This is a really interesting business model; my only concern is that your pricing would be nuts. You're asking for 17% of customer post-tax income for 2 years. That's a lot of money to give away esp if you're in a high rent area. Otherwise, looks cool
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Not just that but this is a bit of a trap as well. If I signed up to your course and earned $49k I'd pay nothing. If I earned $50k I'd end up earning a lot less money than I would if I was earning $49k. I'm hoping you have answered these questions somewhere..?
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If you’re in a high rent area your salary is higher; $50k programming jobs outside of rural areas isn’t really a thing. Our median salary is $90k
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For some perspective, I am in a high rent area. My rent is over half of my salary. I am not paid poorly. If I personally had to give up 17% of my post-tax income I would quite literally be giving you roughly half of the money I have left after tax and rent (but before bills).
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(I am assuming that your requirement is 17% of gross income, which is obviously taxed, so if i were earning $100k you'd ask me to pay $17k annually)
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It’s also capped at $30k total
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If someone earns 51k do they pay 8670 or 170? If the former, your system still has incentives where the marginal tax rate is >>100% in these cases. I assume you know how bad this is but the tradeoff you are currently picking is with keeping the system simple.
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If someone is earning $51k they’ll pay us $722.50/month. Still in a lower tax bracket, so take home is $40.1k or $3,300/month less state taxes. It’s tight, but it’s not >100%.
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Glad to hear it is reasonable. With other taxes and benefits losses that should still push their marginal significantly over 100%. But it sounds like your school is providing so much value & it is so much cheaper than alternatives that students shouldn’t mind.
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Oh, oops! Per month, I read that as per year last night. That's a huge/really significant disincentive. I wonder if you'll notice a very significant absence of students making between $50k & $70k in your numbers going forward.
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Apologies for the spam, but I don't think you understood what I meant by the concept of a marginal tax rate > 100%. https://www.investopedia.com/terms/m/marginaltaxrate.asp … In this case, the marginal dollar earned from 49.9 to 50 is hugely negative. The marginal $10k from 49 to 59 is even negative after taxes.
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I get what you’re saying but Lambda isn’t a tax rate so I was confused by what you meant. Yes, it’s possible to increase your salary by less than 17% and pay Lambda back 17%, but it’s never happened. Also, you keep the increase in income forever, not just for the two years.
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I'm not challenging the overall value proposition for students and the system isn't weird around your $90k median. It's just noticeable when a designed incentive system makes certain scenarios very perverse.
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(And just FYI - a 50% fee on the marginal dollar after $50k until it catches up to a 17% total fee ends up being equivalent to your current fees just before pre-tax salary hits $76k. Above $76k no revenue would be lost.)
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But you’re able to select for incredibly talented people, right?
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We select for people that are capable and hungry, not necessarily talented
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I guess my point was just that you’re not just turning any random $20k/year earning into a $80k/year earner. Not that that lessens your accomplishment. What you’re doing is amazing. I really can’t state how excited I am that someone is finally cracking education but 1/
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I think the longer term societal problem is what happens to the $20k/year earners that aren’t hungry and capable. 2/2
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I’m ready for the next course!
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You’re doing it?! Good luck!
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Yea I am. Thanks!
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