Wait.. so they were securitizing their ISAs? I had no idea they were doing that. It is a brilliant twist I didn't expect, and that also causes me to lose all respect for them. I liked the ISA idea before, but this... is perverse.
This simply gives them a way to tap into the cash they would get in the future, just a few years earlier. And if there’s a 3rd party that wants to take on that risk I see no issue with it.
In theory you are right, and in theory savvy investors would have never allowed the subprime mortgage market to get so ridiculous to allow the 2009 GFC to manifest.
But I think in reality it changes the game greatly. Before securitization Lambda is incentivized to produce grads with lucrative job placements. Now they may find that they get a better return on their efforts going for volume and marketing their ISA bundles. Teaching 5K bootcampers to code is hard. They may find that roping in a Masa Son or other less savvy fund to overpay for a portfolio of 100k ISAs (growth produced by lowering standards and taking on unqualified candidates ) to be relatively easier.