TAaryn Johnson was attracted to Flockjay by her idea that she could earn $75,000 annually as a Black woman living in Alabama after only a 10-week bootcamp. 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.
The offer seemed too good for 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.’ ”
Johnson signed an enrollment contract and submitted her application after learning that Flockjay had closed admissions. The program was officially launched in August 2021.
Johnson states that Flockjay did not deliver on all its promises. She says that the curriculum was simple enough for her seven-year old nephew to follow. 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. The classes had students act out how they would sell tech products one to another. This was similar to children selling things in a grocery shop, but without any simulation of what the actual world might look like. 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. As a consequence, Johnson was unable to receive the coaching one-on-1 that she was promised.
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. Although unaccredited schools are well-established in America, this latest wave of schools offers a new model for funding: the income share agreement (ISA). Although these ISAs can be marketed as a means to obtain education without borrowing money, students such as Johnson soon discover that the agreements could leave them with a large amount of debt without offering any good job prospects. 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.
Johnson, one year later, is being harassed daily by Meratas. Meratas collects on Johnson’s Flockjay tuition. Johnson claims she never received the education Flockjay claimed. After the promise by the company to match her up with partners for hiring, she completed the course. But, after weeks of waiting to connect with a company she finally found her job, she hustled. Flockjay wasn’t mentioned by 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. They have not followed through. Blair, who gave Johnson tuition money, is no longer working with Flockjay. They have transferred Johnson’s financial debts 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. However, tech can seem mysterious to those outside. 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. Flockjay Boot Camps attract students because they promise to decode tech and give students high-paying jobs, without the need to borrow money from four-year colleges.
There has been an explosion in business. HolonIQ reports that around 100,000 individuals enrolled in tech boot camp programs in 2021. That’s five times the number of people who enrolled since 2015. This group of entrepreneurs generated six times the revenue than in 2015, $1.2 billion.
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.
The symbiotic relationship of ISA providers and boot camps seems smart to me. Boot camp tuition can run from $3,000-$15,000 and is expensive. ISAs make it possible for students to afford tuition and avoid taking out loans with high interest rates. Servicers are often used by ISAs to provide funds for boot camps and handle repayments so students can spend their time on school. ISAs offer better terms than federal student loans but less flexibility. If boot camps didn’t exist, ISAs might struggle to find a market.
Proponents for ISAs argue that this financial product ties students, schools and ISA providers, because each of them has a vested in a student graduating with a great 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 has not responded to requests for comment.
Advocates for students argue that ISAs do not offer the all-encompassing solution proponents believe they can. Even though the companies are continuing to promise students a swanky career in the tech industry, Flockjay is a prime example. Despite being praised by celebrity venture capitalists and stars, students report that Flockjay took their money, and they received very little in return. This shows how dangerous it would be to allow both ISAs (and for-profit tech schools) to function 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. In 2021, three students sued Lambda School for coding bootcamp. They claimed that Lambda School misrepresented the school’s job placement rates and the ISA system. A confidential settlement was reached in July. But, another such claim continues in court. Clever Programmer was sued by students this summer, alleging that it charged them thousands of dollars to provide services they did not deliver. Washington State also filed a suit against Prehired tech sales company, claiming that its ISAs were invalid due to the fact the company did not have a license and misled students regarding its programs. Prehired denied all allegations.
While the country struggles to address its student debt crisis, boot camps and ISAs may be creating a new generation. 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 didn’t respond to our questions, however, Bryant Lau (its head of demand) provided a statement. “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 has not responded to my request for comment.
Not all boot-camp students have stories like Johnson’s. Many boot camps offer a tech-focused education and have assisted students in obtaining high-paying jobs in the tech industry. Many boot camps teach computer science skills such as encryption or programming languages, like Python.
Even though programs aren’t accredited, they can provide valuable skills to help students prepare for the workforce. 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.
The lure of ‘debt-free’ college
To say there’s a student debt crisis in America is a vast understatement. As an alternative to student debt, income-sharing agreements were created. The pitch: ISAs transfer the risk of poor workforce outcomes to students, as lenders get repaid only if students land a job that pays well.
“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, who was the president of Purdue University at the time, launched one among the most well-known ISAs 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. Vemo Education raised $7.4 Million from venture-capital companies in 2017. The partnership that the program had with Vemo Education is now over. (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.)
