Not All Bootcamps Are Created Equal — Alternative Education Models and What they Will (or Won’t) Cost You

The Wall Street Journal and Strada Education Network recently conducted the largest ever study on public perceptions of whether higher education was worth the price-tag. That this is becoming a persistent part of public discussion speaks directly to how many of us (especially those with significant debt) feel that higher education is failing us: with ever rising tuition costs and ever poorer employment outcomes.

In fact, according to a 2017 poll by the Wall Street Journal and NBC News, 47% of Americans no longer believe that earning a college degree will lead to a good job and higher lifetime earnings, with 78% of Gen Z-ers saying going to college “no longer makes economic sense.”

With public perception of higher education turning, it’s a space ripe for disruption. As a result, hoards of new organizations seeking to bridge the college-to-career-gap have emerged.

These education alternatives are specifically focused on providing direct pathways to jobs. Credentials aren’t the focus here — the job is the outcome students are seeking.

While these alternatives have differing models — specifically with regard to how they’re financed — there are quite a few similarities that are reflective of the focus on employment above all else:

• Project-Based Work: These programs integrate real projects that students may actually encounter when they’re on the job (as opposed to the more theoretical approach often used in university lectures). In addition to the technical challenges of these hands-on professional projects (which are often done for real employers), students experience working alongside their classmates, again mimicking the real-world challenges (and frustrations) of dealing with coworkers in sometimes high-stress situations.
• Employer Support in Curriculum Design: In building course curricula, these alternative education providers consult real employees in the specific roles students are training for (programming, data science, UX, UI, etc.). With technology moving ever faster, it’s important for course curricula to reflect changes in tools, approaches, and norms through continuous updates (something that faculty at universities are often loathe to do).
• Career Counselors: These programs recognize that when the job is the credential, merely teaching content and helping students build their portfolios isn’t enough. When, in many cases, a program’s financial success is based on the job outcomes of its students, career counselors become absolutely essential. As such, resume help, interview prep, and industry consideration all play a major role in the alternative education experience.
• Employer Partners: To ensure access to jobs, these programs actively and consistently seek employer partners that (1) trust the training and quality of graduates and (2) are open to hiring them. Again, since payment is often linked to job outcomes, these partnerships create direct employment pathways for students and help ensure the continued success of these programs.

Despite these similarities, it’s important to note that they’re not all the same. There are a variety of models emerging — specifically with regard to funding — that aim to more accurately align incentives and lower barriers to entry while simultaneously supporting employers seeking skilled talent in hyper-growth roles that they’re struggling to fill.

Let’s take a look at some of these program models, shall we?

Bootcamps

Taken from military terminology, bootcamps are intensive training programs lasting anywhere from 8 weeks to 2 years. While coding bootcamps were among the first, bootcamps have expanded to include other growing roles in tech (data science, UX/UI, product management), with some emerging entirely outside of tech (medical device sales, pharmacy techs, film/television, etc.).

While some are tuition-based, others are innovating with new payment models (Income Share Agreements (ISAs), deferred tuition, employer-paid) to further lower barriers to entry and stave off fears of taking on more debt. It’s important to note that a number of bootcamps offer a variety of funding options, with some now even offering access to financing (with the help of organizations like Meritize, SkillsFund, and Climb) for those that are willing to take on debt (though the fact that these courses are significantly shorter than 4 years means that the amount of debt is generally much lower compared to traditional universities).

Tuition-Based Bootcamps:

While many of the more well-known bootcamps are adopting alternative financing models, it’s important to get a sense of the players and general costs (specifically how much lower the costs are when compared to the average $99,417 cost of an undergraduate degree in the US).

• General Assembly offers courses in software engineering, UX, data science, digital marketing, product management, and more, with full time, part-time, and in person or remote options. Courses range anywhere from $3,950 for part-time courses up to $14,950 for full time courses. Though GA is tuition based, they offer a variety of payment options including payment plans, employer pay, loans, Income Share Agreements (ISAs), and the GI Bill.
• Flatiron School also offers a variety of payment options for its courses in software engineering, data science, UX/UI Design, cybersecurity analytics, and more. While full courses run about $17,000, Flatiron does have a money-back guarantee for select programs (though this doesn’t appear to include an income floor of any sort).
• Galvanize courses in software engineering and data science will run you $17,980, though they too offer a variety of payment options.
• Thinkful has a 6-month money-back guarantee if you don’t find a job in your chosen field after graduation, and you don’t pay any tuition until you secure a job earning at least $40,000 per year. While the upfront full-time course cost is $16,000, their Income Share Agreement (a concept explained below) also includes a $1,500 living stipend in select cities.
• Bloc, where “Skills > Degree” is part of their marketing strategy, charges $7,500 for an 8 month course, and now offers a money-back guarantee, financing, and scholarships to broaden and diversify enrollment. Additionally, Bloc’s mentors are compensated based on the placement of their students, further aligning incentives.

