Single mom sues coding boot camp over job placement rates

A single mom who signed up for a $30,000 income-share agreement at a for-profit coding bootcamp has filed a lawsuit in California, alleging she entered the agreement under “false pretenses.”

Redmond, Washington-based Emily Bruner is suing Bloom Institute of Technology, formerly known as Lambda School, and its head Austen Allred, alleging they misrepresented job placement rates, operated without a license during her course of study, and hid the “true nature” of the school’s financial interest in students’ success.

“I feel like Lambda misled me at every turn — about their job placement rates and about how they would prepare us for jobs in the field. I was even more shocked when I found out they were operating illegally,” Bruner said in a press release.

“I took time away from my young son and other career opportunities to participate in a program based on lies,” added Bruner, who’s seeking a refund from the school as well as monetary damages. “While I’m thankful I opted out of arbitration so I can have my day in court, I wish my classmates who were also misled could be here with me.”

Amid the tight labor market, some employers are dropping the requirement for a college degree during the hiring process, pushing more Americans to turn to short-term certificates or programs to gain skills such as coding.

But the Student Borrower Protection Center, an advocacy group, warns students of the potential harms of income-share agreements. The group contends that, rather than being a solution to the student debt crisis, these agreements can pose serious harms to borrowers.

Another advocacy group, the National Student Legal Defense Network, filed the lawsuit in San Francisco County Court on Friday afternoon on behalf of Bruner along with law firms Black & Buffone PLLC, and Cotchett, and Pitre & McCarthy LLPs.

“It’s illegal and immoral for schools to lure students into costly income share agreements by promoting false job placement rates, but that’s one of the many illegal things that Lambda School did,” Alex Elson, Student Defense Vice President, said in a press release. “We’re proud to fight on behalf of students to hold Lambda and its executives accountable for the serious damage they have done.”

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ISAs gain steam

Income-share agreements, known as ISAs, are an alternative type of student loan financing where a borrower receives a loan, then pays a percentage of their income after graduation. The terms of an ISA depends on various factors, such as their major topic of study and projected future earnings.

Traditional colleges like Purdue have also dipped their toes into ISAs by offering them as an alternative to student loans, amid a national conversation about the cost of college and the possible need for student loan forgiveness.

Some schools like Purdue that offer ISAs characterize their products as neither a “loan” nor a “credit,” but instead a “contingent debt” since a student doesn’t have to pay the ISA until they find a job.

The federal government recently categorized ISAs as “private education loans.”

Bruner’s complaints

Bruner, the plaintiff, signed her ISA on June 29, 2019 when she was living in New Mexico because she could not pay the full tuition amount to attend Lambda full-time, according to the lawsuit. She says she moved back home to North Carolina to live with her parents, who would help her take care of her baby.

She took out $30,000 for its six- and 12-month computer science programs offered by San Francisco-based Lambda, according to the complaint. Bruner started school in September 2019 and finished the following August. Students at Lambda agree to pay 17% of their post-Lambda salary for 24 months once they make more than $50,000 a year, according to the lawsuit.

After graduating, she couldn’t find a job as a web developer or a software engineer, and was, according to the lawsuit, told by employers that “she did not have the technical skills for the job, and that her education had not prepared her to be a web developer.”

Bruner ended up going back to program management, a field she was working in prior to attending Lambda.

In the lawsuit, she alleged that Lambda misrepresented the fact that it did not have necessary approval from the state regulator, the California Bureau for Postsecondary Education. She also alleged that the school falsified and misrepresented the school’s job placement rates.

Finally she also alleged that the school hid the true nature of its financial interest in students’ success — specifically by “falsely representing” that Lambda only was compensated when students found jobs and earned income.

Lambda School previously provided Yahoo Finance with the following statement when several students filed an arbitration against them: “Per policy, we don’t speak about individual student or alumni situations in detail publicly, but we’re of course happy to review matters directly and will review any cases that are filed. In general, though, for any student’s ISA payments to be activated, they would have first signed an ISA contract and subsequently landed a role leveraging skills learned at Lambda School that pays $50K or more in salary.”

Yahoo Finance has reached out to Lambda for an updated response.

Aarthi is a reporter for Yahoo Finance. She can be reached at [email protected]. Follow her on Twitter @aarthiswami.

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