Anomalies wanted: seeing bootcamps as an opportunity to refine regulations

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Feb 20, 2020

The late Clayton Christensen, co-founder of the Christensen Institute and father of the theoretical frameworks we use to analyze the higher education landscape, had a wooden sign in his office with a simple request: “Anomalies wanted.” 

Clay had a strong conviction that his theories were of tremendous value, but knew that they didn’t pop out of his head perfectly formed. Whenever his theories didn’t fully account for a phenomenon, Clay saw opportunities to refine them and increase their explanatory power.

It’s time for state higher education regulators to take a similar approach.

California’s strike-first approach to regulation

The California Bureau for Private Postsecondary Education (BPPE) has repeatedly butted heads with coding bootcamps over the years.

BPPE’s charge from the state is to, among other things, protect learners against fraud, ensure ethical business practices, and enforce minimum standards for instructional quality. The regulatory body was created in response to California being dubbed the “diploma mill capital of the world,” and its plate is overwhelmingly full. This may explain why some of BPPE’s initial communications with bootcamps have hastily gone the “shock and awe” route.

To wit, BPPE has levied fines and issued cessation orders against several bootcamps for failing to register. Examples include a $50,000 fine against Hackbright Academy in 2015 (which didn’t know it had to apply), a $100,000 fine against Make School in 2018 (after an 18-month approval process, BPPE reduced the fine to $25,000), and a $75,000 fine against Lambda School last year (Lambda’s legal counsel didn’t think the fully-online school needed to apply. They’ve since hired new counsel). While the fines are heavy, this level of gatekeeping is understandable.

More worrisome is when BPPE takes action against providers because they don’t fit within an input-laden traditional regulatory framework—punishing anomalies, so to speak. This issue came to a head last month when BPPE labeled Holberton School an “immediate danger to the public’s health, safety, and welfare.” Holberton, a two-year, project-based software engineering school, was ordered to immediately cease all enrollment and instructional activities.

BPPE cited a failure to meet “institutional minimum operating standards” with regards to Holberton’s “Career Track” option. Holberton was allowing students who had completed the initial nine-month module to pursue employment and, subject to employer validation, count six months of on-the-job training as equivalent to fulfilling remaining graduation requirements. They had gotten a job, after all. BPPE considered this an unauthorized deviation from the approved program. Holberton appealed, and upon further review BPPE limited its cessation order to just the Career Track option, which Holberton has made unavailable in California.

Basing accountability on outcomes

Here’s the thing: many bootcamps generate solid outcomes in California. Holberton School in particular reports a job placement rate of roughly 78% within six months of graduation and a median salary of $102,000 for its full-time employed graduates. These schools advertise a potentially lucrative launch into a tech career, some with downside protection through income share agreements, or ISAs, in case it doesn’t work out—and they seem to deliver. 

Granted, these new models are a regulator’s nightmare. Their faculty models are different than usual, as is the way they charge tuition if they offer ISAs, and they iterate at a rapid pace to make it all work. Question marks understandably hover over different aspects of their business models, which are either innovative or, to wary eyes, new spins on old predatory practices.

How can BPPE gauge quality in light of these anomalous models? By reorienting accountability around workforce outcomes such as job placement rates and earnings, data which BPPE already collects. Just because a bootcamp doesn’t look like a traditional school, it doesn’t mean it’s doing a poor job. However, if a bootcamp doesn’t help its learners get good jobs, then it may be time to bring down the hammer. 

Instead, several of BPPE’s requirements assess inputs that don’t necessarily increase student success. Consider how the following would impede successful online bootcamps or programs that regularly update their curricula:

  • “The minimum standards…require direct instruction, where students and faculty are physically present in the same location during the instruction.”
  • Schools must seek approval for “any change that alters the way students interact with faculty or access significant equipment.”

That new programs don’t fit neatly within BPPE’s strictures, like the ones above, isn’t automatically a condemnation of their business models—in fact, if these schools generate strong outcomes, BPPE should reconsider its approach. 

To its credit, BPPE organized a task force in 2015 to tackle the question of how to regulate “high technology programs.” The group recommended streamlined application processes for these programs and changes to the outcomes reports they would file. Those efforts ultimately stalled.

It’s time to try again. BPPE has held back from aggressively enforcing its citations, giving itself time to refine its approach before possibly punishing the wrong players. Now’s the time to start basing accountability on workforce outcomes and streamlining the approval process for schools that regularly update their offerings, in addition to the previous task force recommendations.

Student complaints and ISA concerns

All of this is not to say that these new education providers have been perfect. Recent news coverage of Holberton School’s scuffle with BPPE brings up several learner grievances. In addition to its ongoing proceedings with BPPE, Lambda School is enduring withering criticism from multiple outlets for various problems. The magnitude of challenges is different, but both programs have work to do.

In principle, their ISA-based models will drive the schools to do better. Their financial well-being is contingent on that of their graduates, incentivizing the schools to improve their practices. For example, it only took three years for Lambda School to begin offering free mental health counseling to its learners. In contrast, it took my alma mater about 250 years to do the same.

That said, concerns swirl around the news that some programs securitize ISA contracts to raise cash upfront, borrowing money from investors and using ISA contracts as collateral. It’s important to note that this does not eliminate incentive alignment. A program that raises capital based on the value of its ISAs won’t prosper without strong workforce outcomes. This is nonetheless a trend worth monitoring to ensure that schools’ financing structures keep them on the hook for their learners’ outcomes, and that unproven models don’t find other ways to cash out on enrolled students, buying time while they figure out their business models.


In conclusion, BPPE has an opportunity to thoughtfully avoid the all-too-common mistake of requiring that new programs fit a traditional mold before they get regulatory approval. Their current approach could stall not only these schools’ learners, but innovation in higher education more broadly. Anomalies—when effective—should be wanted and welcomed, so that regulators can both protect learners and not hold back programs that propel them into opportunity.

As a research fellow on the Christensen Institute's higher education team, Richard helps investigate novel business models in postsecondary education, professional development, and lifelong learning.