Industry News

Will Lambda School Disrupt Online Education?

By Sherman Morrison
October 07, 2019

When I first heard of Lambda School, I must admit I was skeptical. The basic idea is that Lambda will teach people high-tech skills and students don’t pay anything for their education until they land a job that pays at least $50,000 a year. My skepticism was a knee-jerk reaction to how similar it sounds to all those annoying injury-lawyer commercials that say something like “you pay nothing unless we get money for you.” Lambda School is basically saying the same thing, “you pay nothing until you get a great job.”

Once I got past that initial reaction and looked into what Lambda School is doing, I am thoroughly intrigued. If their approach pans out, I think it could seriously disrupt online education as we know it today. The company also just hired its first chief technology officer (CTO), Namrata Ganatra, who is a woman – which is pretty disruptive in and of itself.

Lambda School’s Innovative Business Model: Learn Now, Pay Later

The Lambda School business model was created to offer people what they call a “zero-risk” path into a tech career. Accepted students can start learning tech skills without paying anything at all up front. Right now the four learning tracks offered include the following:

  • Data Science: Python, SQL, Statistics & Modeling, Machine Learning, Linear Algebra, Databases, Big Data, and Visualization.
  • Full-Stack Web Development: JavaScript, HTML, CSS, Node, React, Python, Express, and SQL.
  • iOS Development: Swift, Objective-C, C, Python, UI, Networking, OOP, and Core Data.
  • User Experience Design: User Research, Ideation, Usability, Wireframes, High-Fidelity Design, HTML, CSS, and JavaScript.

The key to making this business model work is the Income Share Agreement (ISA), which is only available to residents of the US, EU and UK. When students enroll, they sign a ISA and start learning. After completing 1,500 hours of interactive online coursework (full-time over 9 months or part-time over 18 months), they still don’t have to pay anything. And they won’t pay anything until they land a job making at least $50k/year. At that point, they will begin making monthly payments equal to 17% of their gross pay for two full years. And it’s capped at $30k total, even if they land an insanely well-paying job. The ISA is also time-capped at five years, whether you’ve paid anything or nothing. A graduate who has to stop working puts their ISA on pause, with no interest accumulation. Students also have the option to pay $20,000 up-front for their education.

Is it working? The Lambda website claims it has helped thousands of students jumpstart their tech career so far, with 86% of its graduates getting hired within 6 months and making more than $50k. That’s pretty impressive by anyone’s standards. I can only imagine that this means it must be highly competitive to get in. Lots of people would jump at the chance of getting an education without paying anything up-front, which means Lambda School must be screening applicants very carefully to ensure they get their investment back. As explained on the Lambda School FAQs: “This is our way of investing in you. We select students we believe will be successful, and cover the costs of your education until you’re in a financial position to pay us back.”

You can also be sure that they put some serious effort into helping you land the job that is key to recouping their investment. The school’s commitment in this regard is described on the website this way: “We’ll match you with expert career coaches, local mentors, and our nationwide network of hiring partners to help you find the right fit.” Elements of the career placement program include the following:

  • Meet 1:1 with mentors: Students are paired up with a mentor in their city who is working in the same field and who will provide additional support during their job search.
  • Polished resumes and profiles: Creating a polished resume, portfolio, and LinkedIn profile with expert feedback and guidance.
  • Practicing interview skills: Lambda provides technical and behavioral interview prep.

Reviews of Lambda School

Everything outlined above are the basics anyone can see about Lambda School as presented on the company’s website. Lambda also presents a series of compelling student stories and testimonials. But what are people saying on third-party platforms about Lambda? I could only find two sources with a decent number of reviews as of this writing:

  • Course Report: 72 reviews with an average rating of 4.9 out of 5 (source).
  • Switchup: 156 reviews with an average rating of 4.9 out of 5 (source).

It gets really high marks from participants, and that’s important. So what are the potential downsides? It seems to me that the biggest danger with this model is people who live in places with a high cost of living who land a job that only pays between $50-$60 after graduating. Remember that the 24 payments of 17% is calculated on the graduate’s gross pay, meaning before any taxes are taken out. The rub, of course, is you have to make your payment out of your monthly take-home pay after taxes and any other deductions have been taken out. In a high-cost-of-living location, your take-home pay on a $60k/year salary ($5,000/month) is going to be something around 25% less than your gross, so call it $3,750. Your Lambda School payment will be $850, reducing your take-home pay to just $2,900. That’s what you’d have left to pay all your expenses in a high-cost-of-living city. Ouch. Still, it could work out quite well for people who land the right high-paying job and are able to live in a place that’s not especially expensive.

Lambda School Hires its First CTO: Namrata Ganatra

Kudos to Lambda for not just trying to come up with an innovative way to do for-profit online education, but also for hiring a woman to be its first chief technology officer. Namrata Ganatra was born and raised in India and had dreams of a computer-related career, ideally at Microsoft. But with three siblings and a middle-class family, there was no way of paying for the schooling she would need.

She was able to leverage her strength as a highly successful student into scholarships that helped her pay for a bachelor’s degree in computer science from the University of Mumbai. She didn’t apply right away for a job at Microsoft, at least not directly. She wanted them to notice her, so she first went to work for a little startup that handled small projects end-to-end for Microsoft. And Microsoft did notice her. Within three years she had an offer to join Microsoft full-time in Seattle, where she helped build the company’s first billing platform. While working for Microsoft she also obtained her Master’s degree in Computer Science from Stanford University by studying part-time on top of her full-time job.

Namrata’s time at Microsoft ended when her fiancé received a great job offer in San Francisco. They moved there and Namrata took a position with a startup that was eventually acquired by PayPal. Then she went on to Facebook to lead their payments engineering team, then served as CTO at Stockpile, and was then briefly Senior Director of Engineering for Coinbase when she stumbled across Lambda School with its model of making tech education accessible and free of risk, something about which she is passionate.

When asked what impresses Ganatra the most since joining Lambda, her answer is how obsessed the school is with student success – which is good news for prospective students. Lambda School isn’t about granting credentials. Instead, it’s about teaching the kinds of skills that employers are demanding more and more right now. If getting a practical education from a school that teaches high-tech skills without having to pay for it up-front sounds like a pipe dream, Lambda is trying its best to make that dream a reality. Traditional institutions of higher education simply have far too many “legacy” overhead costs in the form of physical campuses and tenured faculty positions to offer this kind of model.

How successful Lambda School will be in its attempt to disrupt the traditional model of online education remains to be seen, but I for one will be watching closely to see how it goes.

Featured Image: Chris Ried, Unsplash.