The very idea that she, a Black person living in Alabama, could make $75,000 a year in the tech industry after just a 10-week boot camp is what drew Aaryn Johnson into Flockjay. The ad for the boot camp specializing in tech sales followed her around social media: “This is the bullet train you don’t want to miss! It’s recession-proof even in the midst of a Global Pandemic.” Even better, according to the company’s promotional material, students didn’t have to pay a cent in tuition to Flockjay until they landed a job that paid at least $40,000 a year.
It seemed too good to be true. Johnson assumed the scheme was fake until one day she saw on Twitter that Black celebrities like Serena Williams and Will Smith had invested in Flockjay—and that the Walnut, California–based startup pledged to help people from underrepresented backgrounds get into the tech industry. When Johnson started an application and then abandoned it, a Flockjay sales rep called her and made it sound like the program was exclusive, she says, but that she had a good shot at getting in, because she’d worked in sales in the past. “They said, ‘You’re going to kill it; you’re going to make so much money.’ ”
When she learned that Flockjay was about to close admissions for the class, Johnson completed her application, signed an enrollment agreement, and began the program in August 2021.
Flockjay delivered on little of what it promised, Johnson says. The curriculum was so easy that her 7-year-old nephew could have done it, she says. Students were taught how to make posts on LinkedIn—something most all of them knew—including a homework assignment to post about how much they were enjoying Flockjay’s program. Classes had them act out selling tech products to one another, much in the same way children pretend to sell things at a grocery store, with no simulation as to what it would actually be like in the real world. Within Johnson’s first two weeks of the program, the representative who had urged her to join was laid off, along with half of Flockjay’s staff. The result was that the one-on-one coaching students were promised was effectively removed from the program.
Johnson had entered the lawless arena of tech boot camps; These camps are among thousands of unaccredited schools that pitch their services to students through heavy marketing spends and often don’t deliver on the promises made in their advertising pitches. Unaccredited schools have long flourished in the U.S., but this new wave of schools does something different: attracting students by offering a relatively new funding model called an income share agreement (ISA). They pitch these ISAs as a way to access education without taking out a loan, but students like Johnson soon find out that these agreements can leave them owing a lot of money without the good career prospects they were promised. Nor are these students eligible for any of the Biden Administration’s planned federal loan forgiveness programs, because ISAs are offered not by the U.S. government but by private companies.
Now, a year after enrolling, Johnson is getting hounded by Meratas, the company responsible for collecting on her Flockjay tuition, despite the fact that Johnson says she did not receive the education Flockjay promised. She finished the course, since the company had pledged to match her with hiring partners once she graduated, but after waiting for weeks to be connected with a company, she hustled and found her own job in sales. She never mentioned Flockjay to her new employer. She doesn’t make anywhere near the $75,000 salary the company mentioned in its promotions. Her sales job, while technically in the technology industry, is basically telemarketing, she says: “This is literally the most soul-sucking job I’ve had in my entire life.”
Flockjay was cited in October of 2020 by California’s Bureau for Private Postsecondary Education for operating without approval, Johnson has since learned, and ordered to cease advertising to students and enrolling them. The company has not complied. Blair, the company that gave Johnson the money for her tuition, no longer works with Flockjay; they have turned over her financial debt to Meratas.
“Their shtick was that it was about getting Black people into tech—but over the 10 weeks, they didn’t train us for any real-life situation,” says Johnson. “There were so many people who tried to get jobs after and could not.”
In the turbulent economy of the pandemic era, few industries seem as attractive as the tech sector, where people can earn high salaries, work remotely, and feel with some degree of certainty that they’re in a growing field. But tech can also seem opaque to outsiders. After all, it’s much harder to understand what tech employees do all day than it is to picture what happens in a car factory. Boot camps like Flockjay attract students by promising to demystify tech and get students high-paying jobs without having to take on the debt of attending a four-year college.
Business has been booming. Around 100,000 people were enrolled in tech boot camps in 2021, according to the research firm HolonIQ, a fivefold increase since 2015. These businesses generated $1.2 billion in revenue in 2020, six times what they did in 2015.
Boot camps like Flockjay have flourished over the last few years in part because they partner with companies that offer ISAs, which give students upfront money for tuition if they agree to repay the money once they’re earning a certain wage. Students can either fork over a certain percentage of their salary or a dedicated lump sum every month until they’ve paid back the amount they’ve borrowed—or more, depending on the agreement. ISAs have been used at accredited schools, like Purdue University, but they’re especially popular for nonaccredited schools like boot camps, which often promote these financing arrangements in their sales pitches, since their students cannot access federal student loan dollars.
