We’re excited to share that Lambda School has been officially approved for operation by the California Bureau for Private Postsecondary Education (BPPE). We have been working with the BPPE, which governs private higher education in the state, on this initiative for over a year. Their approval is a huge testament to our team and our students, as well as an official endorsement of our all-remote, career-focused educational model. Beyond our four virtual walls, the approval also signals a new era of education in which institutions are called to invest in their students upfront instead of the other way around.
This will be a long journey, since our model of aligning the interests of educational institutions with their students is very different from how education works today. In order to work within existing regulatory frameworks and achieve this important milestone, we made the decision to change the financing options we offer to new California applicants. Specifically, we are introducing the Retail Installment Contract (RIC) as a tuition financing option for incoming students in California. Unfortunately, we will not be able to offer Income Share Agreements (ISAs) to new students in CA for the foreseeable future. This does not impact current students and, of course, our hope is to persuade California regulators to offer the same benefits to California students received by those outside the state.
The new RIC option preserves as many student protections from the ISA as possible. Most importantly, it still allows for zero upfront payment and no repayment until the student is making $50,000 or more. Payments are still calculated based on 17% of the student’s income and there is no interest rate, both identical to features of the ISA. That said, we’re disappointed that the RIC doesn’t include some very beneficial terms, like the termination of the ISA after 24 payments or 60 months of deferred payments.
That's why this approval is a massive milestone, but not the finish line. We believe the ISA remains one of the most student-friendly, lowest-risk alternatives to traditional student debt, and we plan to continue to advocate for it in California and the rest of the U.S. This kind of student-first model is needed now more than ever amidst COVID-19's sky-high unemployment and a higher education landscape in crisis.
We’re hopeful this regulatory approval in California sets the stage for continued success not just in the state, but nationwide. As we’ve said before, regulatory approval is crucial for setting a precedent for better student protection, broader adoption, and greater access to education.