Do Not Take Out A Coding Bootcamp Loan With Skills Fund

No matter what the lender’s website says, these loans are consumer loans — NOT private student loans — and there are serious implications to be aware of before accepting the terms

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Photo by Joshua Reddekopp on Unsplash

TL;DR: Do not take out a coding bootcamp loan with Skills Fund (aka Skills.Fund). It is not a private student loan. It is a private consumer loan. There is a big difference between private student loans and consumer loans.

It doesn’t matter what your credit report says. It doesn’t matter that Skills Fund’s own website calls it a “tuition” loan, nor that they market themselves as “a provider of student loans” [1]. It doesn’t matter that it’s serviced by a student loan servicer. It is not a student loan. It is a private consumer loan — the same type of loan you’d take out from a regular bank. You can’t refinance it. You can’t write off the interest on your taxes. It doesn’t matter that it’s used for school, nor that Skills Fund pays your school directly. It doesn’t matter that Skills Fund only works with accredited educational institutions. Skills Fund loans are NOT private student loans, and there are serious considerations that must be taken into account before agreeing to the terms of this loan. References and citations are included at the bottom of this piece.

First: background information. Second: screenshots and evidence. Third: I’ll explain why taking out a Skills Fund loan could have serious implications — and what prospective bootcamp students should know before accepting the terms of this loan.

The coding bootcamp loan industry — including the concept of income share agreements — is predatory. Let me just get this out of the way: I went to a coding bootcamp, and I do currently work in the software engineering industry. The fact that I ended up in my desired industry has absolutely nothing to do with the fact that the financial aspect of this career transition was (and still is) predatory.

Like thousands of others, I jumped into a full-time bootcamp, went several months with no income, paid for full-time childcare, and put all my eggs into the “become a software engineer” basket. In order to do this, I needed to finance the program. The options were an income share agreement and a loan through Skills Fund, which specializes in helping students finance a handful of approved coding bootcamps.

Income share agreements mean that you don’t pay for the bootcamp at all until you land a job — but then they take a portion of your earnings until the tuition is paid off. It doesn’t matter if you get the job you wanted or the job you studied for. They’ll take your income from any job that meets the income threshold. For example, you might pay 10% of your income for 48 months. If you get a job that pays $45,000 a year, you’ll be paying a much lower monthly payment than if you get a job that pays $145,000 a year — which is not unheard of at all in the software engineering industry and would have you paying roughly $1200 a month toward your tuition.

I opted for the loan from Skills Fund, believing that it was a private student loan. Two years later, when I went to refinance, I was informed that my Skills Fund loan is not eligible for refinance because it is not a student loan. Here is the evidence.

My Skills Fund loan is serviced by Aspire Servicing Center. “Aspire Servicing Center provides customer service for private and federal student loans” [2]. I applied to refinance this loan through Iowa Student Loan (Aspire’s parent company). After successfully prequalifying, uploading pay stubs, having a hard credit pull, and signing the papers, Iowa Student Loan told me that my loan could not be refinanced because it was a consumer loan, not a private student loan.

Since this didn’t sound right, I began to dig into the evidence.

Both Skills Fund and Aspire market their products as student loans.

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Screenshot by the author on 28 October 2020.
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Screenshot by the author on 28 October 2020.

I took out $23,000. I have paid $3,092.31 in principal and $3,182.57 in interest. My current balance is $22,088.06.

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Screenshot by the author on 28 October 2020.

Despite paying interest on this loan, I did not receive any tax documentation regarding interest deductions. This is a major red flag, as my other student loans provide documentation for this purpose. I have paid a few thousand dollars in interest toward my Skills Fund loan, yet the tax information Aspire provides says I have paid 0 student loan interest.

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Screenshot by the author on 28 October 2020.

I decided to apply for private student loan refinancing through Aspire Servicing Center’s parent company, Iowa Student Loan [3]. I wanted to lower my monthly payments (currently $581.50), get a lower interest rate (currently 10.49% even with a cosigner with exceptional credit), and stretch out the loan term (a non-negotiable 5 year term unless I refinance).

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Screenshot by the author on 28 October 2020.
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Screenshot by the author on 28 October 2020 [2].

I applied with the same cosigner who is on my Skills Fund loan and received the following email after my cosigner submitted their initial application:

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Screenshot by the author on 28 October 2020.

I continued the process by filling out my part of the application. My Skills Fund loan immediately popped up alongside my federal student loans; all I needed to do was click on it. I clicked on the Skills Fund loan, finished the application, and received a phone call asking me to upload my paystub through their secure online portal. A hard credit pull was performed.

My cosigner was also asked to submit a paystub.

At the end of October, I received a call from Iowa Student Loan informing me that my application could not be approved after all, because my Skills Fund loan is not a student loan. I asked for this statement to be provided to me in writing. They refused, and said they would mail me a copy of my promissory note and a letter of denial.

The promissory note didn’t state that this wasn’t a student loan, and the letter of denial said that while it is technically a student loan, it’s not an “education loan” since the length of the program (3 months) didn’t qualify it as an “education loan”.

This didn’t sound right, so I checked my credit report to see how the Skills Fund loan was reporting.

Note that it shows up with “Iowa Student Loan” as the originator, since Iowa Student Loan is Aspire’s parent company.

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I checked my federal student loans to see how they were reporting, just in case “Education Loan” doesn’t mean “student loan”.

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Screenshot by the author on 28 October 2020. Personal information removed.

Interesting. “Education Loan” does mean “student loan”.

According to both Aspire Servicing Center and Iowa Student Loan, the Skills Fund loan is not an education loan, but it’s called an education loan, it reports to the credit bureaus as an education loan, it shows up automatically when I go to refinance it as an education or student loan, and it allows deferments just like a student loan.

As of October 2020, Skills Fund is still marketing themselves to third parties as “a provider of student loans” [1].

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Screenshot by the author on 28 October 2020.

Since Iowa Student Loan refused to provide me with a written statement that the Skills Fund loan is a consumer loan and not a student loan, despite all the evidence to the contrary, I sent emails to Skills Fund, Aspire Servicing Center, and Iowa Student Loan hoping to prompt a set of responses. I received the following:

Skills Fund:

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Screenshot by the author on 28 October 2020. Customer service agent’s personal information censored.

Obviously, I’ll be appealing this decision and filing a dispute.

I’ll provide updates as this situation unfolds.

In the meantime: beware. The Skills Fund loan is apparently not a student loan.

References:

[1] SuperMoney.com Statement from Skills Fund, accessed on 28 October 2020
[2] About Aspire Servicing Center, accessed on 28 October 2020
[3] Iowa Student Loan Refinance Loan, accessed on 28 October 2020

Written by

✨ serial questioner • technical writer/devops • editor of Diary of an SRE • thank you for connecting 👩🏻‍💻 kerisavoca.com

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