Financing Model for Education of the Future

Financing Model for Education of the Future

Sharing your future income for free education or training today may not be a model many will swallow in Nigeria. The entity paying is not necessarily sure the graduate will get a job upon graduation. And the graduate may be concerned that he or she may be losing a lot of money especially if he/she can afford that education.

Yet, in specific areas like software development, the risk for either party can be bounded. Software development jobs are expected to continue to be on high demand. Lambda School, a U.S. virtual coding and software school has exploited that business model. It just raised $50 million.

Similarly, the Lambda School is an entirely virtual school focused on coding and software training that offers its courses at no upfront costs in the hopes of meritocraticizing higher education. Instead of paying tuition, students pay 17% of their income earned for the first two years after they’re employed – but only if the job pays more than $50,000 a year, and the contract is maxed at $30,000 of total income dollars paid.

Future upside agreements have not only resonated with students, but with private investors who are seeking new forms of returns through buying stakes in students. The Lambda School has just raised a fresh $50m tuition facility, and universities with ISA programs are fielding calls from large investment managers keen to understand this developing space. (Finance Collective newsletter)

The Lambda School has enrolled about 1,300 students and enjoys early job placement rate of 86%.

Nigeria Scenario 

For Nigerian equivalent, one can integrate students into a virtual school, pay their university tuitions, and ask for part of their incomes upon graduating from the universities. The universities must have the virtual school curricula as part of their programs for the students to qualify. By the time the students have graduated, they will be proficient in software development and their fields. That will reduce the whole risks.

Somebody needs to run this in Nigeria. It is a mesh of Andela and university systems. Lambda School just raised $50m in U.S. to demonstrate it is possible. This could be the way to finance education of the future. It is better than student loan which will not happen in Nigeria until we have a functioning credit system. (LinkedIn Summary)

You can see this as Andela for those that also want degree certificates and currently enrolled in schools.


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