Speaking for myself, I generally prefer to learn at my own pace studying from books than from lectures and a standardized curriculum. But the issue here is value vs. risk: Lambda provides greater value (instructors, curriculum, etc...), but their income share amount is similar because it needn't account for the (presumably) higher risk of failure with self-study.
I don't seem to be understanding the finances behind it.
The agreement is by completing the program, you pay 15% of your salary for 2 years as long as you're receiving more than $40,000. However, it also says it's capped at $30,000 total over that period.
If you pay someone a $2,000 a month salary for 21 weeks, that's already $42,000. Where's the extra $12,000 coming from?
I'm just trying to understand since if I agree to quit my "current job" and rely on another company to help pay for me, I'm relying on that company to not pull the rug out from under me when I'm half-way through the program. How do I know this is a reliable and sustainable program?
Interesting concept! That's just the first question that comes to mind for me.
That's true but they wrote a maximum of $30,000 total.
Is that total the monthly max cap or total net "payment" back to the organization? If it's 2000 a month salary for 21 weeks then yeah that's fine, but I guess it's the semantics that I failed to understand.
$30,000 is the max that you will pay back, calculated as a percentage of your salary once you are hired. $10,000 is what you will receive over the course of 5 months of training.
I could easily see variants of this happening. For example, companies could fund the students and get to pick first.
I can think of at least 5 people I know that has the potential to become competent developers, but their problem is exactly what this solves: they already have jobs and mortgages.
Can you remove people from the program midway through, if it seems like they're not doing well? If so, what are the rules around this?
In some ways this seems like a very selective program, since you pay people to do something whereas your competitors charge people. But selective programs would want to get the very best students — and here there's actually an adverse selection problem. That is, people who think they will be rock stars and get high-paying jobs will not want to enroll with you since they would expect the longer payback period (at their presumed high salary) would be less favorable than doing a typical program with a payback period that is half as long.
It has to be the former, or else you incentivizepeople to take jobs at 40k unless they can get an offer above 47k. Anything less that 47k and they end up paying more than if they’d taken a 40k job.
> It has to be the former, or else you incentivizepeople to take jobs at 40k unless they can get an offer above 47k.
It's a full-stack dev training program that is clearly targeted to get people making around $100K/year over the first two years out, I doubt very much that they are really concerned with slight adverse incentives for students whose best offer is between $40-47K, which is deep in the failure zone.
You would think so, given the sibling comment about how people would be incentivized to make under $40k, but according to their Launch HN [1]:
"The $40,000 threshold is inclusive. So if their income is equal to our greater than $40,000, they owe 15%. If they ever dip below $40,000 payments stop until it goes back up to $40,000."
Hey, thanks for the link! It seems odd to structure things this way but looking through that thread you linked to it seems they opted for simplicity. Not sure why this is simpler than 15% on the margin though.
Out of interest, what would you say are the key weaknesses at your company that makes successfully hiring, training and managing juniors for remote roles impossible?
>Out of interest, what would you say are the key weaknesses at your company that makes successfully hiring, training and managing juniors for remote roles impossible?
Faulty premise. I would say that it's simply not worth the risk for someone with essentially no way to show they can actually do the work and manage themselves.
The magnitude of risk depends to a large degree on the employer.
> someone with essentially no way to show they can actually do the work and manage themselves.
Two quick follow up points on that (the second point is more important)...
1. Junior devs graduating from places like this and Lambda School will have spent months learning, collaborating and working remotely as part of their course. I wouldn't say that counts as proof that they can do the work per se, but it's definitely proof that - if they can do they work - they can do it remotely.
2. You have the same challenges with non-remote hires as well... What part of your hiring/onboarding/management process requires you to be able to physically touch the junior dev in question?
BTW I absolutely don't think all companies should hire remote.
And I don't think all junior devs would be good remote hires. Far from it.
But there are enough successful companies out there hiring remote junior devs to prove that it is possible.
So when someone says they would never hire a remote junior dev, it just seems silly to me to pretend that's anything more than a company masking serious hiring, training or culture problems which remote work would expose...
It's disingenuous to place this figure there without specifying the location. Even in places with high COL, 91k as an entry-level front end dev is unrealistic if they have no prior experience. And if this is assuming you'd be remote, that's even more ridiculous. 91k off the bat with 0 prior experience in the industry working from wherever you want sounds like a fantasy.
