Coding Bootcamps are expensive. The average full-time programming bootcamp in the US costs $9,900, with some bootcamps charging up to $20,000 in tuition. We'll talk about how to calculate your ROI, available scholarships, when to use financing or payment plans, and unique payment models. We'll also explore the nitty gritty details about bootcamp loans with Zander Rafael of Climb Credit. And Hackbright Academy graduate Shannon Burns will talk about getting creative when paying for bootcamp tuition.
What we cover:
Check out the full transcript below:
Shannon Burns is a graduate of Hackbright Academy, which is an all-female coding bootcamp in San Francisco, and now works as a developer advocate for NginX. She used almost every method we’re going to talk about today to cover her Hackbright expenses, but one of the most interesting ones was that Shannon actually led a successful crowdfunding campaign to cover her tuition.
Zander Raphael is the founder of Climb Credit, which partners with high quality bootcamps to provide loans for bootcamp students. He is really going to come in handy during the second half of this webinar when we talk about external loans and lending platforms for alternative education.
Before we start talking about how to pay for a bootcamp, let’s all get on the same page about what a bootcamp costs.
Average Cost/Price Range
The average cost of a bootcamp is $11,000 for about 11 weeks of instruction.
There are quite a range of bootcamp costs from free all the way to $21,000. On the low end there’s Epicodus, which costs $3400 and the high end is Galvanize at $21k. There are several free bootcamps, but we’ll talk about those in a minute.
I hear the question all the time- is a bootcamp worth it? In our research, we see a 44% increase in salary ($25K lift), so if you think about that $11,000 tuition, it’s more than covered for most people.
Total Bootcamp Cost
Think about these four things:
Shannon, what was your total cost, all in? Anything we’re missing here to think about?
Shannon: After my calculations once I graduated, I estimated with a one month buffer after school ended. I did not calculate financing costs, the total with the $15,000 tuition at Hackbright ended up coming closer to $45,000, just with the cost of rent in San Francisco and losing my salary and everything. It was pretty significant.
I would also include transportation, but I think you got most of it.
You should be Calculating your ROI for any big decision that you make, which is your Return on Investment. Will the cost of a bootcamp pay off in the long run?
Climb does lending for students of “High ROI” education- why do coding bootcamps fall into this category?
Zander: For most people it’s exactly what you laid out. You take in all the costs associated with it, and if you view education as an investment, a cost or collection of costs, and a return, it just so happens that in education, the cost is called tuition and the return is salary. But it’s an investment like any other. When you factor in all these costs, at good programs, if you work hard and are able to find employment, you come out ahead. You effectively have a positive return on investment. One thing to remember, when you share the average salary increase, it’s important to think about what you were earning before. Sometimes we’ll have applicants come through our system who had a very high paying job previously, and choose to go through an academy or bootcamp and enter as a junior engineer somewhere, and they earn the same amount as they did before because they were already earning a lot. They may be happier and they may be more excited, and their lifetime earnings may be higher because as an engineer they’re better positioned to grow, but they may not feel the bump right away. It’s important to think about where you are and what your goals are.
There are some ROI “calculators” out there- feel free to use those. We have a worksheet on the Course Report blog. ROI is a simple calculation- and if you were paying attention in the last slide, then you already know your “Cost” value. Now think about your GAINS. The average bootcamp student sees a salary increase of ~25K or 44%. But this depends on a lot of factors!
What to Ask Your Bootcamp
Shannon, how long did it take you to find your job after Hackbright?
Shannon: I was really lucky. It took me about a month, but I know the average is closer to six months. Those statistics are really hard to find and a lot of schools don’t seem to want to give it away, so really press on it and talk to other students. It depends on your network. Do you have a network coming in? Do you have a network coming out?
Zander, can you explain why you need to look at distribution of outcomes and why the mean or average starting salary might not be the perfect metric to look at?
