Deferred tuition coding bootcamp model should be a textbook example of moral hazard/adverse selection.
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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In economic terms, your assumption doesn’t take opportunity cost into account. Will you say no to the $80k/yr job and go back to the warehouse to save on tuition? By the way this is a *real* example, and the warehouse worker is now a software engineer at Uber
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(Also note that if you refuse the job the income share doesn’t go away, it’s just deferred until you do have a job that meets those criteria)
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My argument all along has never been that a typical (much less, any) grad would aim to simply avoid getting a job.
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I’m just pointing out that incentives of any given deferred tuition grad are structured in such a way as to promote strictly inferior choices vs if they had committed at least some pay for the skills.
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Simple example: let’s say a new grad can get a 50k/yr job easily or 70k/yr job if he chooses to jump through some extra hoops. Deferred tuition reduces the incentives to do the latter.
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$50k - $8.5k tuition = $41,500 $70k - $11,900 tuition = $58,100 So still a $16,600 swing after tuition is factored in (instead of $20k.)
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I get what you’re saying, but IMO it might barely move the needle on the margin, it’s not going to cause drastically different outcomes. If you can get paid more you should.
End of conversation
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