US-based edtech startup BloomTech, formerly Lambda School, lays off half its staff

The online coding school had last cut jobs in April 2021 which was seen as restructuring triggered by the Covid-19 pandemic.

Bloom Institute of Technology or BloomTech works on the ISA (Income Sharing Agreement) structure, under which, an institute allows a student to study for zero initial fee, in exchange for a fixed percentage of their income once they are employed.

Indian online institutes such as Masai School and Newton School, also follow the ISA structure.
Such platform usually provide technical and vocational training to students, who are promised a job after graduation. These companies usually guarantee their students a job and make money from them only once they have a job.

According to the TechCrunch report, the staff was informed about the company’s decision by CEO Austen Alfred in a meeting. The report also cited documents which suggest that the employees will be given medical benefits and normal pay till January 31 2023 and are “expected to work” through that period.

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The online coding school which promises lucrative careers in tech to its students, rebranded itself last year. The company came under scrutiny after some of its alumni alleged that the school was inflating its job-placement rates to lure students eager to get a job.

It faced a lawsuit filed by three of its alumni, alleging that the company had made false promises and had misrepresented job placement rates.