensure all of your contracts comply with the law, and 90
| days to review all of your previous marketing material and
| certify it wasn't dishonest. You're on probation. This is
| nothing to be excited about.
|
| This is similar to when you fought with the BPPE for a year
| because they insisted you can't operate in California while
| offering ISAs. After you finally gave up the fight, and agreed
| to not offer ISAs, they approved you. You said:
|
| > Their approval is a huge testament to our team and our
| students, as well as an official endorsement of our all-remote,
| career-focused educational model.
|
| The BPPE does not endorse schools. They simply said you were no
| longer operating illegally.
| dragonwriter wrote:
| > This is a bizarre response.
|
| Really, its standard corporate spin when accepting a
| settlement, "We're super happy to work with regulators to
| make things better." When, of course, if the company had any
| interest in making things better the regulator would never
| have needed to get involved in the first place.
|
| Obviously, its deceptive, but its not bizarre, its just
| making PR lemonade out of PR lemons.
| samatman wrote:
| You can't seriously believe that regulators have completely
| clean motives and actions.
|
| I'm still getting up to date on what happened here, but
| corporate malfeasance isn't incompatible with aggressive
| and even corrupt regulation. In fact my starting place is
| that both are likely.
|
| What I reject is the claim that the State only steps in and
| takes action if the party they're investigating has done
| something wrong. That's absurd.
| amznthrwaway wrote:
| In this case lambda was flat out lying to their victims.
| lacker wrote:
| _You were caught putting deceptive language in your
| contracts._
|
| Honestly, the California website claims this was "deceptive"
| but to me that seems like an exaggeration. Lambda claimed
| this thing wasn't dischargeable in bankruptcy, the state of
| California says actually it is. Okay, fine. It doesn't mean
| Lambda was doing something malicious. It's not like
| California makes it extremely transparent and clear what the
| rules are for starting a new sort of educational financing.
| When you do something new that's covered unclearly by
| California regulations it is no surprise to have this sort of
| issue.
|
| To me the real injustice is that California does not allow
| ISAs. Students are not idiots incapable of making deals for
| themselves, and the big ripoff in education right now isn't
| ISAs at coding schools, it's taking out a regular student
| loan to get a worthless degree at a mediocre university. All
| of this argument about "catching Lambda's deception" is a
| distraction from the real problems with education.
| jfim wrote:
| > Lambda claimed this thing wasn't dischargeable in
| bankruptcy, the state of California says actually it is.
| Okay, fine. It doesn't mean Lambda was doing something
| malicious.
|
| Maybe I'm missing something, but if someone were in the
| unfortunate position to be considering bankruptcy, wouldn't
| knowing whether this loan is actually dischargeable or not
| be a big deal to them? It seems like it would be.
| kethinov wrote:
| It's not a loan, it's an income share agreement. Someone
| facing bankruptcy is unlikely to be making enough income
| to be subject to ISA repayment which only comes into
| effect if the student is earning above the threshold for
| it.
|
| I really don't get why some people dislike ISAs. They're
| way better than student loans.
| lacker wrote:
| It's important, I just mean that the law isn't obvious
| here, so we shouldn't jump from "Lambda made a false
| statement about the California law" to "Lambda is
| maliciously trying to mislead students".
| [deleted]
| tw04 wrote:
| How is the law not obvious? There are a handful of things
| that are exempt from bankruptcy, "income sharing" isn't
| one of those things. Going through the list of exempted
| items, I can't find a single one where I go "oh, yes that
| sort of applies".
|
| http://www.californiabankruptcy.info/exemptions.html
| pseudalopex wrote:
| That lists property someone can keep. Did you mean this
| page?[1]
|
| [1]
| http://www.californiabankruptcy.info/nondischarge.html
| bpodgursky wrote:
| Well, student loans _are_ one of those things.
|
| ISAs seem a lot closer to "student loans" than, like, a
| new boat. I don't think this is totally unreasonable.
| pseudalopex wrote:
| Federal law determines dischargeability in this case.