130k plus is the typical salary with a college grad in a top company. We are a startup in Seattle, not a unicorn, you've probably not heard of us, and we pay 135k + options for new college hires. We are told our comp is too low by people.
I mean those are your cream of the crop type candidates i'm assuming not a person who just got pumped out of a 12 week bootcamp. I would assume < 10% of people with no experience entering the field get 100k+. Even 10% might be a large number.
They are very good bachelors. I don't think someone with 12 weeks in bootcamp can pass the interview bar. We ask about multithreaded programming in C++, a series of programming challenges, and about theory of computer science, software engineering principals. Nothing that I wouldn't expect from my previous experience with fang like companies.
seriously? evidently things are very different over there, here in the UK youd be lucky to get much over £25-30k in an entry level job and if you dont have a few years experience under your belt then you better be prepared for a long fight to get a position at all
Dead serious. I equally don't understand the EU/UK market for programmers. I think US salaries seem unsustainably high and European salaries unsustainably low, especially in large cities...
> 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.
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).
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."
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.
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.
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.
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.
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.
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.
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.
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.
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.
> I've only met rich white people who are versed in Marxism
Wow. I'm old enough to know that when someone tries to attack you personally, it's because of something deeper in their life and not about the subject matter anymore.
Sounds like you're really upset that someone wouldn't agree with you on this topic. If you're open to staying on the subject matter, are you OK with any limit? A $50k payback? A $100k payback?
A long time ago the US decided to put a maximum rate on loans. I guess I don't understand if you think maximum interest rates are Marxist or something else, because I'm only talking about the interest rate part of this equation.
Sorry I did get annoyed. I've had similar ideas for this model and ultimately feel like it would be dismissed out of a sense of moral justice. Would I be okay with a 100K payback? In theory sure, thats the model for elite universities and no one seems to be concerned for their wellbeing. The determining metric would be ROI. The proposed model limits risk and incentivizes instructors to produce the most valuable curriculum. As more companies compete in the space, unskilled workers win because they now have a bridge to become skilled. Not only that, they're receiving cash while doing so!
I want to see this model taken to the extreme. Offer luxury living to students while they learn, and offer work from home positions upon graduation. Have developers compete to create modern campuses that compete for unskilled labor. They would only do this knowing there's profits to be shared by developing the unskilled to the skilled.
It's a 300% return rate only because you are assuming the repayment only covers the $2K/month stipend ($10K total), with $0 tuition equivalent. They are comparing the program to $15K tuition programs (and also saying it offers more). If you assume the payback is for the stipend plus $15K in tuition, it's a lot more reasonable. If you assume that they are offering 1/3 more than a $15K tuition program so that the tuition equivalent is $20K, it's effectively a zero interest loan at the maximum repayment amount.
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...
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%.
> 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.
Way down at the end of the page an "oh, by the way..." disclosure:
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.
There is also the implication that a potential starting salary is $91,476:
$91,476 The salary of an entry-level front-end developer (Source: PayScale, 2019)
Assuming that was somehow true...
%15 * $92K * 2yr - ($2K/mo * 5mo) = $17.6K total cost of tuition
Looking around, ~$11.4K is the average tuition for a coding school, so this proposition works out to be a rather high interest loan (that can't be paid off early):
It's also a high-risk lending operation, and high-risk lending naturally comes with high interest rates. Maybe someone takes 6 months to find a job, now the interest rate is under 7%.
I think that tying your own financial reward to the financial success of your graduates is perfectly OK, perhaps even desirable.
The important difference being that with this program, you don't pay if it doesn't work out for you. The 17.6% APR is in case of a success - they just helped start your career. Seems well worth the greatly reduced risk!
If making $40k/year is "success". With your $6k payment on the $40k you made, your $34k is barely above the poverty line.
> Seems well worth the greatly reduced risk!
No, it doesn't. Just seems like a 300% repayment rate. I bet the number of software jobs starting under $40k is in the bottom 5%, maybe 1% of job listings. So, you're basically only mitigating risk if you can't find a job.
> So, you're basically only mitigating risk if you can't find a job.
Which is.. everyone starting a bootcamp!! Lol.
Who are you looking out for? You seem really concerned about the biblical application of usury laws. Do you know anyone who has zero technical skill and would LOVE to make 40k? I have a feeling you live in a very, very small bubble.
Just because you think someone is so poor they should be grateful for a 3x loan doesn't make it legal or right. That's the definition of loansharking. It's been a pervasive problem that increases economic inequality because only the poorest would accept a loan with those steep terms. Just because it's related to something positive like teaching people to code doesn't make the 3x payback and less burdensome.
