Also, we allow high-risk private sector stuff all the time: aerospace, automotive, medical, etc. all have literal life and death stakes beyond a school that doesn't work out. Regulation should be proportional to the risk involved, and I just don't see it with the Lambda / ISA model.
Except getting yourself into huge amounts of debt $30000! is life ruining for basically everyone that Lambda is targeting.
We don't allow experiments on high risk populations with medical testing without informed consent. This was faulty in the Lambda case, where they out and out lied about their funding model. We don't allow the public to fly on planes without tons of testing. We don't allow people to drive cars that haven't passed independent crash testing.
So Lambda's ISA shouldn't be allowed to be sold to the public without independent financial advice, like any other complex debt product. And yes I think the same should apply to student loans.
You and I cannot just go and enter into a debt futures contract (well, maybe if you're an "accredited investor" i.e. rich enough to be ok if it goes south). So why do we let vulnerable folks enter into a shady financial agreement with an operator who's more concerned about growth than a good education? It's not good for society for every 1 new engineer there's 3 debt-enslaved washouts. Lambda's still profitable at those horrible numbers.
As far as what Lambda offers, it seems like they're currently the strongest executors from company growth perspective in the ISA/bootcamp space, and we'll have to see how they do on the factors I named above to see if it's effective. Being a trailblazer is high risk / high reward. I welcome their attempt.
The problem is that their failures ruin people financially. Growth at all costs is a _bad_ thing. Going slower and getting things right is required to create a good product that first does no harm.
(1) I think you're misunderstanding the Lambda model where you don't pay the loan unless you make over a certain amount and it adjusts as a proportion of income. It's designed to get around the actual "debt enslavement" issues of the current government debt. *
(2) A few months of education isn't a plane crash or fatal drug, it's a major inconvenience, but no more than any other bad life decision people make freely all the time (taking a bad job, buying a boat, etc.). As I said, regulation needs to be proportional to the down side.
(3) If you make everything really restrictive there is no innovation. Going slow does do harm. Harm that you don't see because it's a positive externality and hence never happens and you don't see it. Growth isn't the enemy and neither is regulation, you just have to be smart about it, and I would argue you're too far on the conservative side.
* The only exception, which I believe is still unclear legally, is whether ISA aren't releasable under bankruptcy, which I would definitely oppose as a big supporter of bankruptcy law.
Comments
Except getting yourself into huge amounts of debt $30000! is life ruining for basically everyone that Lambda is targeting.
We don't allow experiments on high risk populations with medical testing without informed consent. This was faulty in the Lambda case, where they out and out lied about their funding model. We don't allow the public to fly on planes without tons of testing. We don't allow people to drive cars that haven't passed independent crash testing.
So Lambda's ISA shouldn't be allowed to be sold to the public without independent financial advice, like any other complex debt product. And yes I think the same should apply to student loans.
You and I cannot just go and enter into a debt futures contract (well, maybe if you're an "accredited investor" i.e. rich enough to be ok if it goes south). So why do we let vulnerable folks enter into a shady financial agreement with an operator who's more concerned about growth than a good education? It's not good for society for every 1 new engineer there's 3 debt-enslaved washouts. Lambda's still profitable at those horrible numbers.
The problem is that their failures ruin people financially. Growth at all costs is a _bad_ thing. Going slower and getting things right is required to create a good product that first does no harm.
(1) I think you're misunderstanding the Lambda model where you don't pay the loan unless you make over a certain amount and it adjusts as a proportion of income. It's designed to get around the actual "debt enslavement" issues of the current government debt. *
(2) A few months of education isn't a plane crash or fatal drug, it's a major inconvenience, but no more than any other bad life decision people make freely all the time (taking a bad job, buying a boat, etc.). As I said, regulation needs to be proportional to the down side.
(3) If you make everything really restrictive there is no innovation. Going slow does do harm. Harm that you don't see because it's a positive externality and hence never happens and you don't see it. Growth isn't the enemy and neither is regulation, you just have to be smart about it, and I would argue you're too far on the conservative side.
* The only exception, which I believe is still unclear legally, is whether ISA aren't releasable under bankruptcy, which I would definitely oppose as a big supporter of bankruptcy law.