Deferred tuition coding bootcamp model should be a textbook example of moral hazard/adverse selection.
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Well, their company has overwhelming chances of failing, unfortunately. But given the agreement they’ve entered, they now have an extra incentive to pursue that route.
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I think you completely misunderstand the financial tradeoffs most people in that situation are making. Our average student has never made more than $35k/yr. They’re not looking to be cute and arbitrage away tuition. They want a fucking job.
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If you’re in my financial position, or yours? Sure, we’d be hesitant to trade away a percentage of salary for two years (capped at $30k total) once you’re making $50k+. In our students’? They don’t have that luxury.
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They do want a job but not as hard as someone who has paid actual cash to get the skills and gets to keep all of their future pay.
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You’re assuming they come from equivalent economic circumstances
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You have two students of equivalent skill. One has been working in an Amazon warehouse making $11/hr. The other working in SAAS sales making $90k/yr. Former on deferred tuition, latter pays cash. A jr eng role comes along for $80k/yr. Who is more likely to take it?
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I don’t see exactly the point of this example. I think the right perspective is to focus on an arbitrary (but fixed) profile and consider how one’s incentives are affected by a given set of terms.
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Ok, look at it from the perspective of a brilliant student who is making $11/hr. You want to go to school to become a software engineer. Pay upfront? Impossible. Loans? Too risky (risk 100% of annual salary?) Income share agreement? Doable
End of conversation
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Deferred tuition is a bet that a. Talent is evenly distributed but opportunity is not, and that there are people capable of learning b. Students gain enough value va self teaching to justify the future cost c. A school can find and place bets where a and b are true
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