The recent actions taken by the US Consumer Financial Protection Bureau (CFPB) against the Bloom Institute of Technology, formerly known as Lambda School, have brought to light some troubling practices within the coding bootcamp industry. Despite promises of high-paying tech jobs and a “risk-free” education model, BloomTech has been fined and banned from issuing student loans due to deceptive practices.
One of the key issues highlighted in the CFPB’s consent order is the deceptive nature of the Income Sharing Agreements (ISAs) offered by BloomTech. While students were led to believe that they were not taking out loans, the CFPB determined that these agreements were, in fact, loans. BloomTech was earning significant finance charges on each ISA, and students could face collections if they failed to make payments. Additionally, BloomTech was selling student debts to investors, further profiting from these agreements.
Questionable Job Placement Rates
In addition to the deceptive loan practices, BloomTech has come under scrutiny for its job placement rates. While the school claimed a 100 percent job placement rate in one cohort, it was later revealed that this rate was based on a sample size of just one student. The CFPB’s report indicates that job placement rates were inflated and did not accurately reflect the outcomes for most students. Despite touting job placement rates of at least 71 percent, the school’s actual placement rates were closer to 50 percent.
Another concerning aspect of BloomTech’s operations was the quality of education provided to students. The school frequently changed its curriculum and relied on teaching assistants with limited programming backgrounds. Many students reported having to teach themselves course content, raising questions about the school’s ability to equip students with the skills needed to succeed in the tech industry. This lack of quality instruction further adds to the negative impact of BloomTech’s practices on its students.
Resolution and Future Implications
The CFPB’s actions against BloomTech, including the ban on issuing student loans and the requirement to cancel debts for certain students, are a step in the right direction. However, the school’s ability to continue operating with third-party loans raises concerns about whether similar deceptive practices could continue in the future. The impact of BloomTech’s actions on students who were misled into taking on debt for an education that did not deliver on its promises cannot be understated.
The case of Bloom Institute of Technology serves as a cautionary tale about the importance of transparency and accountability in the education industry. Students seeking to pursue a career in technology must be vigilant in researching and choosing reputable institutions that prioritize their success over profits. The actions taken by regulatory bodies like the CFPB are crucial in holding schools accountable for deceptive practices and ensuring that students are protected from exploitation.
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