What’s more, there are a variety of scholarships available at a host of bootcamps, and many are specifically focused on increasing access for those traditionally underrepresented in tech (women, people of color, LGBTQ+, veterans).

Income Share Agreements (ISAs)

ISAs are an alternative payment method where bootcamp students agree to pay a percentage of their salary over a fixed period of time, typically ranging from 8%-25% over the course of 1–4 years. With an ISA, there are no upfront costs (except potentially a deposit to hold your seat), with many offering an income floor (if you make less than $X annually, you don’t pay) and a cap (once you’ve reached the cap, you can stop paying regardless of whether the set time period has passed).

The benefits of an ISA are clear: They enable access without having to front a huge investment or take on significant debt. Since bootcamps only make money with ISAs when students secure jobs, ISAs create significant accountability for the bootcamps to focus on employment outcomes.

But ISAs are certainly not perfect. Because they’re based on percentages, there’s a chance you may end up paying more over the long run than the program actually costs. Additionally, because schools only make money when students land jobs, the students are held to incredibly high standards, leading to higher attrition in the face of poor (or even mediocre) performance.

Others have compared ISAs to indentured servitude, although when compared with the alternative of traditional higher education and federal loans, I believe the indentured servitude argument is a weak one.

ISAs by nature ensure employment. If a bootcamp student doesn’t secure a job or doesn’t meet a specific income floor, the student forgoes payment. In this way, ISAs are essentially insurance — aligning what you pay to the outcomes you receive as a result of the program.

Alternatively, when students take out federal loans for university, they must make payments regardless of their employment outcomes, and there’s limited accountability for universities to ensure graduates are employed (and employed well). Not to mention the fact that late or unmade payments can seriously damage credit, and student loans can’t be discharged even in bankruptcy!

In addition to some of the programs already mentioned, here are a few other bootcamps that offer ISAs:

• Lambda School’s 9-month, online only courses in data science, full-stack web development, iOS development and UX design include an ISA where students pay 17% of their income for two years (or until you reach the payment cap of $30,000) once you start making $50,000 per year.
• AlwaysHired offers tech sales bootcamps, internships, and recruiting services based on your experience level. While there’s a $200 payment up front for materials and the course costs between $2,500-$4,000 depending on which you take, they offer an ISA where students only pay 6% of their first year salary (or less if hired by a partner). Since they only get paid when students have been hired, they’re successfully aligning incentives.
• Holberton’s two-year curriculum is renowned, with students frequently choosing to opt out of the program and enter the workforce early. Their ISA requires students to pay 17% of their salary for up to 42 months, but only if they’re earning at least $40,000 upon completion. The upfront program cost is $85,000, though Holberton shares on its website that at an $85,000 salary upon completion, the estimated repayment only comes to $50,575.
• MakeSchool’s two-year “product college” is unique in that it features both an ISA and a bachelor’s degree program. While the full cost of the program is $70,000, their ISA kicks in only once you’re earning at least $60,000 per year, at which point you’ll pay 20% of your salary for up to 5 years. There’s also an additional ISA of $1,500 to help cover living expenses.

Deferred Tuition

Deferred tuition, which differs from ISAs in that it’s based on a fixed tuition amount and a predetermined payments that don’t leverage percentages, are also a popular option. For example:

• The Grace Hopper Coding Bootcamp (powered by Fullstack Academy), requires a $3,000 deposit and deferred tuition payments of $16,910, paid in nine monthly installments after finding a full-time developer job. The Grace Hopper program is specifically geared towards women, and also offers scholarships through Fullstack Academy and Lesbians Who Tech.

Free Bootcamps (Employer Paid)

There are some bootcamps that are free to students and it’s the employers that are taking on the training costs.

• SV Academy offers an “online, 12 week, tuition-free skill-building and mentorship program that connects job-seekers with employers hiring for full-time sales roles in tech.” If a fellow is accepted and completes the training, they’re guaranteed a job at an average $79k salary, plus a year of ongoing training and mentorship after they graduate. The program is funded by prospective employers, who pay $12,000-$15,000 per hire, knowing they’ll be receiving vetted and trained sales talent.

