High profile for-profit Bay Area coding school BloomTech hit by feds for allegedly tricking students
Ethan Baron
April 17, 2024
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High-profile Bay Area coding school BloomTech, which touts “dream” technology jobs at companies such as Google and Amazon, has been sanctioned by federal authorities for allegedly deceiving students about loan costs and making false claims about graduates’ hiring rates.
The Consumer Financial Protection Bureau in an order banned the school’s co-founder and CEO Austen Allred from student-loan activities for 10 years, and permanently banned the for-profit vocational institute, formerly called the Lambda School and also known as Bloom Institute of Technology, from all consumer lending.
The CFPB targeted the income-based repayment scheme used by nearly all BloomTech students that required payment of a percentage of income once graduates started earning at least $50,000 a year.
“BloomTech falsely claimed its ‘income share’ agreements were not loans, did not create debt, did not carry a finance charge, and were ‘risk free,’” the CFPB said in a news release Wednesday. “In fact, the agreements are loans with an average finance charge of $4,000. The loans carry substantial risk, as a single missed payment triggers a default and the remainder of the $30,000 ‘cap’ becomes due immediately.”
