Watch CBS News

San Francisco-Based Holberton Coding School Facing Fraud Accusations From Former Students

SAN FRANCISCO (KPIX 5) -- Coding schools are cropping up all over the country, touting a fast track to a six-figure software engineering job. But dozens of students at one Bay Area school say they got a bad deal.

Their complaints prompted the state last week to file a complaint against Holberton School, accusing it of obtaining an approval to operate by fraud.

In the heart of San Francisco's South of Market high-tech hub, Holberton School has the look and feel of a startup and a pitch that's hard to resist: learn to code and jumpstart your career, all for no money down.

"They had corporate partners with, you know, the big four. It seemed like a no brainer," said former student Essence Boayue.

Boayue, along with former students Dimitrious Phillious and Josh Gonzalez said the fact that they could study first and pay later was the main reason they picked Holberton over other schools.

"I could not afford to pay for boot camp so that was definitely the main selling point," said Phillious.

Under a deferred tuition agreement, also known as an income sharing agreement, they promised to pay back a maximum of $85,000 dollars by contributing 17% of their future income for three and a half years, as long as they make at least $40,000. As long as they make less than that the loan is deferred. "I could pay once I landed a tech job, or what I assumed would be a tech job," said Gonzalez.

The school at the time offered nine months of foundational instruction, followed by a six-month internship and another nine months of specialization. It clearly advertised that it has no teachers, and no formal courses. But these students say they didn't realize how disappointing that would be.

"We were told that this was a world-class curriculum" said Boayue. "Well, come to find out that a lot of the curriculum consists of Google links. If I am paying $85,000 dollars for content, then I expect it to be written by the person I am paying, and not by the free internet."

They say an impressive list of school mentors never materialized.

"When I hear the word mentor I think a person who comes in and evelops a personal relationship with a student ... and we didn't get that," said Boayue. "We taught ourselves and each other, it was like Lord of the Flies," said Phillious.

After the foundational instruction, the students said there was very little help in finding an internship or a job. "Most of us were looking for anywhere from like six months to a year," said Phillious. "A lot of people didn't get jobs."

As for the specialized training, they said they don't know any student who went on to get it. Instead they claim the school offered a so-called "career track" that skipped that requirement altogether. "I felt cheated. I felt severely cheated," said Gonzalez.

After dozens of students filed complaints, the state issued an emergency decision ordering the school to cease enrollment of new students, based on an immediate danger to the public's health, safety and welfare.

That was followed by an accusation that Holberton engaged in prohibited business practices for giving students credit for education not completed. The school was also accused of obtaining approval to operate by fraud for agreeing not to offer an income sharing agreement then offering it anyhow.

Holberton appealed the emergency decision and is now allowed to continue enrolling new students on a modified and discounted program that no longer includes career track. The school turned down our request for an interview citing the state's pending complaint. Instead it referred us to one of its satisfied students.

"This is a young school. It's also an international startup, so obviously it's going to have growing pains, but I think it's moving forward in an amazing way," said the student, Arthur Damm. He says having no teachers has worked great for him. "I actually prefer to have the freedom to Google anything I want," said Damm.

He showed us how the project-based curriculum works at Holberton: an automated checker tells students when they code incorrectly, so they can try again.

"Automated tests are actually integral in the industry," said Damm. "So a software school whose learning is based on automated testing, it's actually brilliant to me."

Damm says when he started at Holberton last year, students were allowed to skip the specialized training. "When you complete a six-month internship, that actually counts as the finishing of a specialization," said Damm. But not any more, since the state cracked down.

"It was always a two-year program. Some students wanted a shorter option, they were given it. And now that's being called fraud," said Damm.

Like the students that are now complaining, Damm also was drawn to the school by the income sharing model. "To me it's much better than a loan because the interest never changes," said Damm.

But University of California, Berkeley education Professor Tolani Britton disagrees. "Some of the critics have really called this program indentured servitude," said Britton, adding that income sharing agreements are a relatively new way to finance higher education, so no hard numbers are available on their outcomes.

The schools that offer them claim they are not loans, which exempts them from federal truth-in-lending laws.

"There are unknowns, there's a lack of regulation. There's a lack of transparency," said Tolani. "Many of the income share agreements claim that if you make less than $40,000 then you don't pay. However, if you have cobbled together three jobs and are making $40,000 then in theory the income share agreement would kick in."

She says four-year institutions that offer ISA's cap them on average at 3%. "So we are comparing something like that to 17%, and 17% is actually really high," said Professor Tolani.

For now, Phillious and Gonzalez are holding off on paying back Holberton until the state issues a final decision. Boayue got a coding job and has paid back $10,000, that she now wants back.

Ironically, her face and Gonzalez's face are still plastered all over the internet, promoting Holberton School. "I  feel really guilty that I contributed to the advertisement that led a ton of other people to be in this situation," said Boayue.

We asked the students what they would say if they had Holberton in front of them.

"I would say deliver on your promise," said Gonzalez. "You want to make tech accessible to people, this isn't the way that you should do it."

"I just want people to stop getting ripped off," said Phillious.

Holberton now makes students pass a quiz that explains what an income sharing agreement is before they sign up, so they are fully informed. The school sent us the following statement:

"Holberton was created with the belief that a world-class education should be accessible to everyone, regardless of educational background, gender, race or ability to pay. Forty-four million Americans owe $1.6 trillion in student debt; Californians alone owe $134.3 billion. Holberton was developed as a different kind of school that promotes (rather than impedes) social mobility.

At Holberton, students have the choice of paying tuition upfront or instead deferring their tuition until after they find a job. If they choose the tuition deferment option, they pay back a percentage of their income for 3 ½ years as long as they make at least $40,000 yearly gross income with a maximum repayment cap of no more than $85,000. If students don't land a job paying at least $40,000 per year during that 3 ½ year period, they would repay the school nothing -- literally $0. To be asked to owe a full $85,000, the student would need to be making $142,857 on average per year during the entire repayment period of 3 ½ years; if they earn less, then Holberton earns less. In other words, the amount the students pay the school is directly correlated to the student's income so that our success is tied to their success. Our students come from all walks of life. Some were grocery store clerks and dishwashers likely earning minimum wage before joining the school. On average, our San Francisco graduates make six-figure salaries working at some of the technology industry's leading employers like Apple, Tesla and Pinterest.

The California Bureau for Private Postsecondary Education (BPPE) recently mandated that we  cease operation of one of our program modules, Career Track, which we had created to enable students to graduate while working on the job given the high cost of living -- especially in San Francisco -- and given that many of our students come from disadvantaged low-income backgrounds. We are planning to speak to the California Attorney General's office to discuss the concerns that led to the BPPE's decision. In the meantime, we have ceased operations of this program module.

We have always strived to act in our students' best interests and would love to answer KPIX's questions, but in deference to the ongoing legal process, we are unable to comment further at this time. We look forward to the opportunity to more fully explain our innovative program once the proceedings have concluded. This ordeal has been very hard on our students. More than anything, we wish to return to our core mission of providing them with a world-class technical education, regardless of where they come from, the color of their skin or their ability to pay."

View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.