| amznthrwaway wrote:
| It is reasonable to assume bad faith, given that all
| available evidence is that Austen is a pathologically
| dishonest sociopath who PG has personally coached to
| ignore valid criticism unless the critics are white
| billionaires.
|
| Lambda is bad. Austen is one of the worst motherfuckers
| on the planet. Captures far more value than his piece of
| shit "school" creates by tricking desperate people.
|
| Fuck Austen, and fuck Paul graham for personally
| encouraging his dishonest sociopathy.
|
| Worthless pieces of shit, both of them.
| [deleted]
| imgabe wrote:
| The language was misleading because the law isn't clear.
| Lambda isn't in charge of which loans are and are not
| dischargeable in bankruptcy and it seems they thought that
| the type of loan they offered was not.
|
| You should be asking why _every_ school loan is not
| dischargeable in bankruptcy.
| pradn wrote:
| Your bizarre cheeriness in the face of "Agreeing to End
| Deceptive Educational Financing Practices" is offputting,
| especially when coupled with the way college financing has led
| to generational deadweight, anxiety, and hopelessness.
| wakeywakeywakey wrote:
| Reminds me of the 'Human Heater' pitch from the Silicon
| Valley show [1]
|
| [1]: https://www.youtube.com/watch?v=Di3fPj0pUbQ
| judge2020 wrote:
| > It has not been shown conclusively that microwaves (or
| other non-ionizing electromagnetic radiation) have
| significant adverse biological effects at low levels. Some,
| but not all, studies suggest that long-term exposure may
| have a carcinogenic effect.
|
| He might not be entirely wrong. They're still not going to
| sell any to the general public, though, especially if it is
| carcinogenic.
|
| https://en.wikipedia.org/wiki/Microwave#Health_effects:~:te
| x...
| davidw wrote:
| What's he supposed to do? Rant about the government? Making
| the best of it and moving on is probably the best move, since
| it doesn't sound like a big hit to their business.
|
| Also, it looks like you get out of Lambda School debts via
| bankruptcy, which you don't with regular college, so
| that's... an improvement?
| sandofsky wrote:
| > What's he supposed to do?
|
| Apologize.
|
| > Also, it looks like you get out of Lambda School debts
| via bankruptcy, which you don't with regular college, so
| that's... an improvement?
|
| "You can't discharge student debt," is actually a myth. I
| have two relatives that discharged their loans due to
| financial hardship. It isn't trivial, but there's a
| process.
|
| The issue with ISAs, in their current form, is the lack of
| legal framework. Short of bankruptcy, the best you can do
| is lawyer up. Lambda School targets people who can't afford
| lawyers.
| rajacombinator wrote:
| Not to mention that Lambda School is an attempt to actually
| align the incentives of school and students, which is the
| main problem with educational financing today. Wrong target
| to pile on.
| sugarwater wrote:
| As a student that went through the program, I question if
| their incentives were aligned.
|
| During the middle of my enrollment at the program (Sept
| 2020), the school suddenly dropped all notion of grading,
| code review, and attendance, let alone the length of the
| program. It remained this way for 3 months, 50% of the
| length of the program.
|
| This is a broad description of the changes, but I want to
| emphasize that the changes were terrible, _many_ students
| complained, and the school essentially whistled with
| fingers in their ears.
| foerbert wrote:
| This response just appears disconnected from reality. It's
| like watching somebody talk about how getting punched in
| the face was a wonderful and purely positive experience.
| It's just baffling.
|
| There are options other than being weirdly positive and
| ranting. They could not say anything at all. They could
| give one of several varieties of mea culpa. They could
| simply state their intentions going forward.
| TheRealPomax wrote:
| In this particular case? It's an HN item, it's going to
| drop off the front page in <12 hours, so... not commenting
| would have been far more sensible than to try to PR-
| convince a cynical tech crowd.
| pseudalopex wrote:
| Saying nothing was an option.
| anchpop wrote:
| Why would you prefer he say nothing? As long as he's not
| misleading people I don't see what the harm of commenting
| is.
