Austin seems to take corp-speak to another level. See his response when they settled with the California Department of Financial Protection and Innovation:
I am an outsider, but clearly looks to me like they chose to not fight that battle, which was just legal thuggery. Colleges in the U.S. are a racket that make the mafia look like a bunch of amateurs. The Bankruptcy Exception for student loans is one of the most corrupt scams going on in the USA today.
Lambda lied to their students for years about loan dischargeability. They were told to stop by the regulator, so Lambda did. The regulator did nothing to penalize them.
Didn't they lie by wrongly saying the loan can't be discharged through bankruptcy? Surely that would make candidates less likely to join Lambda?
Why is it even in their interest to say that? It's not like them saying it makes it true. And if it were true, it would mean that Lambda is a bigger risk for the student who therefore may be less likely to apply.
Lambda was securitizing the ISAs and selling them to investors on the backend, obviously with a discount based on risk.
Some people treat this like a bad thing, but it's really pretty basic risk-mitigation and cash-flow stabilization. This is kind of like basic factoring, or "modern" solutions like Pipe (https://www.pipe.com/).
There is an argument to be made that it disaligns Lambda and student incentives ("outcome it doesn't matter because Lambda already got paid") but long term, defaulting students would definitely decrease the sales values of the ISAs.
Part of the argument here is that calling these ISAs non-dischargable would lower the risk to the investor, which would make those ISAs worth significantly more.
I am an outsider, but clearly looks to me like they chose to not fight that battle, which was just legal thuggery. Colleges in the U.S. are a racket that make the mafia look like a bunch of amateurs. The Bankruptcy Exception for student loans is one of the most corrupt scams going on in the USA today.