Zander: Sure. To make it really simple, if half the people find no employment and the other half all get jobs paying $150,000 dollars, then the average salary from that school is $75,000, which probably sounds really good, but there’s a 50% chance that you get no job at all. It’s important to think about what share of the graduates find work in the first 3 months, 6 months, year, in field. Many schools will say that they find work, but it turns out they’re working as a barista. They’re employed, but not as a developer. Really push them on it. Some of them are not going to be as good as others. Even after you’ve been accepted, that’s not the end of it.
What to Research Yourself
Shannon: And not just technical related positions can have transferrable skills. My background was absolutely not technical and being able to take that alternative background into a technical role has been incredibly helpful. Start to think creatively about what you’ve done and how that can apply to your future.
Shannon, what did you do before you went to Hackbright?
Shannon: I did a lot of weird things. I worked at Lyft as an account executive. Before that I was working as an event planner for a non-profit. I was a server for a while. I was a makeup artist as well. A little bit of everything.
Shannon, one thing you and I talked about before this was that you read a comparison between Learning to Code on your own vs. a Bootcamp vs. a CS Degree- that’s an important thought process to go through. How did you figure out that a bootcamp was the best option?
Shannon: For me, I had to become very self-aware of how I learned best. I was concerned about the longevity of my career. I know that I learn best in a class with a good environment. I was learning on my own, but I knew I needed an extra push to have somebody to ask questions to and have that in-person experience. I looked into a CS Degree program or a bootcamp and the bootcamps at that point were fairly new and kind of risky and there were no lending opportunities at all. I had already had a bachelor’s and I knew the cost of an education for a second bachelor’s was going to be incredibly expensive because it’s more the second time around. I knew from talking to people coming out of schools in CS degree programs and coding bootcamps that it seemed to me that the people out of bootcamps were having much higher success rates than people coming right out of school in terms of finding jobs at companies I wanted to work for.
This is where we start to get a bit creative. You may be doing a bootcamp because you are not a career changer, but a promotion-seeker. The promotion seeker is motivated and driven; maybe you’re happy at your current company, but you want to move into a new technical role. Or perhaps she loves her team, but wants to take on more responsibility (and snag a raise while she’s at it).
Often times, your employer has a pool of money reserved for upskilling and training; or maybe you have education benefits in your current role. This is the perfect time to pitch your boss to cover a coding bootcamp!
We have a cheat sheet on the Course Report blog about how to convince your boss to pay for your bootcamp, but I’ll give a little rundown here:
I was actually talking with a graduate of Bloc, an online bootcamp, named Seth this week. He was going to join us but couldn’t make it so I want to share his story really quickly, just so you know what this option looks like. So Seth was working at a company called Accella in professional services, he was doing long, enterprise-level projects and he wanted to pursue web development; he talked to his boss (actually talked to the CEO) and his boss didn’t want to lose him; so they decided to move him into a new role called a Developer Evangelist and in order to transition into that team, his boss agreed to pay for a Bloc full-stack development course. And because he was learning on the job, he was actually able to do the Bloc class during work hours for the first couple months.
So, you don’t necessarily need to quit your job and do a bootcamp full-time; see if you can learn while you keep your job.
Remember that these schools are basically covering their costs when you get a job, so incentives are aligned, but expect a really rigorous class. At App Academy, you’ll be tested pretty regularly and the attrition rate will be higher.
You should also ask the school if they’d be willing to do work out a deal for deferred payments.
Tip from Zander: Just remember that with these deferred payment plans, you do have to pay the money back, so you're effectively taking out a loan. So be sure you know the terms of the loan. I've known some schools to offer a deferred payment plan but add on an embedded 16% interest, so be sure to review the document carefully!
Meet Shannon! Shannon went to Hackbright. She used a lot of these tips. One of the most interesting ways that she was able to pay for her tuition was through a crowdfunding campaign.
What is crowdfunding?
Shannon: I have been doing crowdfunding since before it was really a thing when I was a kid. It’s essentially just asking other people for money so you can share the burden with the whole community and achieve great things hopefully. When I had this awesome opportunity and had to come up with the deposit, a month to come up with 5 grand. I realized I needed to try everything I could and I lost all of my shame and asked all of my friends and their friends to help me. I did a bunch of research on crowdfunding to pay for coding bootcamps, and at the time only like three or four people had tried to do it, but I didn’t give up.