I'm not so worried about this company in particular, but if this business model works, imagine desparate people signing up for a $100k loan and having to pay back $300k, or getting $300k for a house and having to pay back $900k.
It's the payback rate that's the problem.
I also don't think it's a bad thing to be concerned about other people in our community.
The difference here is that the incentives of workers and this company are aligned. Either workers start making some serious wages and the company gets their money back (with interest), or both lose - worker their time, company their investment. Given the risk I don't think this is even close to usury. In fact, I would assume they are getting paid by the companies too, for privilege of getting the suitable candidates (which is not a problem in my eyes, if true).
Edit: and if they ever move their operations to EU I know a few people who would probably grab such a chance with both hands.
i know a ton of people who would, as far as im aware the US is significantly cheaper than the UK in pretty much all areas, that $34k translates to about £25k which is not a bad basic wage. i imagine a lot of the people stacking shelves or cleaning toilets for minimum wage would much rather be coding for more money.
Sure, but a loan you don't repay unless you get placed and make above a certain threshold. They're removing the risk for you and you pay for that once you're able.
I agree that the salary estimate is high, and I wouldn't hire a remote junior dev, but still; you're paying nothing up front and they're handing you $2k / month.
> Looking around, ~$11.4K is the average tuition for a coding school, so this proposition works out to be a rather high interest loan (that can't be paid off early)
You are paying extra in the hoped-for successful case in return for paying less if the whole thing turns out to be a bust. Or, equivalently, you are paying a lot extra for a portion of the tuition (which is, in fact, a straight $20,000—the $30,000 maximum minus the $10,000 stipend) to be due over time after completion, repaid on an income contingent basis, and foregone in part or in whole if after-program income isn't at least $200K over two years.
I feel like this might be solving the wrong problem. Are we at the point where we don't have enough experienced coders looking for work? Why not create a better way to find jobs for them first?
Who is the target audience specifically? There are lots of organizations who work with state unemployment agencies around the country to try to place people with training, and then help find them jobs. This seems perfectly placed for that.
Assuming I could find 10 formerly convicted felons who live on unemployment/welfare and dropped out of high school and got them to apply to this program, would they get accepted? If "The most important thing we care about is evidence of grit" is true, I think these individuals should qualify.
I know another company that has been doing something similar in the UK for a few years. In their model they pay for you to train and guarantee you a job at the end of it. The catch is that you have to repay your tuition if you leave that job within 1 or 2 years. They send you on crappy consultancy projects and pay you a relatively low wage while they rake in high consultancy fees.
The people I know who had trained through that could not wait to leave and didn't feel that it had been overall positive.
> Currently, you must have the right to work in the US in order to apply.
I wonder why, though? Is there a legal barrier that prevents them from introducing this to foreign students as well? Or is it just because US-based salaries are much higher than in many other parts of the world?
I am surprised that nobody has raised the question of whether this is 15% of gross pay, pre-tax or 15% of net pay, post-witholding (well assuming W2 positions)? Those are very different things, especially in states like CA/NY where I imagine many candidates might end up being placed. In those contexts 15% of gross might be more like a 25-30% effective share of the developer's net income (?)
This smells too much of Unbounded Solutions/BrighterBrain style scumbaggery -- a wooden nickel I would advise anyone not to take. Want to learn programming on the cheap? Take or audit courses at your local community college or state university, or learn on your own.
This page may be advertising an entirely legitimate program, but it's going out of its way to set off as many "shady business" alarms as possible. The cynic in me says this may even be intentional, for the same reason that Nigerian scammers keep saying they're from Nigeria: to filter out the suspicious.
This is very similar to Lambda School, another YC backed startup that is doing very well. Lambda School went through the YC program just 1.5 years before YC decided to back a competitor. Not cool. Good VCs will bow out if they have a conflicting investment. YC sets a great example for many policies, but I think they got this one very wrong.
Now, if I am applying to YC I'm going to have to consider that they will have access to sensitive plans, strategies, strengths, and weaknesses of my startup, and that they might inadvertently share that with a competitor in a later batch.
I'm sure they'll say they have a Chinese wall and don't share information, but YC as a company now has a conflict of interest.
They really expect to have someone from zero coding to full stack in only 12 weeks? 3 months is barely enough to get started on modern front end, assuming you already have programming experience.
