Personal Finance

Fidelity is the latest employer to offer free college education to workers

Key Points
  • In today's job market, employers are expanding their benefit offerings to attract and retain workers.
  • Free college may be the most effective tool yet.
  • Most recently, Fidelity said it will offer free college to 18,000 employees, including entry-level customer service phone representatives.
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Despite growing economic uncertainty, employers are still waging a war for talent, and employees are coming out ahead.

Now, more businesses are expanding their benefit offerings with free college programs to attract and retain workers.

Most recently, Fidelity Investments said it will offer fully funded undergraduate degrees to 18,000 employees, including entry-level customer service phone representatives. The company, which already offered student debt repayment, will cover the upfront costs for tuition, books and fees at select two- and four-year schools, avoiding the need for reimbursement. 

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Other major financial institutions, including Citi and PNC, announced similar offerings this year.

Roughly 38,000 Citi front-line consumer banking employees are eligible for its education benefits program, including free college. PNC's tuition program is available to 62,000 employees.

"The war for talent is over," PWC U.S. Chairman Tim Ryan said at the CNBC Work Summit last month. "Talent won."

Coming out of the pandemic, these types of benefits play a big part in the competition for workers and, as a result, more companies are offering opportunities to develop new skills, according to the Society for Human Resource Management's recent employee benefits survey

Now, 48% of employers said they offer undergraduate or graduate tuition assistance as a benefit, according to that survey.

Nationwide pizza chain Papa John's also recently announced it is offering fully funded degrees, as well as tuition assistance for associate's and master's degrees and professional certificate programs.

Roughly 12,000 full- and part-time front-line employees, including delivery drivers and kitchen staff who work as little as 10 hours a week, are eligible for the education benefits program, including free college, according to the company.

"Wherever you can differentiate yourself is pretty critical," said Marvin Boakye, Papa John's chief people and diversity officer.

Wherever you can differentiate yourself is pretty critical.
Marvin Boakye
Papa John's chief people and diversity officer

Other big corporate names, such as McDonald's, T-Mobile, Amazon, Home Depot, Target, WalmartUPS, FedEx, Chipotle and Starbucks, also have programs that help cover the cost of going back to school. Waste Management will not only pay for college degrees and professional certificates for employees but also offers this same benefit to their spouses and children.

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.

Education benefits are 'mutually beneficial'

For employers, education as a benefit is "mutually beneficial," said Fidelity's head of benefits, Megan Bourque.

"For associates that have pursued undergraduate degrees, they have greater retention, greater mobility within the organization and tend to perform better, as well," she said.

Chipotle Chief Financial Officer Jack Hartung told CNBC that employees who take advantage of the company's free degrees are 3.5 times more likely to stay with the company and seven times more likely to move up into management.

Not only does free or discounted higher education improve recruitment and retention, it also cuts down on student debt while advancing the long-term well-being of employees, experts say.

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Despite the advantages and what research shows is a strong desire among respondents to go back to school, less than half of employees said they have been able to pursue educational goals in the last several 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: 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.

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