Coding Bootcamps and Higher Ed (2 of 4)
PART 2: HISTORY LESSONS: PARALLEL STORIES
The concept of a coding bootcamp is pretty straightforward – students attend a very intensive, multi-monthlong course often designed to simulate a real-world work experience with very practical training. These courses teach enough software development skills for students to land a job as a junior developer. Some programs are offered on-line, others in person, or as a hybrid of both. No matter the course delivery method, the concept remains the same - tons of practical skills over a short period of time creates job-ready coders. The average in-person course costs around $12,000 and lasts 3 months, though some schools offer longer and more expensive programs.
The typical student that attends a bootcamp is a second-career adult. Some students are recent high school or college grads but this is not the norm; younger, less experienced people often can’t handle the rigor of an intensive program. On average, the student is about 30 years old, with seven to eight years of work experience. More often than not, bootcamp students already have a college degree and are “under-employed”, earning a pre-bootcamp salary of around $40,000. Within a year of completing the course, the vast majority of graduates (reportedly as high as 90+ percent at some schools) are employed using their newly-learned coding skills and are earning a salary of around $70,000 a year – an often life-changing 75% increase from their pre-bootcamp life. Even more importantly, the average students’ long term earning potential more than triples.
The first coding bootcamps opened their doors in 2011, and by the spring of 2012, there was lots of fanfare in the tech and startup communities. Startups desperate for low-cost, high-quality talent had no choice but to take a chance on a candidate without a 4-year computer science degree, and many of the graduates proved successful after some on-the-job training. Over the next few years, as the national talent gap grew larger and the quality of bootcamp programs and their graduates increased, large corporations also warmed to the idea of non-traditional tech hires.
By 2014, although still in its infancy, the industry began to take shape. Schools like General Assembly and Galvanize raised significant investment dollars, and local governments began to invest in bootcamps as workforce development initiatives. As a result, some schools expanded campuses to multiple cities and online.
At the beginning, there was absolutely no regulation of coding programs. Unlike accredited colleges and universities, without real oversight, a bootcamp could theoretically (and falsely) advertise that 99 percent of their students got jobs after graduation. Without any third-party verification and no regulation, there were limited consequences if the data was bad. Undoubtedly, some bootcamps did advertise falsely. A few earned bad reputations for low-quality education, but for the most part, reviews were positive as employers began to set reasonable expectations of how much a three-month course could teach. Each year from 2012 to 2016, the size of bootcamp industry more than doubled year-over-year, and the overall industry grew revenues to roughly $200 Million.
In 2014, as the states began to take notice of the industry’s positive impact, the regulators also began to notice. The California Bureau for Private Postsecondary Education (BPPE) sent cease and desist orders to at least half a dozen of the most prominent schools, as did many other states. Whether these states saw the need to protect consumers from false advertising, or they saw bootcamps simply as a revenue source is irrelevant - the heavy expense of regulation was now here to stay, and growth immediately slowed.
RECENT FOR-PROFIT HIGHER ED DATA
Now let’s switch gears back to the for-profit Higher Ed world. Since coding bootcamps are the equivalent of short certificate programs in Higher Ed, we should compare apples to apples to get a clearer picture.
Across the United States, there are some 1.3 Million students that complete 29,000 different career training programs at about 3700 schools.
U.S. Department of Education data shows that graduates of certificate programs at public (non-profit) colleges earned $9,000 more than graduates of comparable programs at for-profit colleges.
One third of for-profit certificate grads earn less than what a full-time minimum wage worker earns in a year, compared to 14 percent at public schools.
In fields of study that are common to both the non-profit and for-profit sectors (which covers roughly 95 percent of graduates), average incomes are higher in the public sector in four out of five programs, and those higher-earning programs graduate 75 percent of students.
At undergraduate certificate programs in identical fields, grads of public (non-profit) school programs earn about $2,700 more than their private, for-profit counterparts.
The big picture data looks even worse. The Brookings Institute released data in 2015 that tracked the looming student debt problem nationwide, showing alarming trends from 2000 to 2014. Over that time, the number of students holding student loan debt doubled to 43 million people, and the amount of outstanding debt quadrupled to $1 Trillion. When examining the schools whose students carried the most debt, it gets even worse. In 2000, there was only one for-profit in the top 25 debt-load list. By 2014, there were 13 for-profits on the list and the amount of debt owed by students who attended for-profits had increased by 600%. Despite accounting for only a quarter of all borrowers, in 2016, for-profit students accounted for 35% of the defaults. This number is actually down from 44% in 2013, which may show that recent enforcement is working. But hold tight…that part is coming.
It’s not all bad news for the taxpayers. The government ties those loans to the 10-year T-Bill (the rate at which the government borrows from the public), and Uncle Sam tacks on between three and four percent to cover losses. Student loan rates are locked in for the life of the loan and many people take 20 years or more to repay. The super low interest rates at which the government borrowed over the past decade means that there’s plenty of wiggle room - even with high default rates. Not surprisingly, in 2016 the Congressional Budget Office predicted that the government would make a profit of $81 Billion over the next decade.
Taking such a broad view can be a bit misleading and skews our apples to apples comparison, since the overwhelming majority of these high debt-load programs are in areas like cosmetology and medical assisting - areas where the salaries hover between $20,000 and $30,000 a year. Mixed into the data are other software development programs where salaries are triple the average, but the number of graduates is minuscule in comparison.