On the surface, the symbiotic relationship between boot camps and ISA providers seems like a smart way to get people into technology. Boot camps are expensive, with tuition ranging from $3,000 to $15,000, and ISAs enable students to pay that tuition without taking out private student loans, which usually have high interest rates and fees. ISAs often behave as servicers, providing students the money that allow boot camps to operate, and then handling the details of repayment so that schools can focus on education. ISAs have better terms than private loans, but not as much flexibility as federal student loans. If boot camps didn’t exist, ISAs might struggle to find a market.
ISA proponents say the financial product allies students, the school, and the ISA provider, since each has a vested interest in a student graduating and making a good salary. “Because a Flockjay education can be financed via an income share agreement, the incentives of the school and the student are highly aligned—Flockjay is a blueprint for College 2.0,” Romeen Sheth, a Flockjay investor, wrote on Medium in 2019, explaining why he had invested in the company. (Sheth did not respond to a request for comment for this story.)
But groups that advocate on behalf of students say ISAs are not the cure-all solution that proponents say they are, even as the companies continue to sell students the promise of a swanky future in the high-flying world of tech. The example of Flockjay, showered with praise and funding by venture capitalists and celebrities, even as students say the company ultimately took their money and delivered little in return, shows the risk of allowing both ISAs and for-profit tech schools to operate without regulation.
“There was a lot of hope that this new emerging high-tech world would save us,” says Ben Kaufman, director of research and investigations at the Student Borrower Protection Center, which advocates for students, and which provided support to Flockjay students who had complaints about the company. “But there’s a long history of fly-by-night con men setting up for-profit educational enterprises, and then finding ever more exotic and dangerous forms of credit to facilitate them.”
Flockjay isn’t the only company that has produced crops of angry students. Three students sued the coding boot camp Lambda School in 2021, alleging that the school misrepresented its job-placement rates and how its ISA worked. They reached a confidential settlement in July, but a fourth such claim remains in court. A lawsuit filed this summer in Atlanta alleges that an online programming boot camp called Clever Programmer charged students tens of thousands of dollars for services it did not deliver. And Washington State filed a lawsuit against tech sales camp Prehired, saying its ISAs are invalid because the company operated without a license, and that the company misled students about its programs. Prehired has denied the allegations in the complaint.
Boot camps and ISAs are arguably creating a new generation of debtors, even as the nation grapples with how to handle its existing student debt crisis. President Biden said last month that he planned to wipe away up to $20,000 in federal student loan debt for some borrowers, and earlier this year, the Department of Education said it would forgive billions worth of loans given to students who attended schools like Corinthian Colleges Inc. that it found had misrepresented borrower’s employment prospects. But these boot camps and the ISAs that enable them may be creating some of the same problems—and debt burdens—that the Biden administration is seeking to solve.
There’s not a whole lot that Flockjay alums like Johnson can do about their complaints. Some students filed a notice with California’s Workforce and Development Agency in July, suggesting they would file a lawsuit against Flockjay if the agency does not take action. Many more students are like Johnson—embarrassed that they signed up for Flockjay, and just wanting to move on.
“This was a scam, but you feel stupid because you fell for it,” she says.
Flockjay did not respond to questions for this story, but the company did provide a statement, attributed to Bryant Lau, its head of demand. “We stand by the success our hundreds of graduates have had and the incredibly hard work of our staff when we ran our sales academy,” it says. Meratas did not respond to a request for comment.
Not all boot-camp students have stories like Johnson’s. There are many boot camps that do provide a solid tech-focused education, and that have helped students get high-paying tech jobs. These often teach specific skills, such as programming languages like Python, or computer-science skills like encryption and system architecture.
Educational programs that are not accredited can still provide students useful skills that will prepare them for the job market. But research indicates that students with industry-recognized credentials like a certificate and degree—credentials that Flockjay and many other tech sales boot camps don’t offer—are most useful for preparing students for the job market.
To say there’s a student debt crisis in America is a vast understatement. Income-sharing agreements have sprung up as an alternative to taking on this debt. The pitch: ISAs shift the risks of poor workforce outcomes from students to lenders, since lenders only get repaid if the students find a good-paying job.