Why does crowdfunding sometimes not work?
Shannon: I think you have to be honest with yourself about what you’re asking of people. Nobody has a lot of money to throw around, even if you have a six figure salary, your expenses go up. You’re asking people to help you make more money than they make possibly. It’s kind of absurd when you think about it. I realized early on after I had maybe raised $100 from friends and people who care about me, but I realized I needed to do something that wasn’t just going to help me, it would help the whole community. That’s where I got the idea to start a scholarship foundation through the crowdfunding platform. I raised the cost of my own tuition and then donated 10% of my 1st year salary back for another person to go.
I love the name, Funding It Forward. Crowdfunding relies on a reward for that investment. You have to be able to offer something at the end. I think a lot of campaigns that I see aren’t offering anything at the end.
The scholarship was called Hacking For Women. How successful was it? Did it end up working?
Shannon: It’s been an interesting journey. I was a bit naive when I started it, but it’s been incredible. We’re still trying to figure it all out. I realized that I needed to get non-profit status. I wanted to be able to give a tax write-off to anybody who donated. It takes about two years to become a non-profit, so I looked into fiscal sponsorship. I partnered with another non-profit, and have now since merged my scholarship with Women Who Code. I was expecting to be able to save 10% of my first year salary. I did take out a private loan to pay for part of the deposit, so I’m paying that back. I deferred most of my tuition. I did get a scholarship, and then I used the funds that I raised to pay for rent. I did tick a lot of those boxes. I’m still trying to get to the point where it’s viable to start and launch the scholarship. It takes a lot longer than you might think, so it’s important to think about how much you’re going to be paying back and how it’ll affect your future income.
Which crowdfunding platform did you use?
Shannon: I used GoFundMe. Kickstarter doesn’t allow you to fund for education. IndieGoGo took a higher percentage. They take about 5 or 7% of everything you raise depending on the platform.
Do you suggest that people try crowdfunding?
Shannon: Absolutely. Try everything you can. Even if you’re not able to fund everything that doesn’t mean you shouldn’t do it. Ask for all the help that you can. Throw any concern you may have out the window and ask for help and be humble. Tell your story and what you want to do about it and how you want to use what you’re going to learn in the world. Make sure you’re spending your time in a way that is going to provide the most return on your investment of your time. If your crowdfunding campaign starts to become less effective, think about ways to iterate on that and make it more effective. If you end up having more success in other ways like throwing an event then maybe that’s a better use of your time.
A lot of options out there- here are a few.
Zander, why was Climb Credit started?
Zander: This was actually the third student lending business that our team had put together. In all of them we focused on what I talked about earlier with education being an investment and cost being tuition and return being salary. We saw a change in the US education market and bootcamps are a prime example of this, but we see it in many different ways. Skills based training is on the rise. Shorter term skills or technical based training cost less than a 4 year degree and took up less time so you had to forego less salary and got people jobs. At the time we started, nobody was lending to bootcamps. We got a foot in the door and now we work with close to 40 schools across the country. Where we’ve assessed, and by no means are we perfect, and by no means does saying we work with a school guarantee that that school will get you a job. What we’re saying is that those schools have met certain criteria, and usually they’re willing to participate in some way in the risk of the loans, meaning they’re willing to put a little bit of money where their mouth is so that if you graduate and are able to pay off your loans, they do better than if you don’t.
How many students have you interacted with?
Zander: We’ve interacted with thousands of students. Not all of them we’ve offered loans to, but we’ve had thousands of applicants.
Zander: When you get your loan, most people think about interest. They just think about interest rate and that’s the headline number and they look for the lowest interest rate and that’s the one they choose. That’s part of it, but not all of it.