| minimaxir wrote:
| Spinning a negative as a positive is misleading at best.
| pepy wrote:
| you say misleading? how surprising
| pseudalopex wrote:
| Framing a request to stop making false claims about
| dischargeability as a request to clarify them is
| misleading. Making it seem like those were the only false
| claims the settlement covered is misleading too.
| threatofrain wrote:
| > Also, it looks like you get out of Lambda School debts
| via bankruptcy, which you don't with regular college, so
| that's... an improvement?
|
| That was always the case, Lambda School just communicated
| otherwise to students.
| cactus2093 wrote:
| Your bizarre grumpishness is offputting, especially when
| coupled with the fact that Lambda's model that they're
| understandably excited about here is aiming to improve on the
| same broken existing model of college financing that you're
| complaining about.
|
| Edit: come on, at least comment if you're downvoting. What
| did I say that is inaccurate?
| minimaxir wrote:
| You are being downvoted because the "it's ok they did bad
| things for a good cause" argument is not a moral high
| ground.
| foerbert wrote:
| Can't downvote even if I wanted to, but...
|
| > Lambda's model that they're understandably excited about
| here
|
| You seemingly imply their bizarre positivity to being
| forced to stop their deceptive practices is a merely a
| result of them being excited about their model.
|
| How does that track at all? What does one have to do with
| the other?
|
| And on top of all that, you started by calling a critical
| response to their extreme positivity in the face of
| regulation for deceptive business practices "bizarre
| grumpishness."
| michaelbuckbee wrote:
| I'd agree with you except that in this case it seems like the
| "deception" was actually working against Lambda school.
|
| Previously -> if you go bankrupt you still owe us.
|
| Now -> if you go bankrupt you don't owe us.
|
| On the face of it this seems like it would make Lambda school
| _more_ attractive than less.
|
| Note, the clause in question is "qualified educational
| loan...subject to the limitations on dischargeability
| contained in...the United States Bankruptcy Code."
| tims33 wrote:
| I'm sure the previous terms made the loans much more
| attractive to lenders which is helpful to Lambda. It would
| be most useful to understand who created the terms in the
| first place.
| judge2020 wrote:
| Maybe more attractive, but only in the 'defraud them by
| going bankrupt after getting the certification' sense,
| where they educate the students without getting paid in
| some cases.
|
| One of the biggest reasons student loans can't be forgiven
| in bankruptcy is because, after school, chances are the
| graduate has zero assets and can go bankrupt with the only
| downside being destroying their credit for 7 years. Whether
| or not you think this is justified or fair is up to you,
| but the situation before this ruling simply [de-]elevated
| Lambda School to the same playing field as other
| educational institutions - the only difference being that
| those institutions don't offer student loans themselves.
| marcinzm wrote:
| It's not about being attractive, it's about ex-students not
| declaring bankruptcy because they think it won't remove
| their lambda school loans. Thus lambda school keeps getting
| money from them instead of getting nothing after they
| decide to declare bankruptcy. That clause was, in my eyes,
| clearly designed to discourage students from exercising
| their ability to clear debts via bankruptcy.
| narwally wrote:
| Yep, it's about "Human Capital: The Last Unoptimized
| Asset Class" <- the title of an actual internal memo they
| wrote.
| ghufran_syed wrote:
| what's wrong with that? is it better that people can't
| develop their human capital, or is it better if people
| have a variety of ways to finance education to develop
| their human capital? The status quo is government student
| loans to finance education, which are generally NOT
| dischargeable in bankruptcy, AND must still be paid even
| if if you didn't graduate, or get a good job afterwards?
| Isn't the income-share agreement at least "less bad"? I'd
| be interested to hear your thoughts on how better to
| address the problem? If the government was involved, I
| personally think the best way would be a graduate tax of
| x%
| nrmitchi wrote:
| I've seen this point made elsewhere too, but I'm not sure
| I understand it.