“This is true ‘debt-free’ college,” former Indiana governor Mitch Daniels wrote in 2015, when pitching ISAs as a solution to the student debt crisis. Daniels launched one of the first and most high-profile ISAs at Purdue University, where he was then president, in 2016. The program, called “Back a Boiler,” gave students a portion of their tuition in exchange for the students’ agreeing to pay back a percentage of their future income for a period of time after they graduated. The program partnered with a startup called Vemo Education, which in 2017 raised $7.4 million from venture-capital firms. (In 2022, Purdue suspended its Back a Boiler program amid complaints that it had misled students about how much money they’d owe after graduating. Daniels also announced in June that he was stepping down as Purdue’s president.)
ISAs have long been popular at private universities in Europe and Latin America, and U.S. entrepreneurs began founding ISA companies as early as 2012 to fill the gap between federal student loans and private loans, which often have high interest rates and inflexible payback terms. Many of the earliest ISA companies, including Upstart and Pave, have since switched to offering traditional loans.
In 2019, $250 million in income-share agreements were created, and 40 colleges and boot camps either offered or were developing ISA programs, according to Edly, an education lending platform, which estimated before the pandemic began that $500 million would be generated in 2020.
Flockjay talked about the potential merits of ISAs as part of its funding pitch to investors. The angle paid off; in 2019, Flockjay received funding from startup accelerator Y Combinator; Dreamers VC, the venture capital fund co-founded by Will Smith; and Serena Williams’ investment firm Serena Ventures, which Williams has recently said she plans to focus on when she retires from professional tennis. (Serena Ventures did not respond to requests for comment. A Dreamers VC representative says that Flockjay was one of the few boot camps proactively engaging in communication with California regulators.)
Advocates like the Student Borrower Protection Center (SBPC) say the way ISAs and boot camps became popular—by marketing themselves as a debt-free alternative to college—was misleading. “THIS IS NOT A LOAN,” a Flockjay deferred-tuition agreement seen by TIME says, and other ISAs clearly state that they are not loans. But ISAs behave very much like loans, with similar terms and fees, and sometimes require borrowers to pay back much more money than they’ve originally borrowed. ISAs often have payment caps that limit the amount a student has to repay, but these can be three times as high as the amount borrowed, according to the SBPC. In some cases, if borrowers want to pay off their ISA early, they have to pay the amount of the payment cap as a penalty, rather than the initial tuition amount—as was the case with a Purdue student who took out an ISA for $15,000 and was told she’d have to pay $37,500 if she wanted to close her contract, according to the Indianapolis Star.
“The products have this facial element of seeming really simple and elegant,” says Kaufman, of the SBPC, “but it’s really smoke and mirrors they use to trap people in expensive debt that lasts longer than they think it will.”
And while student-borrower advocates agree that ISAs are probably a better alternative than private student loans, they say that any product pitched as a money-making operation to investors won’t be a good deal for students. Federal student loans do not earn the government profits.
“The whole premise is that this will generate a profit for somebody, whether it’s an investor or a boot camp,” says Jessica Thompson, a vice president at the Institute for College Access and Success. “Since when does anybody think that students are going to come out on the better end of that deal?”
Neither ISAs nor unaccredited boot camps are closely regulated, and that’s created many of the problems students like Johnson have encountered. Students can take out ISAs for schools that don’t offer a good educational product and mislead them about student outcomes—allegations made in numerous lawsuits against boot camps—and then still be required to pay them back.
Flockjay, for instance, told students in promotional materials that the average full-time job offer from companies on its platform was $75,000. Yet according to the company’s own 2021 enrollment agreement, out of 114 students who began the program in 2019, only 52 were eligible for graduation, and of those 52, just 22 were in jobs making between $45,000 and $50,000. The rest were making less than $45,000 or didn’t report their salary information.
Students like Johnson and Brianna Kirby, a Black woman who started the program in June 2021, say there were many more discrepancies between what Flockjay initially promised and what it delivered. Though these complaints are more focused on the quality of Flockjay’s educational product than the terms of its deferred tuition agreement they signed with Blair (now enforced by Meratas), students say they agreed to the tuition terms because they were told they would make good money after graduation. They say they are now saddled with debt without the benefits they expected.
Flockjay’s enrollment agreement said the company would give students coaching for interviews and perfecting their résumés, and that its career-services team would act as a liaison between hiring partners and graduates, but after the August 2021 layoffs, most of the career-services team was gone. The enrollment agreement required students to schedule mock interviews with the career-service team, but after the layoff, students would sign in to scheduled mock interviews and no Flockjay staff would ever show up, according to online messages TIME has viewed between Kirby and other students. The enrollment agreement prohibited students from looking for jobs on their own for a set period of time after graduation, so that Flockjay could match them with hiring partners, who paid the company a fee, but when those hiring partners didn’t materialize, students were stuck with no permitted way to find work.
