You do realize Lambda has to persuade investors that these ISAa will pay off, right? They’re still highly motivated to get their students making money either way.

If they hold the ISA and the student doesn’t make any money they don’t make any money. If they sell the ISA and their students don’t make any money soon they won’t be able to sell them and then they don’t make any money.

Never underestimate people's willingness to grab money now even when the rational long term strategy would ultimately pay more.

Ok got it - but what's the issue? This is similar to invoice financing, which is a pretty common practice.

The only way I see this impacting student outcome is if the school loses motivation to help students post-graduation, but the discount for selling these ISAs must be very high.

Bingo. ISAs are financed one way or another, whether it’s with VC or with an ISA-backed financing mechanism.

Lambda School is still on the hook and loses money until the students are placed and have paid back. It’s about incentive alignment.