|
| The ISAs are, as far as I know, capped at 30k, and only
| apply if you're making 50k/yr. I can't imagine a
| situation where someone's decision of whether or not to
| declare bankrupcy comes down to the 30k-max ISA; either
| it's the majority of your debt, and you're making
| >50k/yr, or it's a small amount relative to your other
| debt, in which case you should proceed anyways.
| [deleted]
| mbesto wrote:
| > On the face of it this seems like it would make Lambda
| school _more_ attractive than less.
|
| Technically sure. On the face it tells me something about
| their branding - that their offering may be more deceptive
| than I might realize. Especially since its a new economic
| model for education, the customer probably hasn't thought
| through everything, so trust is important here.
| anchpop wrote:
| I wonder if the accusation is that they were trying to
| mislead people into not understanding that bankruptcy is an
| option, in the hope that they'll be less likely to default?
| Still doesn't really seem that serious to me. Nobody who
| was under the impression that the loans could not be
| discharged by bankruptcy will be disappointed to find out
| that they can.
| nicklecompte wrote:
| > they were trying to mislead people into not
| understanding that bankruptcy is an option
|
| It's exactly this. Lambda School customers tend to be
| young and financially ignorant, with very few resources.
| If a graduate is in a position where, say, they can't
| find a software job, they could be _functionally_
| bankrupt, and their dwindling income /savings will still
| be going towards outstanding Lambda School payments.
|
| From this perspective, it's extremely shitty for LS to
| deceive students that they would have to make the
| payments, with no legal options, even if they were
| stressed about rent and groceries.
| spullara wrote:
| You don't have to pay if you don't have a job so I don't
| think this comment is correct.
| [deleted]
| jamiequint wrote:
| Your inane judginess is offputting, especially when coupled
| with how Lambda School is providing attractive alternative
| options the expensive colleges you're whining about.
| dang wrote:
| Having read your comments in the thread I get where you are
| coming from, but can you please not do it like this? It
| doesn't help. It just gives people more reason to reject
| the point of view you're trying to defend.
|
| https://news.ycombinator.com/newsguidelines.html
| jamiequint wrote:
| If you're going to flag my comments which are formatted
| in the exact same style and voice as the comment I'm
| responding to, please at least attempt to be consistent
| by flagging those comments as well.
| lupire wrote:
| I'm surprised that non-anonymous people, who rely on their
| salesmanship for income, are comfortable publicly
| embarrassing themselves like this.
| jamiequint wrote:
| Generally people who build interesting things don't enjoy
| shitting on other people's attempts to change the world
| for the better.
|
| I give less than zero shits if people who adopt this type
| of attitude don't want to work with me. They're not worth
| working with to begin with.
|
| Go look at the HN launch posts for Dropbox or Coinbase,
| or the struggles of other companies trying to do
| something new and make a difference and look at the
| parade of negative nancies shitting on these companies.
| It's gross, and they look foolish.
|
| I'm on the side of the builders.
| minimaxir wrote:
| Lambda's customers (students who want to learn how to
| code and are negatively impacted by this deception) are
| builders too.
| jamiequint wrote:
| We're talking about a single section in a probably
| lengthy contract in an area of law (ISAs) that barely
| existed until a few years ago. I feel like half of HN is
| picturing a cigar smoking villain, the reality of it is
| probably far more boring.
| mbesto wrote:
| People are critical because "world changer builders" can
| often be found skirting rules that the rest of us have to
| play in. You're a self described growth hacker, which
| likely means you too have probably bent a few rules in
| your day. That's not a criticism of you - you can do your
| business how you like - but don't be surprised when a
| bunch of aspiring hackers/techies get annoyed when they
| see people who do bend the rules to their gain (financial
| or otherwise) despite having access to the worlds most
| prominent investors (read -> resources) and seemingly
| don't do their homework. It challenges the average joe's
| assumption about what is right and wrong in the tech
| startup world.
