New evidence that Federal Aid to bootcamps is a bad idea


In an excellent article for the International Business Times, Salvador Rodriguez demonstrates that coding bootcamps’ true job placement rates are likely far below the eye-popping claims that run as high as 99 percent. This is simply more evidence that giving these schools access to federal Title IV dollars is premature and will likely lead to waste and abuse.

Rodriguez found that there is no clear standard on employment outcome reporting. Sometimes the bootcamps don’t count people who don’t finish the training. In other instances, jobs obtained in a relevant field so long as it happens within a year after the program ends. In still other cases, the time frame is only four months, but things like paid internships count. And while many prominent boot camps pledged to join a consortium to develop and divulge some type of standard measure of labor market success, over a year after their creation only one has delivered. Rodriguez indicates that, without audited, third-party results, these high employment claims aren’t particularly meaningful.

If the idea of misleading job placement rates sounds familiar, you’re not the only one who thought of the comparison. From Rodriguez:

Third-party verified outcomes are key to ensuring the integrity of the fast-growing coding boot-camp market, experts said. That is crucial to maintaining the public’s trust and avoiding government intervention, as has occurred with other for-profit schools. Just last month, the Federal Trade Commission sued DeVry University for deceptive marketing.

Coding boot camps would like to avoid that fate, several school representatives said.

“There’s very little barriers to entry in the market, and there’s a high risk of low-quality providers rushing in. It’s an easy market to get into,” said Sharon Weinbar, CEO of Hackbright Academy in San Francisco. “We want prospective students to feel confident when they choose to apply.”

Of course, as previously reported, the Department of Education wants to allow this Wild West of higher education into Title IV aid. Right now it’s only through experimental sites, which will pave the way to eventual adoption into the Title IV aid system. Perhaps the Department can put up some more barriers to entry that will only allow high-quality providers into the system?

Oh wait. Devry, and all of the other colleges investigated for fraudulent job placement claims, were already part of the Title IV aid system. And there’s little reason to  have faith in the federal financial aid system to sort schools out based on quality (or even level of fraud). After all, our accreditation system is hopelessly ineffectual–even schools with the worst outcomes are usually able to keep their accreditation status. And the “quality assurance entities” (QAE) required to participate in the experimental site won’t necessarily improve things. These new entities face similar perverse incentives as accreditors, in that if they shut down the participating program then the QAE lose both the prestige of the ex-site and will face scrutiny over why they approved the program in the first place. As with accreditors, they have little reason to do their job well.

So we certainly should not be handing out federal loans to anyone who wants them to be attending these new schools. The only thing we can be certain of is that the introduction of federal aid to coding boot camps would create perverse incentives for these programs. As I’ve argued before, it would be much better to simply let these boot camps develop, without federal aid, in order to allow the market to sort out the good and bad actors. The fact that their job claims may be less than accurate provides further proof that the Department should stay away from the latest shiny object that has caught its eye.