Employment and Jobs

Companies Lure Workers With (Nearly) Free College Tuition

March 28, 2019  • Rebecca Koenig

UpSkill America is an employer-led movement to expand opportunity for America’s workers and allow our economy and communities to thrive. As part of our mission to advance the upskilling movement, we are pleased to share the following article from U.S. News & World Report, featuring comments from UpSkill America Director Jaime Fall.

Nico Constant [is] one of thousands of workers taking advantage of a new breed of employer education benefit designed to help employees earn degrees at little cost. Pioneered by Starbucks in 2014, this kind of program has proliferated as companies like Disney, JetBlue and Walmart recognize that “trying to further your career as a working adult is really hard and really expensive,” says Jayne Parker, Disney’s chief human resources officer.

Low-cost college degrees offer obvious advantages to workers, who can use their new credentials to climb the ladder at their current companies or find better jobs elsewhere.

“Anytime you have a bachelor’s degree, it puts you a step ahead,” Constant says. “I have this sense of confidence moving forward professionally.”

Companies are betting they’ll benefit too by attracting ambitious workers and convincing them to stick around for a little longer than they might otherwise in today’s competitive labor market.

Half of U.S. employers provide education assistance, according to the Society for Human Resource Management 2018 Employee Benefits Survey. Traditionally, though, these programs have come with a lot of caveats. Many require workers to cover their own tuition costs and wait months for reimbursement, which may cover just a few credits’ worth and be contingent on getting good grades. Eligibility rules often limit the subjects employees may study and tether them to their employers for months or years in exchange for financial support.

These rules make it difficult for many employees to achieve their education goals, says Jaime Fall, director of UpSkill America, an initiative of the Aspen Institute: “If you’re an entry-level worker, there’s hardly any chance.”

Recognizing these drawbacks, several big companies have overhauled their systems or simply started fresh. They’re disbursing money directly to education institutions to reduce workers’ out-of-pocket costs. They’re doing away with tenure requirements, accepting brand-new employees into their programs and eliminating clawback clauses that punish workers who leave soon after taking advantage of education benefits.

Several companies now provide enough financial assistance to help workers not simply take a class or two, but earn an entire bachelor’s or master’s degree.

Each program has its own rules. At Starbucks, employees who work at least 20 hours a week and who don’t already have bachelor’s degrees are eligible to take online courses through Arizona State University, selected for the quality and large scale of its education offerings. ASU provides an upfront scholarship covering 42 percent of tuition costs. Starbucks reimburses workers for their remaining tuition at the end of each semester.

JetBlue partners with multiple digital education companies, such as Study.com and Sophia.org, to offer college-level courses that are cheaper than those available at traditional institutions. Thomas Edison State University in New Jersey accepts the credits workers earn online and grants diplomas in four disciplines: business, aviation management, liberal arts and computer science. Program participants never have to pay more than $3,500 for their degrees, the company promises.

Disney, Taco Bell and Walmart have created their programs through Guild, a benefits platform that works with dozens of education institutions. Hourly workers at Disney are eligible for its Aspire program, which covers all tuition costs upfront after only 90 days on the job. Employees at Taco Bell’s corporate restaurants and participating franchises have access to $3,000 to $5,250 in upfront tuition assistance each year. And Walmart workers can earn their high school or GED degrees online for free or pay $1 per day to study business or supply-chain management at the college level, primarily through online programs offered by select nonprofit universities.

There’s early evidence that these education programs are helping companies meet their recruitment and retention goals. Almost immediately after the launch of Disney’s Aspire program, job applicants started citing it to explain their interest in the company, Parker says. Starbucks employees who have taken advantage of the company’s education benefits stay there 50 percent longer than its general U.S. retail population.

Receiving free college tuition while also earning a paycheck will likely prove most enticing to people who couldn’t otherwise afford to get a bachelor’s degree, Fall says. He doubts the concept will do much to convince people with the means to enroll in a four-year college immediately following high school to deviate from that course.

However, the UPS Earn & Learn program, which started in 1997, may serve as a model. The company recruits part-time employees, who make up a large proportion of its entry-level workforce, while they’re still in college. They’re immediately eligible to receive $5,250 a year in tuition reimbursement with a lifetime cap of $25,000.

“It’s absolutely a strong reason why people choose UPS,” says Doug Paterson, director of human resources operations.

New corporate education programs have adopted one hallmark of the traditional campus experience: academic advising. JetBlue’s program and those offered through Guild pair students with coaches who provide guidance, encouragement and, when necessary, a gentle shove.

Going back to school without mentorship can be intimidating for workers, Parker says: “Make sure you have a coach or some support process to help you through.”

Workers who are interested in taking advantage of a company’s education benefits program should also figure out whether their participation is contingent on approval from their supervisors, Fall says.

“Companies have room for improvement preparing managers to support workers through this program,” he explains. “That’s one of the biggest areas of concern.”

Having both structure and financial support makes a big difference, leaders say.

This piece was excerpted from “Companies Lure Workers With (Nearly) Free College Tuition” by Rebecca Koenig in U.S. News & World Report. Click here to read more.

Walmart and Walmart.org are supporters of UpSkill America, an initiative of the Economic Opportunities Program.

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