The résumé coach assigned to Kirby frequently entered spelling and other errors into her résumé. When students were sent assignments to perfect their résumés, these often weren’t graded on time, Kirby says, even though this significantly slowed down the job -search process. And students were asked to complete a “Capstone Project” to promote Flockjay and recruit new students, even though Flockjay was supposed to be teaching students business-to-business, not business-to-consumer sales; the winning students received an a $100 prize, according to graduates who talked to the Student Borrower Protection Center. After the August layoffs, students in Kirby’s and Johnson’s classes began to discuss the lax student services on Slack, wondering if they could take legal action. “I’ll be honest with you, if I wasn’t financially obligated I could care less about this whole ordeal,” one student wrote in the Slack channel. “However, I am stuck $7k.”
After talking with other students about how they felt let down by Flockjay, Kirby and Johnson both closed down the bank accounts to which they had given the company access. (California law says that a note of debt for an educational program is not enforceable if the institution did not have approval to operate when that note was executed; it’s unclear how this would affect the debt of students who live in other states.)
Like many other students, Kirby ended up finding a job on her own after graduation, without the help of Flockjay. She does not make anywhere near $75,000. Meratas has been sending her so many emails that she’s started marking them as spam.
“Flockjay didn’t make good on their contract with us; they target vulnerable marginalized communities, and left us in the wings with no transparency or communication,” she says. “Now we’re stuck making full payments despite feeling shorted.”
One former Flockjay worker says she thinks the company’s focus on increasing its student base is what led to its problems. Lynn Meadors was hired as a Flockjay résumé writer in early 2021. When she began, Flockjay had six classes of graduates, each around 25 students, but each month, the classes got bigger and bigger, she says. By the time she left, in November 2021, the classes were about four times the size they’d been in the beginning. That’s despite the company’s having about half the staff it had before August of that year.
Meadors believes Flockjay was trying to add as many students as possible to increase its revenue. “Students were being recruited primarily because they could check a box or fill a seat in the class,” she says, “rather than because they had the potential to be successful.” When students didn’t complete assignments, staff would be encouraged to graduate them anyway. Because Flockjay’s “partner companies” had to pay them a fee whenever the companies hired a student Flockjay had introduced to them, students were told not to seek jobs on their own, so Flockjay could get the commission.
“I do think there were a lot of predatory aspects of Flockjay,” Meadors says. “They made it sound like if you went through Flockjay, you were almost guaranteed to find employment, but I know many students who have not found work or who have had to accept jobs in totally different fields and are still now paying Flockjay.”
Most of the students were people of color, Meadors says, and Flockjay’s model of getting current students to recruit new ones was successful at making people feel comfortable signing up, even if class quality was declining. Students told her they’d joined because they saw friends or friends of family members posting about their experience, or saw ads from alumni of color that said how successful they’d become in tech.
“The thought that any person who entered the program could have a successful tech career is flawed,” Meadors says. “In reality, the majority of people were not successful.”
Previous Flockjay students have reported better experiences with the program. Brenna Redpath’s son went through Flockjay in 2020, and she says he flourished in the program. He’s now working in tech sales and makes $80,000, she says, a path that motivated Redpath to enroll in Flockjay in August 2021. Her son’s class was about one-third the size that hers was, she says. Her son had a career coach dedicated to helping him find a job; Redpath says most of the career counselors who were supposed to be available to her had been laid off, with only about two for every 100 students.
Redpath, who is 56, had a few interviews after graduating from Flockjay, but she did not find a tech job. She has since found work at a nonprofit that has nothing to do with the tech industry. But since she is making more than $40,000, she and her husband have been anxiously eyeing their bank account, which they did not close down because it’s linked to many of their other monthly payments. She worries Meratas will start collecting soon on her ISA.
“I believe in the mission of Flockjay,” says Redpath, “but I watched them not deliver for people who could use it.”
Since they’re structured differently from loans, ISAs have been difficult for regulators to handle. Regulations often require that lenders disclose the amount of interest a loan has accrued, for example—something ISA providers say would be difficult to calculate. Until the Consumer Financial Protection Bureau entered into a consent order with Better Future Forward, a nonprofit ISA provider, in 2021, some ISA providers weren’t even certain they had to adhere to the Truth in Lending Act, which governs which disclosures student loan borrowers receive. Since the consent order requiring the nonprofit to follow the Truth in Lending Act and the Consumer Financial Protection Act only addresses Better Future Forward and its ISAs, many providers say they still don’t know what federal regulations apply to their own ISAs.
