Lambda School’s Austen Allred on Solving Problems in Education – Problems Sighted

Check out the Problems Sighted Episode Page & Show Notes

Key Takeaways

  • Aligning incentives is critical
    • Schools and their students are usually not aiming for the same thing
      • Schools may want to “expand the minds” of their students, while students simply “need a freakin’ job”
  • Lambda School aligns incentives with students by enabling them to defer tuition until after they’ve landed a job
    • After students graduate and get a job, what happens?
      • They give 17% of their salary back to Lambda School for 2 years, capped at a max of $30k, but only after they’re earning an income over $50,000/year
  • One huge problem with massive open online courses (MOOCs) – the completion rates are incredibly low
  • Student debt is growing by 0.1 – 0.2 trillion dollars a year

Intro

Always Align the Incentives

  • Schools and their students are usually not aiming for the same thing
    • Schools may want to “expand the minds” of their students, while students simply “need a freakin’ job”
      • This causes plenty of negative externalities
        • An externality is a cost or benefit that affects a party who did not choose to incur that cost or benefit
  • Austen considers it likely that there will be an unbundling of university offerings to better serve specific student goals
  • Lambda School, for example, is specifically designed to help students find technology jobs

The Problem with MOOCs (Massive Open Online Courses)

  • People originally saw an opportunity for optimization
    • The idea was to find the best professors for different subjects, build amazing courses around their lectures, and put them online for anyone to take
      • Surely it’d be better than having plenty of different mediocre professors teach at different institutions
    • However, the completion rates of these courses are incredibly low
  • It turns out that the lecture isn’t as important as what happens around it
    • Working with others and having adequate social pressure are critical in helping you finish a course
      • MOOCs left that key component out of their instructional design

Lambda School

  • Fundamentally, the school tackles a human psychology problem:
    • Humans have a really hard time pushing themselves to do difficult things and to keep continually pushing themselves beyond what they’ve done in the past
  • Lambda School aligns incentives with students by enabling them to defer tuition until after they’ve landed a job
    • After students graduate and get a job, what happens?
      • They give 17% of their salary back to Lambda School for 2 years, capped at a max of $30k, but only after they’re earning an income over $50,000/year
    • This structure is made possible through Income Share Agreements
  • Lambda’s success is completely dependent on their students succeeding
  • Because of this alignment, they’ve forced themselves to innovate and create a “full-stack” solution
    • Re-imagined admissions, the school itself, outcomes, financing, etc

Income Share Agreements

  • An Income Share Agreement (ISA) is a financial instrument that allows parties to pledge a portion of their future income
    • This is how most students pay for Lambda School
  • While it’s a powerful tool for aligning incentives, it doesn’t solve all problems
    • Implementing an ISA in colleges (like Purdue has done) is a step in the right direction, but it also creates several challenges
      • Most revenue immediately goes to $0
      • Schools have to figure out a selection process to find the right students
      • The instructional design has to account for the trade-offs of online learning
  • Austen believes you need a full-stack, vertically integrated re-thinking of how things should be in order to make it work at scale
    • “Chevy can definitely produce electric cars, and that’s a great thing. But it’s still not a Tesla.”
    • That implies that every career path potentially represents an opportunity for Lambda School’s integrated approach

Student Debt

  • “Student debt is growing by 0.1 to 0.2 trillion dollars a year. That’s not okay.”
    • “We’ll see the impact of student loans on the economy for another 30-40 years”

What problems does Austen wish people would work on?

  • International credit infrastructure
    • More income verification
      • It’s really hard to use ISAs in other countries, or even extend consumer credit, because the infrastructure just isn’t there yet
    • “If you can figure out Income Share Agreements in India, please give me a call”
  • International arbitrage for code reviews
    • Find really talented engineers earning low U.S. dollar-denominated salaries, and pay them to review code
  • Immigration as a service
    • Making immigration to and from various countries clear and easy is probably a billion dollar opportunity

These notes were edited by RoRoPa Editing Services

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