Lambda School has a unique proposition: you don’t pay for the education unless you land a job. It’s a sensational promise underscoring the main issue with coding schools and bootcamps, which is students finding a job upon graduation. Unfortunately, it seems Lambda School may have a bigger problem.
California has ordered Lambda School to cease all operations, reports Business Insider, and pay a $75,000 fine. The school can return to operation once it adheres to state regulations set forth by the California state Bureau for Private Postsecondary Education (BPPE). Specifically, the BPPE says Lambda School failed to register as a school. BPPE’s main goal is to eliminate (or at least restrict) ‘degree mills,’ which accept just about anyone who walks in the door. These institutions often promise a high-paying career, only to see graduates fall short of their dreams and end up saddled with mountains of debt.
It’s easy to see how Lambda School ran afoul of the BPPE. Its guiding principle is that the education is free, but once you graduate and find a job, the school takes a portion (17 percent for U.S. residents, 10 percent for students in the EU and UK) of your income for two years. For U.S. students, Lambda School says the post-payment plan equates to $30,000. If you choose to pay up-front, it’s a $20,000 flat fee.
Lambda School CEO Austen Allred told Business Insider the order was “stayed” because Lambda was negotiating with the BPPE… but the California Department of Consumer Affairs says no stay is in effect, and there has been no appeal of its decision.
Further complicating matters, Allred says: “Because we’re talking with BPPE, it doesn’t affect students at all.” The school’s general counsel says an appeal is pending, and the company is awaiting a hearing date.
The California Department of Consumer Affairs says if Lambda School is operating while its registration is pending, which it absolutely is, it will be in violation of state law.
Lambda School’s website is currently accepting applications, and shows classes are starting again as early as October 28. BPPE’s citation says Lambda School must “discontinue recruiting or enrolling students and cease all instructional services and advertising in any form or type of media, including the https://lambdaschool.com and any other websites not identified here that are associated with the Institution, until such time as an approval to operate is obtained from the Bureau.”
The school, which is backed by major venture capitol firms such as Y Combinator and GV, has an interesting problem on its hands. The BPPE aims only to hold schools accountable, which means schools in its program must complete performance fact sheets and undergo annual reviews. The broad scope of these actions is to ensure students are graduating and finding jobs in their field of study, and are able to re-pay loans. BPPE may also perform random compliance inspections.
Lambda School seems more interested in acting like a tech startup than a proper post-secondary education provider. It obtained a business license in the city of Pleasanton, California, but never bothered to register with the BPPE. Lambda School was supposed to pay its fine by August 23, 2019, though it’s unclear if it had, or if school officials are confused by the appeals process and ignored that deadline. Either way, it seems Lambda School is operating illegally as a “school.”