Staffing and Placement Models

Another emerging option involves staffing and placement models. Staffing firms are realizing that they can play a truly unique role in bridging the college-to-career skills gap, especially given that they’re keenly aware of the skills employers (i.e. their clients) are seeking. In this way they can provide training for promising recent grads, retain them on their books, have them work on client projects during “trial periods,” then give those clients the opportunity to hire. It’s training meets consulting meets staffing.

These models are especially compelling for employers because these organizations are bearing most of the cost and risk of hiring. When hiring a single employee takes up to 6 weeks and costs around $4,000 (due to all the paperwork involved), not to mention the costs of terminating a bad hire, employers are often extremely eager to test potential hires in a low-risk/risk-free way before taking the plunge of hiring full time.

Here are some examples:

• Techtonic essentially provides outsourced apprenticeships. Techtonic selects, hires, trains (and pays) apprentices, who start shadowing more experienced developers after a 14 week training period. Apprentices are typically doing meaningful amounts of work within a few months, and after a year, clients are invited to hire the software apprentices. This radically reduces the risk of entry-level hiring, as clients already know these apprentices and have seen the quality of their work.
• Revature offers free technology training, certifications, and housing during their 12-week program. Since Revature is a staffing firm, students are hired before they start training (via an online application and/or RevaturePro, an online program where applicants demonstrate their aptitude), meaning employment is guaranteed. While there are a variety of fields, Revature takes a highly customized approach, taking orders from clients and training based on specific client needs.
• Avenica’s model is specifically focused on college students and includes a matching process based on skills, interests, and a science-based behavioral approach. Their ‘Evaluation-to-Hire’ model lets clients choose talent and take on a 4 month trial period, though Avenica’s training focus is more on interview and basic job prep techniques.

Apprenticeships

Finally, apprenticeships are surfacing in the tech and professional services world. While apprenticeships are more traditionally thought of in the trades, professional apprenticeships have been common throughout Europe for quite some time.

In Chicago, the Chicago Apprentice Network is helping large employers (Aon, JP Morgan Chase, Accenture, etc.) establish apprenticeship programs with City Colleges of Chicago. Apprentices work full time, receive hands on training, get paid a salary, and take classes aligned to what they’re learning in the office. Students that complete the 2 year apprenticeships are then guaranteed employment (although those that drop out must repay their tuition).

The major challenge with apprenticeships is scale. At roughly $100k investment per apprentice, radically expanding opportunities in this way is certainly a challenge. Although these programs often receive government funding, it seems hardly enough to offset the cost substantially enough to create opportunities for more than a handful of students per employer each year.

Considering The Future

Given the varying risk-return profiles, it’s likely that no-tuition upfront models will overtake tuition-pay models in the future.

What will certainly be interesting is considering the future of these programs for those of us that have already taken the leap, made the investment, and set off on a career path. Even with these deferred tuition models, it’s hard to ignore the sunk costs of spending time, energy, and resources in a given industry that may not be panning out in the way that we had hoped.

Either way, that these models are emerging and picking up traction speaks volumes. While Americans put a high value on education, at the end of the day, the view needs to be worth the climb. If the job prospects of traditional universities are sub-par (especially when considering the associated investment/debt), they’ll risk losing market share to alternatives, particularly as more Americans opt out of traditional higher education.

While more universities are striving to create opportunities that foster career outcomes, the short of it is that their incentives simply aren’t aligned in the way these employment-oriented alternative education programs are. While it might ‘look good’ for universities to have high employment outcomes, at the end of the day, they’re not being held accountable: universities still get paid regardless of the earnings of their graduates. (And while that certainly affects alumni contributions, my feeling is that most millennials are more focused on paying down their debt than considering paying even more to their alma maters).

Of course, it’s not for lack of trying. Some universities have added paid bootcamp opportunities for their students as an off-ramp. Which seems like an affront: why charge students even more, when those skills can simply be incorporated into course curricula and the already high tuition being paid?

Still, my views are biased, and considering I no longer work within a university, I am very likely ignoring a number of the challenges universities may be facing that require additional contextual knowledge. Nevertheless, the trends are clear: employment-based outcomes are becoming essential. How exactly that pans out — either with emerging alternative education programs, employer-oriented innovations within universities, or something entirely new — only time will tell.

Note: This post was inspired after reading Ryan Craig’s “A New U.” I couldn’t recommend it more!