Exclusive: MA Attorney General Probes Startup Institute
Update: The earlier version of this article mentioned ThriveHive is a Startup Institute partner. It’s been redacted since.
Startup Institute, a network of coding and development training intensives founded in Boston in 2012, is the latest for-profit educational institute that’s come under Massachusetts Attorney General Maura Healey’s scanner in her probe into for-profit colleges.
The attorney general’s office is conducting a fact-finding review of Startup Institute, usually done to seek more information on a company. Startup Institute confirmed that it’s co-operating with the AG’s office.
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As part of the review, the company said that the attorney general’s office has contacted former lending partners of the Startup Institute to issue refunds and forgiveness to students who took out loans for tuitions that ranged between $9,100 – $9,500. The company’s finance partners include Earnest (2013-2016), Climb Credit (2015-2017) and Skills Fund (2017-2018).
According to the Boston Globe, Healey joins an effort headed by Senator Elizabeth Warren to urge federal education officials to relieve students of debt from for-profit schools that are accused of “deceptive recruiting, enrollment, and lending practices.”
“The attorney general’s office has contacted our former lending partners and those lenders have sent refunds and forgiveness to students who took out loans. While we are happy for those students (less debt is never a bad thing!), we are also confident that we have done no wrong which is part of why we’re writing to you today,” Startup Insitute said in an email statement to BostInno.
Startup Institute was founded in 2012 by well-known names in the startup circle including MIT Engine CEO Katie Rae, former director of TechStars Aaron O’ Hearn, MIT Engine general partner Reed Sturtevant and NYC Innovation Collective founding board partner Shaun Johnson. Startup Institute was initially meant to be an offshoot of TechStars offshoot called Boston Startup School. It was set up with the aim of increasing the pool of employable tech talent in Boston by providing technical training to meet with the demands of the innovation economy.
The training included an 8-week immersive program with courses on coding, web design and digital marketing and the company also claimed to provide students with eight weeks of post-graduation career support.
Starting in June 2018, Startup Institute shifted its focus from offering flagship programs at its premises and instead, started partnering with colleges like New England College and Gillette to offer an online MBA in digital marketing. It now operates only in Boston, discontinuing its services in New York and other cities.
The company raised $3 million from Silicon Valley Bank in September 2014 to expand its training programs in smaller markets. The company named Rich DiTieri as its CEO in 2017 who took over the role from Diane Hessan who stepped down to work with the 2016 Hillary Clinton’s Presidential campaign. DiTieri served as the company’s CEO until April this year. Director of Admissions Sarah McLaughlin took over the reign as the current managing director of the company; Startup Institute doesn’t have a CEO.
BostInno spoke to a former student of the Startup Institute who was hired right after the program as well as secured a refund from Skills Fund, the institute’s finance partner.
“I was skeptical at first when I got a letter from Skills Fund saying that I was eligible for a refund,” said Alexander Michaud, a native of New Hampshire who was part of the web development track in the Winter-Spring 2018 cohort. “Later, I got a letter from the Startup Institute stating something similar. I didn’t know who else had any knowledge about this and I didn’t want to wave my good fortune in front of anyone who might not have it.”
This probe is part of an extended investigation Healey has been conducting against for-profit colleges. In April 2018, Healey’s office secured $898,000 from a Florida-based credit union that made loans to more than 200 Massachusetts students who took courses at The College Network, Inc., a for-profit company that offered online study guides and educational services to students.
“The College Network treated their students like ATM machines,” said Maura Healey in a statement. “With this settlement, more than 200 students will receive discharges and refunds and we are sending a clear message to lenders.”