Either they have found some revolutionary new way of injecting data into the brain Matrix style, or the people coming out of that program won't be even close to ready and will probably have a mess in their heads.
Also 90K for an entry level remote position? I have 20 years of experience, where do I have to sign for that? I'd gladly take an entry level position with zero responsibilities for that kind of money.
We will pay you to learn to code, then place you on projects for real clients. They will then have the option to hire you within 6 months. It's outsourcing cross training. (We'll have a few senior devs to mentor the teams, and we'll hire an exec or three involved in government contracting to give ourselves multiple options.)
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[ 3.0 ms ] story [ 163 ms ] threadThe agreement is by completing the program, you pay 15% of your salary for 2 years as long as you're receiving more than $40,000. However, it also says it's capped at $30,000 total over that period.
If you pay someone a $2,000 a month salary for 21 weeks, that's already $42,000. Where's the extra $12,000 coming from?
I'm just trying to understand since if I agree to quit my "current job" and rely on another company to help pay for me, I'm relying on that company to not pull the rug out from under me when I'm half-way through the program. How do I know this is a reliable and sustainable program?
Interesting concept! That's just the first question that comes to mind for me.
It's $2,000 a month for 5 months, so $10,000 total.
Is that total the monthly max cap or total net "payment" back to the organization? If it's 2000 a month salary for 21 weeks then yeah that's fine, but I guess it's the semantics that I failed to understand.
I just can't do math apparently.
I could easily see variants of this happening. For example, companies could fund the students and get to pick first.
I can think of at least 5 people I know that has the potential to become competent developers, but their problem is exactly what this solves: they already have jobs and mortgages.
In some ways this seems like a very selective program, since you pay people to do something whereas your competitors charge people. But selective programs would want to get the very best students — and here there's actually an adverse selection problem. That is, people who think they will be rock stars and get high-paying jobs will not want to enroll with you since they would expect the longer payback period (at their presumed high salary) would be less favorable than doing a typical program with a payback period that is half as long.
It's a full-stack dev training program that is clearly targeted to get people making around $100K/year over the first two years out, I doubt very much that they are really concerned with slight adverse incentives for students whose best offer is between $40-47K, which is deep in the failure zone.
"The $40,000 threshold is inclusive. So if their income is equal to our greater than $40,000, they owe 15%. If they ever dip below $40,000 payments stop until it goes back up to $40,000."
[1] https://news.ycombinator.com/item?id=19227441
> $91,476 - The salary of an entry-level front-end developer
These two things should not be next to each other. It's exceptionally rare to get $90k a year remotely with no prior work experience.
Out of interest, what would you say are the key weaknesses at your company that makes successfully hiring, training and managing juniors for remote roles impossible?
Faulty premise. I would say that it's simply not worth the risk for someone with essentially no way to show they can actually do the work and manage themselves.
> someone with essentially no way to show they can actually do the work and manage themselves.
Two quick follow up points on that (the second point is more important)...
1. Junior devs graduating from places like this and Lambda School will have spent months learning, collaborating and working remotely as part of their course. I wouldn't say that counts as proof that they can do the work per se, but it's definitely proof that - if they can do they work - they can do it remotely.
2. You have the same challenges with non-remote hires as well... What part of your hiring/onboarding/management process requires you to be able to physically touch the junior dev in question?
BTW I absolutely don't think all companies should hire remote.
And I don't think all junior devs would be good remote hires. Far from it.
But there are enough successful companies out there hiring remote junior devs to prove that it is possible.
So when someone says they would never hire a remote junior dev, it just seems silly to me to pretend that's anything more than a company masking serious hiring, training or culture problems which remote work would expose...
In the metro Boston area, fresh college grads are getting $100K+bonus typically, with upside from there. I think $91K is not at all unrealistic.
FAANG are recruiting high-level programmers, not people hooking up forms to APIs.
> (you must have the right to work in the US)
So you and I, both out.
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.
Ummm, that's how the whole tech industry works. Ever work for a recruiter? They're taking a cut of your salary.
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.
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.
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.
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.
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.
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.
Oh, MONEY - who cares about that stuff. Not the poor, they got tons of it.
I get the feeling you and your parents are well off. And I say that only because I've only met rich white people who are versed in Marxism.
Wow. I'm old enough to know that when someone tries to attack you personally, it's because of something deeper in their life and not about the subject matter anymore.
Sounds like you're really upset that someone wouldn't agree with you on this topic. If you're open to staying on the subject matter, are you OK with any limit? A $50k payback? A $100k payback?
