Why? Among other deceptive practices, the “Bloom Institute of Technology” didn’t call them loans. It advertised a way for students to get high-paying tech jobs “risk free” with “no loans” by paying 17 percent of their future income for five years — rather than the $20,000 sticker price of tuition.

But those Income Sharing Agreements (ISAs) were definitely loans, the CFPB has decided, since Bloom was earning an average finance charge of $4,000 on each one, students could default and get sent to collections if they failed to make payments, and Bloom was turning around and selling those student debts to investors for $7,000 to $10,000 a pop.

Bloom handed out more than 11,000 of these loans between 2017 and 2023, according to the CFPB consent order you can read at the bottom of this story. But it doesn’t offer them as of 2024, so the ban on future loans may be too little, too late.

That said, the agency’s also ordering Bloom to cancel all loans for students who haven’t made a payment in the last 12 months, let current students immediately quit the program with no debt, and return a small amount of money to graduates who paid Bloom a premium and yet didn’t manage to land a job making $70,000 or more. That last group of students will still have loans, but retroactively capped at the sticker price of tuition.

BloomTech has already agreed to the order; company CEO Austin Allred signed his consent last Friday. He’ll personally be paying $100,000 out of the $164K penalty, and is banned from student lending activities for 10 years.

None of this puts BloomTech out of business, by the way — it can keep operating with third-party loans instead.

In 2020, Lambda students told us their fears weren’t just about the worrying financial terms of the loan, but also how the company didn’t seem to be hiring professional instructors to provide students with the skills to actually land jobs despite promising “world class” industry experts. The CFPB’s report backs this up:

BloomTech’s curricula frequently changed and relied in part on teaching assistants paid $15 per hour with limited programming backgrounds. As a result, many students complained that they had to teach themselves the course content. 

Allred tweeted that the school achieved a 100 percent job placement rate in one of BloomTech’s cohorts. In a private message, he later acknowledged that the sample size was just one student.

From 2019 forward, BloomTech touted job placement rates of at least 71 percent. But BloomTech’s non-public reporting to investors, which relied on more accurate methodologies, has consistently shown placement rates closer to 50 percent.

There’s more in the full consent order, which you can read below.