Many companies are offering generous tuition assistance so workers can go back to college
- In today's job market, tuition assistance is one of the incentives companies are using to attract and keep workers.
- For employees, it may be the most valuable benefit on the table.
Since the start of the pandemic, some workers have had to put their higher education goals on hold. Now, more companies are trying to help revive those college aspirations.
Target and Walmart recently announced tuition reimbursement programs to help employees with the cost of going back to school.
Amazon will reimburse up to 95% of tuition and fees for eligible employees.
Home Depot, UPS, FedEx, Chipotle and Starbucks also have programs that help employees pay for college. Waste Management said it will not only pay for college degrees and professional certificates for employees going forward but will offer this same benefit to their spouses and children.
In today's job market, tuition assistance is one of the many incentives companies are using to attract and keep workers. It may also be the most valuable.
Not only does free or discounted higher education improve recruitment and retention, it cuts down on student debt while advancing the long-term wellbeing of employees, experts say.
Research shows there are substantial differences in lifetime earnings by educational attainment.
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Men with bachelor's degrees earn about $900,000 more over the course of a career than high school graduates. Women with bachelor's degrees earn $630,000 more, according to the Social Security Administration. Naturally, graduate degrees account for an even more substantial disparity.
Of course, employers paying for their employees to get a degree is not new. For decades, businesses have picked up the tab for white collar workers' graduate studies and MBAs.
However, many companies are now extending this benefit to front-line workers — such as drivers, cashiers, and hourly employees — as well as heavily promoting the offering more than they have before.
"It is an underrated benefit and probably underutilized benefit," Willis Towers Watson senior director Lydia Jilek said.
For employers, education-as-a-benefit is a cost-effective addition to core offerings and it adds "to the stickiness of the employee," Jilek said. "If someone can get a bachelor's degree for no cost, that is likely to increase their loyalty to their employer."
Chipotle chief financial officer Jack Hartung told CNBC in April that employees who take advantage of the company's free degrees are 3½ times more likely to stay with the company and seven times more likely to move up into management.
Despite a strong desire to go back to school, less than half of employees said they have been able to pursue educational goals in the last five years, mostly due to the time commitment and financial obstacles, according to research by Bright Horizons.
The struggle is even greater among minority groups, Bright Horizons found.
To that point, 44% of Black employees said they are having trouble affording education, compared with 29% of white employees. There's a similar discrepancy among men and women. Roughly 36% of working women report financial barriers to education, compared with 22% of men.
"There are still the constraints that all working adults have: time, the financial commitment and having the confidence to go back to the classroom," said Jill Buban, a workplace education expert and general manager of EdAssist, a division of Bright Horizon focused on workforce education.
EdAssist works with companies like Accenture, Bank of America and T-Mobile to develop upskilling programs.
"These benefits can give that extra boost," Buban said. "That can be a real game changer."
These benefits can give that extra boost. That can be a real game changer.Jill Bubanworkplace education expert
In addition, "with the increased opportunity for distance learning, people can enroll in a program online perhaps that they haven't been able to do in the past," Jilek said.
Alex Hall is completing his MBA virtually. The senior director at Liberty Mutual in Boston is enrolled at Northeastern University and takes classes at night, after work. His employer reimburses 100% of the cost for undergraduate and graduate courses.
Hall, who is 33, said he wouldn't have been able to get a graduate degree otherwise.
"I don't know if I would have incurred that large expense on my own," Hall said.
Hall said he hopes an advanced degree will help him achieve his professional goals. "This is the avenue that will hopefully put me in positions of more authority," he said.
But already, there are advantages, he added. "It's given me an enormous amount of confidence."