Lambda School’s For-Profit Plan to Solve Student Debt

This story is part of a series on how we learn—from augmented reality to music-training devices.

Early this summer, tech entrepreneur Austen Allred was on Reddit, as he often is, when he noticed something suspicious. The coding forums he frequents, where people usually talk about JavaScript bugs and command line functions, were being suffocated by rants and raves on a particular topic: a coding bootcamp called Lambda School, which Allred happens to run.

To Allred, the posts looked suspiciously robotic. Perhaps a competitor was posting spam to get any mention of Lambda banned from the forums. Maybe it was a bootcamp critic on a tear. Allred had heard that people were spreading rumors he was behind the accounts, trying to gin up more exposure, good or bad, for his startup. “People want us to fail,” he says, casting a glance from under the brim of his signature grey and red trucker hat, emblazoned with the eponymous Greek letter. “People want to think that Lambda is a scam, because they want to believe the results we’re producing are impossible.”

Lambda School is an online coding program that’s free until you finish and get a job. The central conceit is an income-share agreement (ISA): students pay nothing while attending the school and then pay a portion of their earnings once they’re employed. The concept, first proposed by economist Milton Friedman in the 1950s as a “human capital contract,” has been heralded by some as a market-based solution to student debt. Everyone is on the same page about the goal: finding a good-paying job.

That idea has proven especially alluring to a certain subset of Silicon Valley for whom the phrase “aligning incentives” sends hearts aflutter. Plus, advocates say the model allows for wider access in a space dominated by private student loans. Lambda School has no campus; the video lectures are available wherever students have Wi-Fi and are thus infinitely scalable—so long as there are coding jobs to fill (for the moment, there are plenty). In January, Lambda received $30 million from investors including Google Ventures, Y Combinator, and Ashton Kutcher.

As Allred sees it, anyone can be a coder, provided they’re willing to put in the work. The most important quality, he says, is “grit.” That upsets some people, he suspects. “We eliminate the excuses people rely on to say why they’re not successful, why they’re not rich, or why they went down a different path.” …(continue reading)