Now You Can Pay for Code Boot Camp With Student Loans

Startups like Max Levchin's Affirm are using tech to offer student loans for learn-to-code bootcamps. But some are questioning whether it's just another way to perpetuate the cycle of student loan debt.
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President Obama has praised coding bootcamps like General Assembly and Dev Bootcamp as quick ways to secure a "ticket into the middle class." But given that these programs can cost upwards of $10,000 and often require people to take an extended period of time off of work, it could be argued that these bootcamps aren't all that affordable for people who aren't in the middle class to begin with.

But that may soon change as more online lenders begin offering student loans for these alternative learners. The latest entrant into this space is Affirm, the financial technology startup that PayPal founder Max Levchin launched back in 2014. Starting Tuesday, students at General Assembly, Bloc, Kaplan’s Dev Bootcamp, and Metis will be able to secure loans that last 12, 15, or 18 months, with interest rates ranging from 6 to 20 percent. In most cases, students won't be required to pay back the loan during the first six months they're enrolled in the program.

With this new product, Affirm joins companies like Earnest and Upstart, which have also begun offering student loans for this same demographic. Levchin says he expects this field will only grow with time, as more students pursue this type of education.

"I’m pretty bullish on the whole thing. In general, I think it’s going to grow very aggressively," Levchin says.

Perpetuating the Cycle?

Not everyone in the tech industry views that as a good thing, though. There are those who say these bootcamps are offering students the promise of a job and then failing to deliver, and that giving these students loans will just perpetuate the cycle of debt that so many people already live in. Meanwhile, many hiring managers say they still see a marked difference in the quality of work produced by bootcamp graduates versus traditional college graduates. "It’s hard for somebody to come out of a dev bootcamp in a short amount of time and perform at the same level in an interview as someone who just finished a computer science major," said Airbnb's vice president of engineering Mike Curtis in a recent interview with WIRED.

But Levchin argues that there are differences in quality with any education system. "In four-year programs, there's a real difference between Stanford and a state school computer science degree," he says. "In that sense undoubtedly there’s a pecking order."

That's why he says Affirm is being purposely selective, and only working with bootcamps that place a high percentage of their graduates in high-paying jobs. That's not just for branding. It's for financial reasons too. The students who stand the best chance of paying Affirm back on time will be the ones who are able to secure those jobs after graduating.

That won't be the only way that Affirm determines who's worthy of a loan, though. Over the last year, the company has learned a lot about how to determine trustworthiness from its initial product, Buy with Affirm, which enables people to pay online merchants in installments and offers low, transparent interest rates. People apply for credit using just their name, phone number, email, and date of birth, and Affirm's algorithms go to work analyzing thousands of bits of publicly available data. In certain cases, the system will ask the applicant for a bank statement or other supplemental information, but most times, they're approved instantly. The student loan product will work in much the same way.

Levchin's ultimate goal is to apply these indicators to more industries to create a suite of online credit and loan products, all under the Affirm umbrella. "Our goal is not about being a point-of-sale lender or education lender. It’s fundamentally about helping people improve their quality of life through responsible use of debt."