At the Lambda School, you don’t have to worry about where you’ll find the money to pay your tuition bill. In fact, you don’t have to pay any upfront cost at all. In place of tuition, students agree to pay a percentage of their income once they find a job, and only if that job pays more than $50,000 a year. Students that don’t find employment within five years or never reach that level of salary aren’t required to pay back anything.
Lambda’s co-founder and CEO, Austen Allred, was inspired to start the school after dropping out of college. He spent two years running a venture-backed startup in Utah that ultimately failed. He then got a job with a San Francisco-based company. The difference between the positions and salaries in the two locations gave him the idea for the school. While his friends in Utah were just as talented as those in San Francisco, they didn’t have a path to a better job.
Along with another college drop-out, Ben Nelson, the two offered a free one-month online introduction to computer programming. Seven thousand people enrolled. Then, they offered a 12-week course for $10,000. Few enrolled because of the cost. So, they tried offering a course where students paid $1,000 initially and then the remaining $9,000 once the student got a job. When more than 100 students enrolled, the pair realized that introducing an income sharing agreement was the logical next step.
The repayment plan is 17 percent of your income (if you’re making more than $50,000) for the first two years. Tuition is capped at $30,000, so you’ll never pay more than that, even if you have a higher income. For students not interested in the payment plan, there is the option to pay $20,000 upfront.
Lambda School is a for-profit online software engineering course based in San Francisco. There’s no brick-and-mortar institution; all of the learning happens online. The courses are 30-weeks long. While the School used to only offer a course on web development, they’ve expanded their offerings to include courses on data science, android development, UX design and iOS development.
It may not be surprising that this model draws in students from a low-earning demographic. Students entering Lambda have an average annual income of $22,000. The average graduate of the program increases their income by $47,000. Eighty-three percent of graduates have landed jobs, some ending up at prestigious companies such as Google, Amazon, Verizon and AT&T.