But how do you know what’s crappy or not?
Skills Fund takes our informal motto very seriously: “We don’t finance students to attend crappy programs.” In the last five months, we’ve looked at dozens of bootcamps to determine the high-quality ones from the, well, crappy ones.
We’ve chosen not to partner with about 25% of the schools we’ve looked at. What did we learn as we conducted due diligence and underwrote bootcamp quality?
The reasons bootcamps failed to meet our standards fall in two buckets: (1) Not ready for prime time and (2) low ROI for students.
We evaluate schools fairly comprehensively. Outcomes matter, greatly. Completion rates, job placement rates, starting salaries of graduates, etc. are just a starting point. Strong outcomes that meet our bright line standards are necessary, but not sufficient for us to deem a school high quality.
The level of employer engagement in curriculum design; how relevant the curriculum is to local labor demands (and that’s not always the case); admission selectivity in student / program fit; instructor quality and training; and, the bootcamp’s financial soundness: all of these factors and more go in into our review of a school. In sum, we want schools that can produce consistently strong outcomes for students.
Not Ready for Prime Time
We see a number of bootcamps that only recently launched or haven’t taught their first class yet. Often these schools are founded by entrepreneurs who, in classic entrepreneurial fashion, are bootstrapping their business. This means they are experimenting, iterating quickly, and often running lean. Founding a successful company is hard — trust me I’ve had failures and successes — and that’s why the entrepreneurial journey is considered a hero’s journey.
These are bootcamps with tremendous potential that we can’t, yet, stamp with our quality seal of approval. Often the entrepreneurial founders are surprised to learn they likely need to be licensed in the state in which they will operate. Some haven’t truly engaged employers in the development of the curriculum. Others can’t yet show a deep sense that skills they’re equipping their students with will lead to high-paying in demand jobs.
In these cases, we act as a coach to the entrepreneurs, walking them through what they need to accomplish in order to be deemed high-quality. We’ve been pleasantly surprised to hear back five or six months later from some of these schools that they’ve done everything they need to do in order to become one of our partners.
Low ROI / ROE
One of the most pernicious things about the federal student loan program is it creates price inelasticity in the cost of higher education. Universities are able to increase their tuition ever upward, knowing students can borrow unlimited amounts from the federal government, regardless of if that education will result in a job that will give the student any likelihood of being able to pay back all those student loans. This is tremendously bad public-policy, resulting in an $1.2 trillion student loan bomb and millions of underemployed and debt-burdened college dropouts and graduates. What our government is encouraging students and institutions to do is just plain morally wrong.
Skills Fund’s model is designed to prevent this travesty from happening in the bootcamp space. We won’t work with schools that we believe charge too much for the expected jobs their graduates will be able to get it. Whether you call it Return on Investment (ROI) or Return on Education (ROE), we won’t let students borrow money to pay for skills training whose costs — not just in tuition, but time out of the workforce and thus forgone income while in school — are unreasonable for the post-graduation incomes of most graduates.
We’ve turned down working with several schools whose combination of tuition amounts and program length would leave graduates with too much debt for the jobs they claim grads will get.
When I led the Colorado Department of Higher Education, I viewed the main purpose of our Division of Private and Occupational Schools (DPOS) as preventing diploma mills from cropping up in Colorado. (DPOS is the now the regulator of bootcamps in that state.) When I met with the division staff and the board, the main question on our minds was protecting consumers from diploma mills or schools that might shut down mid-session, leaving students high and dry.
I’m pleased to say that in all of our reviews of bootcamps, we haven’t found any that even have the whiff of diploma mills. These schools are founded and run by serious people focused on a serious mission: real skills training.
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