APR: The first thing and most obvious is APR, which really just means the effective interest rate. So imagine that there are a bunch of fees associated with the loan. The APR is the equivalent interest rate to all of those fees added in. It’s a way to measure different loans that have different fee structures. It just standardizes them. If the APR is 10 versus 10.5, the 10.5 one is more expensive per the amount of time you take it out. It may be that both headline interest rates are 10%, but one of them has some fees, which makes the effective interest rate 10.5
What’s important is that it’s expressed across time. If it’s 10% a year, and your loan is only for one year, that means you’re only going to pay 10% over that year, whereas if it’s for 2 years, you’re going to pay 10% over 2 years because you’re borrowing money for longer.
Term: When people talk about the “loan term” they’re usually talking about how long the loan is. People say they should take a shorter loan term because they’ll pay less interest over the life of the loan. That’s true, you’ll pay less interest, but imagine a situation where you borrow your $10,000 for your coding bootcamp and you have one month to pay it back. That would mean in the first month you have to pay back $10,000 plus one month of interest. Which would be crazy. You wouldn’t be able to afford it. The whole point of the loan is that you can pay it back over time. Similarly, if you take out a $10,000 loan, and you only have one year to pay it back, your payments per month are going to be almost $1000. You’re going to have to come up with it somehow, or you’ll default on your loan, and it will be very bad.
Monthly Payment: APR and interest rate aren’t going to be enough to look at on their own. You should really be focused on your monthly payments. If I told you that this loan has an interest rate of 10,000%, however, you only had to pay a dollar per month for a really really long time, you might say that it’s a great deal because you’ll always be able to come up with a dollar and it won’t impact your life that much. That might be a much better loan for you than one where you have to pay $1000 a month. You should look at the APR as a way to check the effective interest rate, but what you’re going to feel each month is the monthly payment because that’s what you have to come up with. It may sound great that you have a really low interest rate and a year to pay it back that means you have to find $1000 a month. A 3 year loan you only need to find a couple hundred.
A really important thing is that for any student loan, there are no pre-payment penalties, which means that if you get a bonus or you’re making more money, you can pay it off earlier. In many ways, it’s a good thing to take out the longest loan you can because the minimum you have to pay is the lowest per month, but if you want to pay more you can.
Which schools do you partner with and how do you decide?
Zander: Part of that is a secret sauce. We evaluate their outcomes. We look at their alumni and talk to their alumni. We talk to hiring partners. We try to do surveys of all their graduates. We get a picture of how people are doing. We say no to a lot of schools. We say no to about a quarter of the schools that we reach out to. We don’t even reach out to lots of other schools.
Why do you say no to schools? Is it because of placement numbers or bad reviews from alumni?
Zander: There’s more than one factor. The main thing is we don’t believe that the school is consistently going to graduate people who can find work, and high paying work. That doesn’t mean that if we do work with a school that we guarantee that you’ll find work. It doesn’t mean everyone will. We know some people won’t.
Is there a difference between the for-profit education debacle and the trend of funding these bootcamps?
Zander: There are two parts. The first is that part of the reason that the Corinthian debacle exists is that the federal government will lend to every student at the same rate whether they’re studying computer science at MIT or a distance learning English literature program where they’re a C student at Corinthian college. Those two students will get a loan no questions asked. Most people would think that the MIT computer science student is more likely to find work and be able to pay back the loan than the C student at Corinthian, but the lender in this case doesn’t differentiate. Corinthian costs almost as much as MIT. You have a lot of people borrowing huge amounts of money and never getting work. Lenders have to be diligent and say no to students. If we don’t think that the school is going to help you get a job, or it costs way too much.
The second part is on the schools. The schools need to work hard at producing good people, otherwise all the lenders will go out of business too.
It sounds like you’re doing diligence on the "after" side, but what if a student has bad credit or no credit going in. Does that affect how Climb works?
Zander: We look at various factors from your previous life. Everyone should apply. There’s no cost to applying. The worst case is you apply and you find out we can’t work with you. You may as well apply to a bunch of lenders because you’ll get the deal from someone. We’re selling you money today, and you should shop around for who’s selling you the cheapest money, or the most useful money. We do look at credit history and how often you pay back other debts, however, the quality of the education you’re receiving is going to dramatically influence our decision.
