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STARTUP

These College Startups Don’t Charge Tuition Until Grads Make $50,000 a Year

Enough book learning. Let’s get you a job.

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BY Sonya Mann - 05 Feb 2018

PHOTO CREDIT: Getty Images

What if higher education didn't cost an arm and a leg, and it were focused on getting you a job rather than just a diploma?

A handful of enterprising new startups are determined to remake the college experience, focusing squarely on teaching marketable skills like computer science rather than, say, Anthropology 101. The hope is to avoid loading students down with debts they can't repay, an all-too-common predicament for today's graduates.

The concept isn't entirely new -- code bootcamps and old-fashioned trade schools have offered job-specific training for many years. But newcomers like Lamba School and MissionU are providing career training with a twist: They don't charge students anything up front. Instead, they take a percentage of graduates' salaries when those grads land a job making $50,000 or more. No job, no tuition.

Lambda School, which announced on Tuesday that it has raised $4 million, and MissionU also streamline educational material so that a high-paying job is reachable within six months or a year, rather than four. Lambda will then take 17 percent of a graduate's salary for two years, capped at $30,000. If the graduate can't get a programming job within five years, the school relinquishes its claim. MissionU takes a 15 percent cut for three years, provided the graduate gets a job within seven. (Code bootcamp App Academy has similar payment plans, but it still requires a $5,000 deposit.)

Both programs are tightly connected to potential employers -- Y Combinator, IBM, PayPal, and Uber, among others -- and actively introduce students to recruiters. The education startups don't succeed unless the students do. "We wanted to have skin in the game with our students so that we were completely outcomes-driven," MissionU CEO Adam Braun said. Both schools teach the material that the founders think will best prepare students for tech jobs, based on their own histories in the industry as well as feedback from hiring partners.

A changing job market

In industries with a tight labor market and a more relaxed culture, a bachelor's degree from a traditional four-year college isn't the must-have requirement that it used to be. Tech, one of America's most vibrant growth industries, is the example du jour. But the trades are equally welcoming of hardworking, skilled, diploma-lacking entrants. In fact, programming and other tech disciplines uniquely operate like a blue-collar industry with white-collar office environments and compensation to match.

The job site ZipRecruiter found in a study of its listings that employers are increasingly posting "new collar" positions, which it defines as "jobs that are skilled and well-paying, but don't necessarily require a four-year degree." The report noted that startups and small businesses are more likely than large companies to seek out new-collar workers. Since November 2016, the number of tech jobs with educational requirements have decreased from 30 percent to just under 20 percent, according to ZipRecruiter.

Despite their similar payment structures pegged to students' future salaries, MissionU and Lambda School are quite different when it comes to teaching. MissionU requires students to move to San Francisco (other cities are in the works), where they will join a small cohort of peers for a combination of online learning and in-person meetings, at least twice a month. The curriculum is project-based, and MissionU is focused on data analytics at the moment.

Lambda School, also with a project-based curriculum, currently offers computer science and artificial intelligence tracks. It draws direct inspiration from MOOCs, which were once themselves regarded as an alternative to college, and takes place totally online. But unlike MOOCs, Lambda School is live and real-time, with instructors who can give students individual attention when they need it.

The approach uniquely combines scalability and accountability, says Austen Allred, Lambda School's co-founder. The program, by virtue of being online, can reach more students than MissionU in a single class, while the live instruction provides structure and discipline.

"The problem that I feel like we're actually solving is more around human psychology and commitment than it is necessarily education," Allred explains. "How many people have tried to learn programming on their own and not made it? Usually that's just a matter of not sticking it out." Allred adds that in order to raise funds from investors, "all we had to do in the beginning was prove that we could make people not drop out."

MissionU's Braun, on the other hand, thinks that the "soft skills" training of meeting in person can't be replicated online. His perspective is similar to that of the nonprofit code bootcamp 42, which says in its FAQ that "our system works better if you are physically present to interact with other students."

Beyond coding

For the time being, Lambda School and MissionU are only appropriate for students who want to join the tech industry, although both have grand ambitions to expand into other areas eventually. (MissionU already includes a substantial amount of business and marketing education in its data analytics program.) But they're not the only option for students who want an education with provable ROI.

Climb Credit is a student loan startup that works with educational programs, including trade schools, that have a track record of student success. Since Climb Credit obviously wants the loans it makes to be repaid, the startup focuses on programs that increase students' earning ability. The company works with schools that range from the Great Lakes Truck Driving School, to code bootcamps like General Assembly and Hack Reactor, to the New York School of Finance.

Cofounder and CEO Zander Rafael says Climb Credit borrowers are routinely able to double or triple their salaries after completing programs of less than a year (although of course, such outcomes can never be guaranteed). The company works with some schools to offer loans to every single accepted applicant, in exchange for the school assuming some of the financial risk.

None of the founders, teachers, or students interviewed for this story said that the traditional university system should be abolished. Rather, they pointed out that a standard liberal arts education is a luxury and not always a fiscally responsible goal to pursue.

"The new working class, or the new middle class, they don't necessarily need a college education," Lambda School co-founder Allred said. "So it's probably overkill for a lot of them to spend an extra two years learning about Greco-Roman antiquities, as much as I think that stuff is important."

Programs like Lambda School provide another path: "We do one thing. We get you to a job, and that's it."

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