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Four students at the coding boot camp Bloom Institute of Technology, formerly known as Lambda School, have filed a class-action lawsuit against the school.
The National Student Legal Defense Network, along with cocounsel Miner, Barnhill & Galland and Cotchett, Pitre & McCarthy, filed the lawsuit Thursday on behalf of the students. The school, known as BloomTech for short, offers students the option to pay up-front tuition, or to pay no up-front tuition fees and instead pay back their tuition through an income-share agreement, meaning that when a student lands a job paying $50,000 or more, they must pay back 14% of their income for four years or until they hit a cap of $40,000.
The students, who attended from March 2020 until the present, say in the lawsuit that they enrolled because they were attracted by the high job-placement rates in tech. They allege that the school had false and misleading information about job-placement rates on its website and on CEO Austen Allred's Twitter account.
What's more, they say that BloomTech engaged in unlicensed lending and point out that the school operated without California state approval until August 2020. The students are asking for equitable relief, such as canceling their income-share agreements or getting a refund.
While students have previously taken legal action against BloomTech, this is the first class-action lawsuit against it.
Alex Elson, the vice president of Student Defense, said the organization has received many complaints about the school, particularly about the misleading job-placement rates, as well as dissatisfaction with the quality of education.
"They wouldn't have gone if they didn't know what the true rates are," Elson told Insider.
BloomTech has raised over $129 million from investors like GV (formerly Google Ventures), Stripe, and Ashton Kutcher.
Former BloomTech students said that the school fell short of its promise, with underqualified instructors and an incomplete curriculum, Insider first reported. They said they often had to rely on self-teaching and were brushed off when they voiced concerns about the program or complained about harassment. Leaked documents also showed that BloomTech's job-placement rates were much lower than advertised, Insider previously reported.
Income-share agreements have become popular among coding boot camps because students don't have to pay tuition up front. But income-share agreements can be risky because they're not clearly regulated by federal laws, which focus on consumer loans.
BloomTech did not immediately respond to a request for comment.
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