|
| Like does Lambda not have access to Wilson Sonsini
| lawyers like the rest of their cohort? Or more plausibly,
| are they just willfully ignorant towards wanting to make
| sure they play by every rule (e.g. hire lawyers) that
| comes into their chosen market? Move fast and break
| things am I right?
| jamiequint wrote:
| > You're a self described growth hacker
|
| I don't describe myself as a "growth hacker" anywhere
| that I'm aware of.
|
| > don't be surprised when a bunch of aspiring
| hackers/techies get annoyed when they see people who do
| bend the rules to their gain (financial or otherwise)
| despite having access to the worlds most prominent
| investors (read -> resources) and seemingly don't do
| their homework.
|
| Not everything is so black and white. What is more likely
| is that some lawyer gave an opinion that Lambda School's
| offering could be interpreted as an educational loan and
| qualify as such (pretty clearly actually, given that the
| contract was written by a lawyer), and maybe even said
| that if they got sued here the remedy would likely be to
| just clarify the definition.
|
| > Like does Lambda not have access to Wilson Sonsini
| lawyers like the rest of their cohort?
|
| YC has in-house legal counsel now, and Lambda is an old
| enough company to have their own counsel. In any case,
| obviously a lawyer wrote the contract and gave an opinion
| that doesn't agree with your own expert legal opinion.
|
| > Move fast and break things am I right?
|
| Hopefully! We need a lot more of that in the world. More
| Zuckerbergs, more Travis Kalaniks. The more the better.
| SamReidHughes wrote:
| Actually the ones negatively impacted by information
| about bankruptcy options are not builders. They're the
| ones who can't land a job.
| dsr_ wrote:
| Go look at all the other YCombinator investments, and
| then look up survivorship bias.
|
| I, too, can identify winners in the past. It's
| identifying them in the future that's hard.
| threatofrain wrote:
| I didn't realize that lying to customers was so important
| to ethical building.
|
| https://web.archive.org/web/20190703224616/https://news.y
| com...
|
| https://soundcloud.com/vwoo/interview-with-austen-allred
| jamiequint wrote:
| I didn't realize strawmanning was so important to
| maintaining your moral superiority complex.
| [deleted]
| aerosmile wrote:
| I am surprised by your comment. Posting a single sentence
| without any context other than what appears to be nothing
| more than a personal insult (how do you know about
| Jamie's sources of income?) is unusually rude for this
| community.
| [deleted]
| minimaxir wrote:
| Their profile says "Now: Investing/Consulting" which
| implies salesmanship for income.
| aerosmile wrote:
| Ok, they didn't Google their name, but instead clicked on
| their profile and researched them "only within the HN web
| domain." Still feels personal and unnecessary.
|
| Edit: nevermind, they did Google him.
| jamiequint wrote:
| Haha, I just updated my profile after I read that
| comment, so they definitely Googled my name.
| dang wrote:
| Please don't take threads further into flamewar.
|
| https://news.ycombinator.com/newsguidelines.html
| rexreed wrote:
| The above response is a great example of spin, or if you
| prefer, this nice euphemism:
| https://idioms.thefreedictionary.com/polishing+a+turd
| yawnxyz wrote:
| "contains a provision that falsely asserts that the Contract is a
| "qualified educational loan" ..."
|
| Did University of Phoenix qualify for "educational loans"? I'm
| constantly surprised why this sector gets a pass like this from
| bankruptcy.
| renewiltord wrote:
| The reason is that the applicants would not be loaned anything
| if they could discharge debt in bankruptcy. i.e. student loans
| would not exist unless collateralized and we don't want people
| to have to put up collateral equal to the value of the loan.
|
| This is because if I were a student, the optimal route would be
| to take the largest loan possible while on no assets, then go
| to the most expensive university, then declare bankruptcy on
| graduation.
|
| The lender knows this, so they won't give me any loan unless I
| can put up collateral equal to the value of the loan.
|
| The government knows this, and they also want kids to go to
| college, so they provide a mechanism by which kids can promise
| to pay back the money.