Who should be taking out a loan? Who should NOT be taking out a loan?
Zander: I think at the end of the day, there aren’t any type of people or certain backgrounds that should or should not apply. What a loan allows you to do is smooth your consumption. Effectively, you can consume today from money you plan to earn in the future. You’ll have many motivations for borrowing money, but what’s really important is if you think you can pay it back. Remember how much you’re going to have to pay each month and draw up a budget. Ask yourself, “How much money do I have to earn after graduating to be able to afford this loan?” If the answer is too much, then the bootcamp is probably not a good idea for you unless you can pay cash.
Liam asks, if I do have savings, should I necessarily use that to pay for a bootcamp, is there a scenario where I should still take out a loan from Climb?
Shannon: Also take into account, it might be good to have that cash before the living expenses that are going to come up because that’s a lot more liquid. Even though it was more expensive in the long run for me to take out a loan, I would not have been able to have gone to school. I wouldn’t have had rent to pay for.
Does Climb ever pay for living expenses or housing?
Zander: We will sometimes with specific schools. For most people that apply, it wouldn’t be wise to borrow the whole tuition amount and all their living expenses. As Shannon points out, if the total is $45,000 in total expenses, we’ll give you 10 of it, and we happen to give you 10 for tuition. That frees up 10 of some other money that you were going to have to scrounge up. It depends on your risk tolerance and your personal preferences. You can always pre-pay the loan. If you have 10 grand in the bank, you can keep it in the bank and pay 3 months of interest, which isn’t much, for the security of knowing you get to keep all that cash, and when you graduate and get a job, you can pay off the loan right away.
Some lenders pay the bootcamp directly, while others pay the student- which is better? Can you tell us about risk-sharing? What kind of risk does the school take on?
Zander: We try to keep it simple. We lend money for tuition. We send it directly to the school. If you borrow $10,000, we’ll say you’re good for it, and we tell the school, and you can show up in class. It saves the transaction cost and the nuisance of multiple transfers.
Risk share varies by school. From a student’s perspective, just know that if you come to get a loan from climb, it’s a good thing. It means that the schools we’re working with are saying that they know the student will do better if they can back they’re loan.
Zander, when are credit cards a good option?
Zander: Credit cards are loans. They are just loans that charge close to 20% interest. That’s an important thing to remember. Credit cards are a good option if you pay it off every month. If you’re doing it because of the ease of online transaction or because you want to collect the points and you have a bunch of savings and you can pay off your credit card, by all means. Carrying a credit card balance is a very inefficient way to carry debt because you’re going to be charged a lot of interest, close to double the interest that Climb charges. If you can get a lower interest loan, you should do it. For Climb, the application takes under two minutes, and you’ll hear back in a day or a few days. A credit card can be a backup, but the interest rate and the total payment is going to be much higher.
Any tips, tricks, things we did not cover?
Zander: The biggest thing I’d say to anybody thinking about is that it’s not a surefire thing. It’s not a magic bullet. You still have to work really hard. If you’re excited by the work, there are a lot of jobs out there. But you have to be excited by it. You need to be a bit of a self-starter. You need to be able to graduate and there won’t be 20 jobs just waiting for you. You’re going to have to call people.
Finally, if you are looking at a school and Climb isn’t working with them, ask if they can sign up for Climb because then we can offer you even cheaper loans.
Do you have students who have now graduated and are paying back their loans?
Zander: Yeah, nearly everyone is paying back their loans, which is what we want.
Shannon, anything you want to add before we sign off?
Shannon: Just be honest with yourself about what you want when you’re considering a bootcamp. Is it something that you’ve dedicated effort to to see if you enjoy it? It wouldn’t be a great idea to figure out all of your financing and these moving parts and realize that you hate coding, which people do sometimes. Be sure it’s something you enjoy doing because you enjoy doing it. Going through a bootcamp isn’t worth it just for money.
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