Free college could be the next essential employee perk
For anyone who has attended an American university in the past 20 years, chances are they have racked up a lot of debt with their degree.
The Federal Reserve estimates that Americans owe $1.73 trillion in student loans, with the national college debt rising 91% between 2011 and 2021. The College Board found that the cost of an undergraduate degree from a public school has risen 213% since the 1980s.
Now, as employers struggle to stay competitive in a tough talent market, more and more are looking to attract workers with benefits that can make higher education more accessible and even eliminate student debt.
Read more: From Campus to Career: Creating Financial Wellness for Your New Hires
Public benefit company InStride connects companies with universities across the country to create flexible, debt-free training paths for employees. Inspired by Starbucks College Achievement Plan, which enabled Starbucks employees to graduate from Arizona State University Online for free, InStride is on a mission to help other companies provide higher education to their employees through partnerships with credibly ranked institutions with a well of programs. The program serves as an alternative to tuition reimbursement.
“America was built on relationships between business and academia,” said Vivek Sharma, CEO of InStride. “But reimbursement is outsourced to third parties and has no impact. In many cases, the learner has to bear the cost, and what barista or front-line worker has $10,000? »
InStride estimates that Corporate America spends $180 billion each year on tuition assistance and company-sponsored training programs. But these advantages do not allow the same flexibility, financial freedom and accessibility to employees. When InStride conducted a study with global management consulting firm Bain and Company, they found that less than 40% of employees even knew their company offered tuition reimbursement, yet only 1% of employees used it. advantage.
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Sharma insists that the companies they work with ensure employees don’t have to spend their own money to get an education. In turn, he explains that companies have a lot to gain in terms of improved recruitment and retention rates, brand visibility, DEI initiatives and overall revenue growth. InStride claims that companies can realize up to 300% return on their investment in education.
“If I invest in training an employee, she will believe in my business, she will treat customers better and she will stay with us longer,” says Sharma. “This is a very real strategic advantage that changes the trajectory of an individual’s life.”
By offering employees a debt-free college path, companies are also positioning themselves as employers who are taking concrete steps to have a social impact, which is of interest to investors, employees and customers.
Technology research and advisory firm Gartner reported that 85% of investors consider environmental, social and governance criteria when investing in 2020. Ypulse, a research firm focused on the Gen Z and millennials, found that 93% of people aged 18 to 36 believe that if a brand supports a social cause, it should act on behalf of that cause.
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And there are few social causes as universal in America as equitable access to higher education. Candice Smith, relationship specialist at Desert Financial Credit Union, signed up for this benefit the same day it was made available to her.
“I always wanted to go back to school, but I didn’t think I could,” Smith says. “I didn’t want to take out loans. I’m a banker, so I see it on people’s credit reports all the time, even 10 years later. My husband is still paying off his community college loan.
As a mother and full-time employee at Desert Financial, Smith only takes one or two courses at a time, but she’s confident earning her bachelor’s degree in organizational leadership will be worth it.
“There have been new positions opening up lately where I work, and I want to apply, but most of the time you need a bachelor’s degree,” she says. “It’s frustrating if you haven’t finished it yet.”
Sharma notes that companies can also change the life of an employee’s family not only by giving an employee a better chance of career advancement and higher pay, but by extending the benefit to partner, child , sibling or legal guardian of an employee.
Read more: Student loan debt crushes the mental and financial well-being of employees. Is it time for employers to act?
“We know of several Uber drivers who have passed on this educational opportunity to their loved ones,” Sharma says. “It changes the life of the whole family because that’s what education does.” The ASU Uber Tuition Award covers all remaining tuition costs that accompany the completion of the federal student aid application. This award can be given to the employee or a direct family member.
Sharma predicts such perks will become more common for employers, likening a free college education program to health care, which is now considered a standard perk in many industries.
“Employers are going to retain people more and improve the community,” Smith says. “When I’m done, I’ll be better educated, more experienced and ready to step into that next role. So I don’t understand why companies haven’t started offering this sooner. »