Coding Bootcamp BloomTech Penalized for Misleading Students!
The Consumer Financial Protection Bureau (CFPB), a U.S. government agency, has penalized BloomTech, formerly known as Lambda School, for misleading students. BloomTech gave false information about student loan costs, exaggerated how many of its graduates got jobs, and illegally handled student loans.
Get Rutuja Desai’s stories in your inbox
Join Medium for free to get updates from this writer.
BloomTech is now banned from any form of consumer lending, and its CEO, Austen Allred, cannot engage in student lending for the next 10 years. The CFPB’s decision also requires the company and Allred to stop collecting payments from graduates who did not secure a qualifying job, let students withdraw their funds freely, and remove finance charges for certain agreements.
The CFPB stated that BloomTech pushed students towards “income share” loans, which were marketed as having no risks but actually came with high costs and risks similar to other loans. BloomTech and Allred must pay a total of $164,000 in penalties, which will go towards a fund for victims.
BloomTech started in 2017 and was initially supported by big investment funds. The school provided short courses like web development and data science and offered a payment plan where students paid a portion of their income after getting a job. However, the CFPB found that the school exaggerated its job placement rates and the fairness of its loans.
To follow the CFPB’s order, BloomTech needs to drop the finance charges for certain graduates and allow current students to cancel their loans or continue with new loan arrangements.