Private universities across Europe and Latin America have been using ISAs for years. In fact, U.S. entrepreneurs started ISA businesses as early as 2012 in order to bridge the gap between private student loans and federal student loans. These loans often come with high interest rates and have inflexible repayment terms. Upstart, Pave and many other ISA-based companies have moved to traditional loans.
250 million income-share agreements were made in 2019, and forty colleges and boot camps offered or were developing ISA programmes in 2019, according to Edly. The education lending platform Edly estimated that 500 million dollars would be created in 2020, before the pandemic.
Flockjay spoke out about the merits of ISAs during its pitch for funding 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 didn’t respond to our requests for comment. Representatives from Dreamers VC stated that Flockjay is one of few boot camps actively engaging 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. According to the SBPC, ISAs can have repayment caps which limit how much a student must repay. However, these payment caps may be as high as three times the amount of the original loan amount. 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 don’t earn government profit.
“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 told students, in marketing materials, that the average job offering from companies via its platform was for $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.
Johnson and Brianna, both Black women who joined the program, claim there are many more differences between Flockjay’s initial promises and its actual delivery. 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. The students claim they now have debt and are not receiving the benefits that they expected.
Brianna Kirby began the Flockjay Program in June 2021.
Courtesy Brianna Kirby
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. Students were obliged to arrange mock interviews with Flockjay’s career-service team. But, once the layoff was over, they would be able to log in for their scheduled mock interviews. According to TIME messages, Kirby and other students have seen online, no Flockjay employees would appear. 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.”
Flockjay was the victim of a bullying system. Kirby and Johnson were both forced to close down their bank accounts that they provided 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.)
Kirby was like so many others, and she found work on her own, after graduating from college. Her salary is not even close to $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. Flockjay, which had six graduate classes with each class having around 25 students when she started, grew in size each month. 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 thinks Flockjay wanted to recruit as many students to boost its revenues. “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.”
Flockjay graduates in the past have experienced better results. 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. Redpath stated that the only career advisor available for her son was one who was dedicated to finding him a job.
Redpath is 56 years old and had several interviews after she graduated from Flockjay. But, Redpath did not land a job as a technology worker. Since then, she has found work in a non-profit that does not have anything to do with tech. 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. Meratas could soon start to collect on her ISA, she worries.
“I believe in the mission of Flockjay,” says Redpath, “but I watched them not deliver for people who could use it.”
How to police a financial product that is new
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.
Senator Marco Rubio (R.FL), has presented numerous Congressional bills to regulate ISAs since 2014. However, they never got anywhere. This year is no exception—in July, Rubio and three colleagues introduced a bipartisan bill they say would help regulate ISAs. It would ban ISA contracts that last more than 20 year and it would exempt students earning less than a certain amount from paying towards an 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.
James from Better Future Forward believes that the industry will struggle to grow unless policymakers establish a system for regulatory oversight to prevent abuses of ISAs. He argues that ISAs are a useful tool when used properly. Better Future Forward for example offers ISAs exclusively to selected students attending accredited universities in Minnesota (Wisconsin), Illinois and Wisconsin. 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. Students could become further indebted if they don’t have access ISAs. The current loan system is also broken. 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.
ISA companies must comply with 50 state regulations, which makes it more difficult for them to function. This is according to the CEO at one company, who has stopped offering ISAs and is not allowed to talk on the record due to 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 regulation forced many ISA firms to shift to different business models. This leaves students without other options than private loans that have very high interest rates.
Many of those who tried offering ISAs over the last decade are now out of business due to a lack regulation. Flockjay, which has taken a different approach from its tech bootcamps days, now says that it’s refocused on helping tech sales employees and graduates get more out of their current jobs. 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.
Flockjay students is an example that shows how state regulation does not work. 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. Flockjay wasn’t subject to further regulation by the BPPE. California has yet to approve the operation of Flockjay’s school.
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 statement stated that the regulator doesn’t confirm, discuss or comment on investigations. BPPE is a term that refers to matters related to funding to the Department of Financial Protection and Innovation. 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.”
However, students like Redpath, Johnson, Kirby and Johnson claim that they receive emails from Meratas in an attempt to collect 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.
The next day, she received an email. “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.” —Simmone Shah reporting
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