u/jcasimir wrote (the comment Michael replied to):
If only u/michaelnovati makes it through reading this whole thing, I'll understand. I sat down to write something "real quick" and it's now 90 minutes later 🤣
u/michaelnovatireplied·
I made it half way so far and agree with the analysis and the argument theoretically.
There's an important detail though, which is that even with "job guarantees" the financing is more complicated than just 1. pay upfront and then get tuition back, 2. defer payment entirely until you get a job. The school will get smaller loans in the mean time backed by the contract and who pays what if/when a student isn't placed is complex.
But it's no surprise a couple of loan providers had to very suddenly stop offering loans recently, if the outcomes don't match up, the whole system doesn't work. If all of them stop, it will cause the collapse of remaining bootcamps. Imagine you are a bootcamp and you get an email out of no where that effective immediately you can no longer offer loans, and you only have one loan provider. You are basically done unless you find people to pay upfront cash only.
u/cglee wrote (the comment Michael replied to):
Here's a way it can work and probably how most of higher ed works:
* First, attract students with marketing.
* Next, find bank to buy contract. Eg, bootcamp fee is $25k, then bank buys it at $18k. Student owes bank $25k. Assume it costs bootcamp $15k/student all-in, so bootcamp
u/michaelnovatireplied·
This is how it worked since the Lambda School days.
The banks backing those are all tiny regional and local banks trying to expand their interests. Maybe to look larger and innovative in support of getting acquired? Maybe as an effort to get some capital to survive?
If the bank isn't doing well (or is doing really well) and gets acquired by a large bank, the large bank reviews these deals and says 'hmmmm'.
Banks move slowly so kind of like CIRR, it takes a while to realize the reality. Most recent CIRR reports don't look so bad.... but things tanked in 2023 and when the banks catchup, we'll see if they continue to back the remaining providers.