Lambda School, the startup that offers online computer science classes to be paid for after a student gets a job, has raised an additional $74 million in funding, the company announced Friday.
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The idea behind Lambda School, which was founded in 2017 and is based in San Francisco, is that traditional education models don’t have an incentive to ensure students get a job after they graduate, according to the school’s website. Students often take on debt only to struggle to find employment after graduating while the schools get paid no matter what.
Lambda School operates on an income share agreement model in which students don’t pay any money upfront, but do pay 17 percent of their salary for two years once they make $50,000 or more annually, according to Lambda’s website. Lambda School says it also helps its students find jobs, and if a student doesn’t find a good job after 60 months of deferred payments, tuition is waived.
Lambda currently offers courses in data science and full-stack web development.
“As more people search for better careers and higher incomes, this new funding will enable Lambda School to invest in improving and expanding our programs to deliver positive student outcomes,” CEO Austen Allred wrote in a blog post announcing the funding. “Specifically, we’ll continue refining our coursework and curriculum, evolving and refining our model, and optimizing the way we support successful employment after Lambda.”
The COVID-19 pandemic has accelerated the shift to online education as many schools switch to remote learning. Venture capital funding for edtech companies reached $4.1 billion globally between January and July, according to Crunchbase data. And as the pandemic has wiped out jobs, some people are looking to make a career change or gain new skills to make them more employable–something Allred touched on in his blog post.
“Student debt has reached alarmingly high levels, and the current pandemic has students feeling even less aligned with the interests of traditional educational institutions,” Allred wrote. “Increasingly, students feel treated as a means to an end. Almost every day, journalists report on the denial of housing refunds on closed campuses, additional coronavirus-related fees for safety equipment or university decisions to not reduce tuition despite the shift to online learning.
While ISAs have been praised by some as an alternative way to pay for education, others have compared it to indentured servitude.
The new funding brings Lambda School’s valuation higher than the $150 million it was worth after its $30 million Series B in January 2019, according to TechCrunch. Allred told the publication that he hopes this is the last round of funding the company raises because it wants to be profitable.
The funding announcement comes one day after Lambda announced it had been approved for operation by the California Bureau for Private Postsecondary Education. The approval, however, does not allow for ISAs for new students in California.
Illustration: Dom Guzman
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