| yawnxyz wrote:
| So this just creates an incentive to push as many kids
| through school as possible and to take out the biggest loans,
| right?
|
| Shouldn't there be a metric built in that says something like
| "the quality of education didn't meet the expectations of the
| loan, so the loan can be discharged"?
|
| Where's the warranty for the lender?
| dragonwriter wrote:
| > Shouldn't there be a metric built in that says something
| like "the quality of education didn't meet the expectations
| of the loan, so the loan can be discharged"?
|
| There are, in fact, several policies in this area, the most
| significant is Borrower Defense to Repayment:
| https://studentaid.gov/borrower-defense/
| gruez wrote:
| >Shouldn't there be a metric built in that says something
| like "the quality of education didn't meet the expectations
| of the loan, so the loan can be discharged"?
|
| How do you prove whether the failings are because of the
| student or the school? The fact that there are three
| parties involved (the student, the school, the lender) also
| complicates things. Finally, lenders would bake this risk
| into the loan itself, which means higher interest rates for
| people going to non-famous institutions.
| nrmitchi wrote:
| For what it's worth (I learned this recently and was equally
| surprised by it) student loans were not non-dischargable
| until 2005. Ie, for all time before 2005, a student could do
| what you describe, and as far as I know it wasn't a
| widespread practice.
|
| It is a relatively new thing that really only came in to
| existance _coincidentally_ around the same time that
| education became so expensive that going through the effort
| of bankrupcy became "worth it".
| tedivm wrote:
| Bankruptcies have to get approved by a judge, and often
| debt is restructured instead of being discharged. The
| scenario where someone takes on a bunch of debt then
| declares bankruptcy on graduation is a joke because judges
| wouldn't allow it. They may get their loan deferred or
| restructured to help buy time to get a job, but they
| wouldn't just discharge it like that. These kind of made up
| "what if" scenarios to justify broken laws are always weird
| to me especially when there aren't so far from reality.
| judge2020 wrote:
| Neither of us are lawyers (based on your profile), but
| there are two modern forms of bankruptcy in the U.S:
| Chapter 7, which does discharge your debts, or Chapter
| 13, which is restructuring. In a chapter 7 bankruptcy,
| you have to pass the means test, which checks if your
| household income is below the median income of your
| state:
|
| > The means test looks at the gross income of everyone in
| your household during the six months before you file. If
| your household income is below the median income in your
| state, you'll qualify to file a Chapter 7 bankruptcy.
|
| If it isn't, then the courts can force your chapter 7
| case be converted to a chapter 13. But if someone, say,
| lives alone and still works at their minimum-wage job
| from college, I don't see anything else that would
| prevent a chapter 7 from proceeding.
|
| https://www.nolo.com/legal-
| encyclopedia/chapter-7-bankruptcy....
| nrmitchi wrote:
| I may have been unclear and didn't mean to imply there
| there was a rush of students declaring bankrupcy, thus
| this law made sense. The law is, in my opinion, _stupid_.
|
| I was implying that education should never have been
| allowed to become so unreasonably expensive and
| unsustainable that it has to be propped up with special
| exceptions.
| dhdhhdd wrote:
| And so the education would get cheaper. Nothing drives up
| prices more than easy access to big loans.
| wespiser_2018 wrote:
| The problem with the US college/debt system is we combine
| three features: study anything, at any school you can get
| into, and take out nearly unlimited loans to do it. Big
| loans aren't bad if you use them to study medicine, and a
| lot of student debt is held by grad degree holders: the
| issue is people taking on debt that people can take on debt
| that isn't a very good investment in themselves.
| renewiltord wrote:
| I'm with you. I believe that we need the following reform:
|
| * Information Reform: Schools should be required to report
| median income of graduating class by major by year (with
| number of declined-to-disclose). Students should know what
| they're going to get out of this program.
|
| * Incentive Alignment: School programs above a certain cost
| should only be payable either up-front or via income share
| agreement. Schools should only be paid if their education
| yielded economic gain for students but students should be
| permitted escape valves if possible.
