As Coding Boot Camps Grow, Questions Arise Over Loans


Students who wish to attend coding "boot camps" will now be able to take out student loans.

These intensive accelerated learning programs, which last for three or four months, can cost $10,000 to $20,000. They're not publicly funded nor traditionally accredited, and therefore can't offer federally subsidized student loans or Pell Grants. This year, about 16,000 will graduate from programs like those of Hack Reactor, General Assembly, and Dev Bootcamp. About 48,700, on the other hand, will receive a traditional bachelor's in computer science.

Because of the inability to take out student loans, and the fact that hopeful future programmers would have to go months without a job, enrollment in these bootcamps consists mostly of white males with some college experience. Recently, startup student lenders like Skills Fund, Pave, and Earnest have begun to help finance these camps.

Shawn Drost, co-founder of the Hack Reactor boot camp, said:

Most of our programs have guaranteed financing. We ship the private lenders our sheets of graduates and defaulters and they end up charging like 10% interest, and students pay it back within a year.

Drost says that about half of his students take advantage of these loans, and General Assembly says that it's used by 15-20% of their students.

This week a company called Affirm has joined the lending business, saying that it will lend to riskier students at higher interest rates, writes Anya Kamenetz of NPR.

VP Brad Selby, previously of Paypal, said:

It's progressive underwriting. We want to approve more people.

Until now Affirm had been only lending at low interest rates to those who shop at certain online stores, writes William Alden of Buzzfeed. It will use publicly available information like LinkedIn profiles to assess risks, and with permission will check an applicant's bank account usage.

Another company, Upstart, offers students a "human capital" contract in which they apply for funds to a program called Metis in exchange for a percentage of their future income.

The for-profit sector has faced pressure from the government, lawsuits, and decreasing enrollment, especially since so much of their profit comes from loan money while the government stipulates that 10% of their income must come from another source.

However, these tech boot camps aren't facing the same criticism because their graduates are perceived to have much better job prospects. Their graduation and job placement rates, which are not independently verified, are reported to be over 90%.

Not everyone in the tech industry believes that boot camps are a better alternative to traditional degrees, writes Issie Lapowsky of Wired.

Mike Curtis, the Vice President of Engineering at Airbnb, said:

It's hard for somebody to come out of a dev bootcamp in a short amount of time and perform at the same level in an interview as someone who just finished a computer science major.

The Department of Education has also announced a desire to make traditional student aid available to these accelerated learning programs.

Jake Schwartz, co-founder of General Assembly, said:

We're really proud of the fact that this industry we've helped build is getting this attention and focus. We just want to make sure that we're very careful in how we roll out this process of getting the government involved. This industry is still nascent and I don't want it to become a gold rush land grab for government money. That's the worst that could happen.

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