BloomTech Founder Austen Allred Reflects on Political Beliefs Amidst CFPB Enforcement Action

San Francisco, CA – Austen Allred, co-founder and CEO of Bloom Institute of Technology (formerly Lambda School), recently shared a personal revelation on social media, stating, “After studying sociology and economics to build a rigorous case for socialism, the project completely backfired as I realized my political beliefs were largely psychological coping mechanisms.” This candid reflection from the prominent tech entrepreneur comes as his company faces significant regulatory challenges.

Allred, known for pioneering the income share agreement (ISA) model in vocational education, has long been a vocal figure in the education technology sector. His previous venture, Lambda School, aimed to provide accessible tech education with no upfront tuition, collecting a percentage of students' future earnings only if they secured a high-paying job. This model was often framed as democratizing access to high-income careers.

However, the Consumer Financial Protection Bureau (CFPB) announced a major enforcement action in April 2024 against BloomTech and Allred. The CFPB banned BloomTech from engaging in consumer lending and prohibited Allred from working in the student lending industry. The action also directed Allred and his firm to cease collecting payments on certain predatory student loans for many borrowers.

According to the CFPB, Allred and BloomTech used deceptive marketing tactics, trapping students in what the agency deemed "predatory private student loans." The CFPB's consent order noted that BloomTech's curricula "frequently changed and relied in part on teaching assistants paid $15 per hour with limited programming backgrounds," and that the company "often sold its ISAs to investors right after originating them."

The regulatory body also highlighted that BloomTech knew as early as 2018 it was "unable to place students [in jobs] at scale." Despite advertising ISAs as a consumer-friendly alternative, the average student reportedly paid a $4,000 financing fee, equivalent to an APR exceeding 18 percent. This enforcement action underscores a critical period for Allred and his educational ventures, contrasting sharply with his recent public introspection on personal ideology.