|
| * Bankruptcy Reform: Student loans should be discharged in
| bankruptcy, ISAs should not.
| vineyardmike wrote:
| > education yielded economic gain for student
|
| What a sad narrow view of education.
|
| I recognize that for many education is a vocational
| experience meant to provide accesss to better jobs, but
| really education can be so much more broad and valuable.
| renewiltord wrote:
| I think it is very rude of you to have removed the other
| part of that sentence that addressed that. To then insult
| me based on this misreading is really boorish. If you are
| interested in conversing with me, please do not do that.
|
| Now, for anyone else reading for whom it wasn't clear: I
| want schools to primarily receive economic benefit by
| providing economic benefit _but_ (quoting from above) I
| believe students should have an escape valve to pay for
| education that does not have direct economic benefit. I
| believe that paying upfront is sufficient as an escape
| valve.
| imtringued wrote:
| Sounds like student loans simply don't work then. Why would
| you choose a free market mechanism only to then decide that
| you don't like it and corrupt it entirely for the sake of
| charity/welfare?
|
| If you want the government to play such a role in funding
| education why not let it simply do so? It's not like you are
| wasting the money by creating a productive workforce.
| jbigelow76 wrote:
| Seems pretty simple...
|
| Student loans become dischargeable > lenders stop lending
| where tuition cost != market value > exorbitant tuition no
| longer affordable > universities forced to reprice to new
| market coniditions > paying back tuition now preferable to 7
| year hit on credit for bankruptcy > diplomas for everyone :)
|
| The inability to discharge tuition via bankruptcy has become
| a moral hazard that society needs to deal with.
| dnautics wrote:
| > The inability to discharge tuition via bankruptcy has
| become a moral hazard that society needs to deal with.
|
| Keep in mind that society != government. It's government
| that is enabling nondischargeability; and it's not in the
| best interests of the political class to change this
| situation.
| jfrunyon wrote:
| Except that declaring bankruptcy has actual consequences for
| people with no assets.
| [deleted]
| mountainriver wrote:
| Apparently you can discharge student loans in bankruptcy
| https://www.npr.org/2020/01/22/797330613/myth-busted-
| turns-o...
| rahimnathwani wrote:
| From what I read, it seems that:
|
| 1. The DFPI has existed since 2013 (when it was formed by the
| merger of two other agencies). It used to be called the DBO. It
| was renamed to DBO in 2020, but it is not new.
|
| 2. The California Consumer Financial Protection Law (CCFPL) is a
| recent law that gives the DFPI new powers and responsibilities.
|
| 3. The introduction of CCFPL did not change the accuracy or
| inaccuracy of the 'bankruptcy dischargeability provision
| language'. The CCFPL just made it the DFPI's job to stop any
| inaccuracies.
|
| Is that correct?
| threatofrain wrote:
| Recent discussion on Lambda School.
|
| https://news.ycombinator.com/item?id=26802601
|
| https://news.ycombinator.com/item?id=25415017
|
| Interview with Austen Allred, CEO of Lambda School.
|
| https://soundcloud.com/vwoo/interview-with-austen-allred
| cm2012 wrote:
| Lambda school is a much better model for students than normal
| colleges.
| lupire wrote:
| Maybe, but stating that with no supporting information is
| worthless.
|
| "Lambda school is a much worse model for students than normal
| colleges." Maybe? Maybe not?
| beckingz wrote:
| 'As part of the settlement Lambda will: (1) notify students that
| the bankruptcy dischargeability provision language is not
| accurate (2) retain a third party to review the terms of the
| school's finance contract to ensure that it complies with all
| applicable laws; and (3) undergo a review of its marketing
| materials to ensure that the information is accurate and not
| likely to mislead consumers. '
| srndsnd wrote:
| I'm confused as to why this headline has to be so close to
| clickbait. I'm not even one to stand up for people like Lambda, I
| think a lot of bootcamps are shady at best, and actively
| deceptive at worst (Trilogy).
