OPINION: Free markets, not government, can drive free college
Working 20 hours a week through college might not be the typical path most high schoolers would picture. But it may be worth forgoing the traditional college experience to avoid the traditional debt experience.
When Amazon, Wal-Mart, and Target announced that they would pay their employees’ college tuition, they created new opportunities for working Americans, but also changed the higher education landscape for the better.
The concept of “working your way through college” is known to the younger generations as a fairy tale told by their parents and grandparents. Now, employees at these companies have the opportunity to work their way through college debt-free.
In July, Wal-mart announced that it was dropping the $1 per day fee for tuition benefits, and that it had established new partnerships with Johnson & Wales University, the University of Arizona, the University of Denver and Pathstream, an upskilling platform.
Target announced its program in early August, and Amazon announced in early September that its existing program would expand to cover 100% of eligible expenses, as well as a growing slate of programs, in 2022.
Tuition benefits are not a new concept, but these programs are newly generous. Without benefits like these, a debtless future would not be a practical reality for many people working in retail stores or warehouses.
Starbucks had set the standard for these programs when it partnered with Arizona State University’s online school in 2014, but it still requires employees to pay for classes upfront and seek reimbursement later.
Two years later, Chipotle similarly began offering to reimburse their employees $5,250 each year for college costs. In 2019, Papa John’s started paying 100% tuition at Purdue University Global, but only for corporate employees. These were groundbreaking programs at the time, but now, they lag far behind what other major retailers are offering.
Data from the National Center for Education Statistics holds that, even with grant aid and scholarships, the average college student at a 4-year public college pays $13,900 each year to attend. That’s the equivalent of 926 hours of work at $15 per hours. But that calculation also assumes that the student would be able to work and go to school full time – a tall order for anyone, and impossible for many.
Full-time work and part-time college, or part-time work and part-time college, is more feasible. Working 20 hours a week through college might not be the typical path most high schoolers would picture. But it may be worth forgoing the traditional college experience to avoid the traditional debt experience. The average recent graduate of a bachelor’s program has nearly $30,000 in loans, according to U.S. News. For someone who earns $15 per hour and works full-time, that’s roughly a year’s pay.
Companies are doing this out of necessity. They are competing with each other for workers, and a college degree is a powerful incentive.
In July 2021, the most recent month for which the Bureau of Labor Statistics has published data, more than 5 percent of retail and hospitality workers separated from their jobs. One out of every 20 employees in these sectors ended the month without the job they started the month with. For a major company, this means major recruiting and training costs.
A tuition benefit decreases employee turnover because an employee who may otherwise look for another job without hesitation may not be willing to change, pause, or abandon their academic programs. Furthermore, workers are also benefitting because these companies must compete with one another.
Wal-Mart, for one, has targeted this benefit to workers who are likely to be low earners: salaried employees and those already possessing a bachelor’s degree are ineligible.
Though not everyone needs or wants a bachelor’s degree, these companies seem to appear to factor that into their offerings. Amazon’s program will cover the cost of GED course and English language learning beginning in 2022 and Target’s program includes college prep courses for high school students.
These company-sponsored programs are not a silver bullet for higher education. Not everyone can work at these companies, and not everyone has a job or home life that can be balanced with the added commitment that higher education requires. But this is a start, and a new door that is open to millions of people who might not otherwise have considered college as a viable option.
The rapid expansion of tuition perks is a great sign for the American worker.
It says that companies value education and they value their workers. The programs are financial incentive for colleges to serve a larger population of people who otherwise might have access to a degree. And for millions of Americans, it’s a shot at life-changing opportunities to grow their knowledge and skills.
Follow the author of this article on Twitter: @AngelaLMorabito