Since 2014, Sen. Marco Rubio (R-FL) has introduced numerous Congressional bills that would regulate ISAs, but they have never gone anywhere. This year is no exception—in July, Rubio and three colleagues introduced a bipartisan bill they say would help regulate ISAs. The bill would prevent ISA contracts from being longer than 20 years, and would allow students making below a certain income to be exempt from making payments toward their ISA.
The bill is endorsed by Better Future Forward’s CEO Kevin James and Purdue’s president, ISA champion Daniels. But SBPC’s Kaufman says it would “enshrine into law all the worst aspects of ISAs,” and allow providers to continue to claim that these agreements aren’t loans.
It may be difficult for the industry to grow until policymakers create a system of regulatory oversight that prevents abuse of ISAs, says James, of Better Future Forward. He argues that used correctly, ISAs can be a powerful tool. Better Future Forward, for instance, offers ISAs only to certain students who attend certain handpicked accredited universities in Minnesota, Wisconsin, and Illinois. The company has worked with regulators in an attempt to create new laws that would make sure that ISAs could be discharged in bankruptcy, unlike student loans, and that students don’t have to repay if they make below a certain income.
The U.S. higher educational system needs programs that expand access to financial support and that are built around students’ success, James says. Without access to ISAs, students could further become trapped in debt, since the current loans system is broken, he says. The loan-forgiveness programs the Biden Administration is offering “are patches on a broken system—doing little to ensure history won’t repeat itself,” James wrote in a June 2022 paper laying out his preferred regulatory approach.
Since there is little meaningful federal regulation, ISA companies have to comply with different regulations from 50 different states, making it even harder for them to operate, according to the CEO of one company that has recently stopped providing ISAs, and which is not authorized to speak on the record because of pending litigation. The startups that offer ISAs don’t have a lot of capital, and can either spend their money on ensuring they comply with every state-level regulation, or they can spend it on its educational product, or on marketing.
“Clear rules would have probably been the best thing that could have happened to us,” the CEO says. A lack of regulation has forced many ISA companies to pivot to other business models, which leaves students with few options other than private loans, which have extremely high interest rates.
Indeed, many of the companies that have tried to offer ISAs in the past decade have since left the market because of a lack of regulation. Flockjay itself has since pivoted from tech boot camps, and says it is now focused on helping its graduates and other tech sales workers get better at the jobs they already have. The company is now pitching this as a new service to former students, even though students say they were told they’d receive ongoing alumni support for life as part of the program they had already paid for.
The example of Flockjay students indicates that the state regulation is not particularly effective. Though California’s Bureau for Private and Postsecondary Education (BPPE) fined Flockjay $15,000 in October of 2020 for operating without state approval, a year later the BPPE lowered the fine to $10,000—roughly equivalent to the tuition of 1.25 students. The BPPE did not take any further regulatory action against Flockjay. The school still does not have approval to operate in the state of California.
California’s Department of Consumer Affairs, which oversees the BPPE, said in a statement that Flockjay appealed its citation for operating without approval; when its appeal was denied, the school submitted evidence in November 2021 that it was no longer operating. The regulator does not confirm, discuss, or comment on investigations, the statement said. BPPE refers matters related to financing to the Department of Financial Protection and Innovation (DFPI.). In a statement, DFPI said: “It is the DFPI’s stance that ISAs issued by schools not licensed or registered with BPPE are unenforceable and cannot be serviced.
In August 2021, Meratas, which took over servicing Flockjay’s ISAs in June, entered into a consent order with the DFPI. The consent order states that Meratas will not service any ISAs “that have been determined or declared unenforceable or void by the DFPI or any regulatory agency.”
But students including Kirby, Johnson, and Redpath say they are getting emails from Meratas trying to collect on their Flockjay ISAs. They say they’ve also been offered “discounted tuition” offers, in which their debts will be wiped out if they pay $6,000 right away.
In August, Redpath emailed Flockjay asking to speak to someone “who can have a conversation about the contractual problem of Flockjay holding teaching for my batch while legally being banned from doing so by the Department of Education.” She noted in the email that many students were unhappy about the lack of career support services, and that their class was three times bigger than previous classes had been.
She received an email back the next day. “You can continue to defer your tuition payments until you get a job exceeding $40,000/annually,” a Flockjay customer-success manager wrote. “Per the DTA [deferred tuition agreement] this is only deferred until you get any job.” —With reporting by Simmone Shah
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