|
| It is definitely important to note that that these loans can be
| discharged in bankruptcy. But as far as I know, isn't this _less_
| stringent than typical student loans, which _can 't_ be
| discharged in bankruptcy? Is the point here that there was a
| population of Lambda students who weren't aware they could
| discharge their loan, and this contract prevision was preventing
| them from doing so? Or was the school deliberately making that
| process more difficult? The article makes none of that entirely
| clear.
|
| On the whole this doesn't scream "deceptive educational financing
| practices" to me. That sounds like a government agency press
| release making a mountain out of a molehill and trying to knock
| Lambda down a peg, but I might be wrong.
|
| Edit: after reading how dischargeability impacts people's ability
| to take out the loan in the first place, yeah, this matters quite
| a bit, and I was wrong because I didn't understand how education
| financing works. I'll own that. Seems Lambda was being less than
| equitable in how they approached the matter, and hoping no one
| would notice.
| [deleted]
| threatofrain wrote:
| https://dfpi.ca.gov/wp-content/uploads/sites/337/2021/04/CFP...
| luckylion wrote:
| > But as far as I know, isn't this less stringent than typical
| student loans, which can't be discharged in bankruptcy?
|
| That's the point, I believe. Lambda School was pretending their
| loans were protected from bankruptcy proceedings so students
| wouldn't consider it.
|
| It's somewhat common for corporations to pretend that laws
| don't exist. Even if only half of the customers believe them
| and don't sue, they'll save money.
| aerosmile wrote:
| You're right and wrong. You already touched on the latter in
| your edit, so let's focus on the former for a sec. I was not
| surprised at all to see your comment, since I walked away with
| the same impression - someone at a gov agency tried harder than
| usual to achieve the max juice out of this release. Learning in
| this thread that this is a brand new agency and that this might
| have been the very first case they were tasked with (hope I got
| that right), helped me complete the full picture.
| elliekelly wrote:
| "Deceptive practices" is a commonly used legal term in consumer
| protection. It's often used in conjunction with "unfair
| business practices" or "unfair and deceptive practices"
| depending on the state and what has been alleged.
| detaro wrote:
| If you agree that it's an important detail, how is
| misrepresenting their status in the contract, and thus
| misleading people about their rights, not deceptive?
| songqin wrote:
| What do you specifically find deceptive about Trilogy? Just
| curious, as I see them around me a lot.
| jfrunyon wrote:
| > It is definitely important to note that that these loans can
| be discharged in bankruptcy. But as far as I know, isn't this
| less stringent than typical student loans, which can't be
| discharged in bankruptcy? Is the point here that there was a
| population of Lambda students who weren't aware they could
| discharge their loan, and this contract prevision was
| preventing them from doing so? Or was the school deliberately
| making that process more difficult? The article makes none of
| that entirely clear.
|
| It makes it quite clear. The loan has always been dischargeable
| in bankruptcy. However, they had a provision in their contract
| stating otherwise, which was deceptive.
| luckylion wrote:
| Why is it a settlement, were the regulators not sure that they
| violated the law and sought compromise? It sounds like "Lambda
| School agrees to comply with the law" which implies that doing so
| is optional.
| lupire wrote:
| The goal of regulation is compliance. Especially for new laws
| where the meaning may be unclear. Since the permanent harm is
| minimal (anyone who didn't know their loan was dischargeable,
| now knows and can discharge it), the informational update
| solves the problem.
|
| Obviously if the defendant did not agree to comply with the
| law, there would be no settlement and the case would be pursued
| further.
| jpindar wrote:
| Is Lambda the only school that's using this loan model?
| DoreenMichele wrote:
| _The language violates the new California Consumer Financial
| Protection Law (CCFPL), which took effect this year_
|
| At the risk of being misconstrued as defending predatory
| practices, it sounds like they quickly reached an agreement to
| comply with legal stuff that probably didn't exist when they
| wrote the language that's being updated.
| threatofrain wrote:
| It's true, before it was legal to be dishonest about whether
| loans could be discharged under federal law.
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