A long time ago the US decided to put a maximum rate on loans. I guess I don't understand if you think maximum interest rates are Marxist or something else, because I'm only talking about the interest rate part of this equation.
I want to see this model taken to the extreme. Offer luxury living to students while they learn, and offer work from home positions upon graduation. Have developers compete to create modern campuses that compete for unskilled labor. They would only do this knowing there's profits to be shared by developing the unskilled to the skilled.
It's a 300% return rate only because you are assuming the repayment only covers the $2K/month stipend ($10K total), with $0 tuition equivalent. They are comparing the program to $15K tuition programs (and also saying it offers more). If you assume the payback is for the stipend plus $15K in tuition, it's a lot more reasonable. If you assume that they are offering 1/3 more than a $15K tuition program so that the tuition equivalent is $20K, it's effectively a zero interest loan at the maximum repayment amount.
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...
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%.
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.
I think that tying your own financial reward to the financial success of your graduates is perfectly OK, perhaps even desirable.
If making $40k/year is "success". With your $6k payment on the $40k you made, your $34k is barely above the poverty line.
> Seems well worth the greatly reduced risk!
No, it doesn't. Just seems like a 300% repayment rate. I bet the number of software jobs starting under $40k is in the bottom 5%, maybe 1% of job listings. So, you're basically only mitigating risk if you can't find a job.
Which is.. everyone starting a bootcamp!! Lol.
Who are you looking out for? You seem really concerned about the biblical application of usury laws. Do you know anyone who has zero technical skill and would LOVE to make 40k? I have a feeling you live in a very, very small bubble.
I'm not so worried about this company in particular, but if this business model works, imagine desparate people signing up for a $100k loan and having to pay back $300k, or getting $300k for a house and having to pay back $900k.
It's the payback rate that's the problem.
I also don't think it's a bad thing to be concerned about other people in our community.
The difference here is that the incentives of workers and this company are aligned. Either workers start making some serious wages and the company gets their money back (with interest), or both lose - worker their time, company their investment. Given the risk I don't think this is even close to usury. In fact, I would assume they are getting paid by the companies too, for privilege of getting the suitable candidates (which is not a problem in my eyes, if true).
Edit: and if they ever move their operations to EU I know a few people who would probably grab such a chance with both hands.
The poverty threshold in the US for a single person under the age of 65 seems to be $13,064[1].
[1] https://www2.census.gov/programs-surveys/cps/tables/time-ser...
I agree that the salary estimate is high, and I wouldn't hire a remote junior dev, but still; you're paying nothing up front and they're handing you $2k / month.
You are paying extra in the hoped-for successful case in return for paying less if the whole thing turns out to be a bust. Or, equivalently, you are paying a lot extra for a portion of the tuition (which is, in fact, a straight $20,000—the $30,000 maximum minus the $10,000 stipend) to be due over time after completion, repaid on an income contingent basis, and foregone in part or in whole if after-program income isn't at least $200K over two years.
Assuming I could find 10 formerly convicted felons who live on unemployment/welfare and dropped out of high school and got them to apply to this program, would they get accepted? If "The most important thing we care about is evidence of grit" is true, I think these individuals should qualify.
The people I know who had trained through that could not wait to leave and didn't feel that it had been overall positive.
On the upside you get some work experience too.
I wonder why, though? Is there a legal barrier that prevents them from introducing this to foreign students as well? Or is it just because US-based salaries are much higher than in many other parts of the world?
Now, if I am applying to YC I'm going to have to consider that they will have access to sensitive plans, strategies, strengths, and weaknesses of my startup, and that they might inadvertently share that with a competitor in a later batch.
I'm sure they'll say they have a Chinese wall and don't share information, but YC as a company now has a conflict of interest.
Really makes you think twice.
Either they have found some revolutionary new way of injecting data into the brain Matrix style, or the people coming out of that program won't be even close to ready and will probably have a mess in their heads.
Also 90K for an entry level remote position? I have 20 years of experience, where do I have to sign for that? I'd gladly take an entry level position with zero responsibilities for that kind of money.
I fully support more attempts to spread this out! Competition is good!
We will pay you to learn to code, then place you on projects for real clients. They will then have the option to hire you within 6 months. It's outsourcing cross training. (We'll have a few senior devs to mentor the teams, and we'll hire an exec or three involved in government contracting to give ourselves multiple options.)
Who wants to fund? laughs