War for work­ers sets off emerg­ing ben­e­fit trend: Free college tu­ition

Bright Hori­zons, Dis­cover, U.S. Xpress and Dis­ney are among a grow­ing list of em­ploy­ers that are foot­ing the bill for em­ploy­ees’ college de­grees.

Employee Benefit News - - Contents - BY KATHRYN MAYER

Bright Hori­zons, Dis­cover, Dis­ney and U.S. Xpress are among a grow­ing list of em­ploy­ers of­fer­ing to pay for em­ploy­ees to get college de­grees.

Sara Van­der­hoof teaches preschool kids ev­ery day. But when it came to her own ed­u­ca­tion, she al­ways felt she was miss­ing one im­por­tant as­set: Her college de­gree.

The 46-year-old teacher in Flan­ders, New Jersey, who works for Bright Hori­zons — a com­pany with 20,000 em­ploy­ees that serves more than 100,000 chil­dren across the coun­try — had wanted to go back to school for years, yet she didn’t think it was pos­si­ble be­cause of fi­nan­cial con­straints. That changed re­cently when her em­ployer an­nounced it would pay for its em­ploy­ees’ as­so­ciate’s or bach­e­lor’s de­grees.

“I will ac­tu­ally be able to pur­sue my bach­e­lor’s de­gree, which not only al­lows me to ful­fill a dream of mine, but will also make me a bet­ter teacher for my stu­dents,” she says.

Van­der­hoof is one of the grow­ing num­ber of em­ploy­ees tak­ing ad­van­tage of an emerg­ing ben­e­fits trend: free college tu­ition.

Bright Hori­zons, Dis­ney, Dis­cover, MGM Re­sorts, U.S. Xpress and Wal­mart are among the em­ploy­ers that have an­nounced they will foot the bill for em­ploy­ees to get college de­grees as the war for tal­ent heats up and em­ploy­ers see the ef­fects stu­dent debt is wreak­ing on the Amer­i­can work­force.

Free tu­ition ben­e­fits “are pretty amaz­ing when you think about it,” says Julie Stich of the In­ter­na­tional Foun­da­tion of Em­ployee Ben­e­fit Plans, a group that counts more than 8,200 or­ga­ni­za­tions and 32,000 in­di­vid­u­als as mem­bers. “It’s re­flec­tive of the times we’re in right now where we’re all scram­bling to find the key, per­fect per­son to fill job open­ings.”

With the un­em­ploy­ment rate drop­ping to 3.7%, a 48-year low, ac­cord­ing to the lat­est La­bor Depart­ment statis­tics, a num­ber of em­ploy­ers are beef­ing up their ed­u­ca­tion ben­e­fits to en­tice and re­tain work­ers. Roughly half of com­pa­nies now of­fer some sort of tu­ition re­im­burse­ment pro­gram, ac­cord­ing to the lat­est statis­tics from the So­ci­ety for Hu­man Re­source Man­age­ment.

Free college tu­ition is a pow­er­ful next step.

Star­bucks blazed the trail by im­ple­ment­ing a free tu­ition ben­e­fit for its work­ers back in 2014 — em­ploy­ees without a bach­e­lor’s de­gree who work at least 20 hours a week in any U.S. com­pany store can par­tic­i­pate in Star­bucks’ part­ner­ship with Ari­zona State Univer­sity’s on­line pro­gram. Since then, a hand­ful of ma­jor com­pa­nies have fol­lowed suit in the last few months, point­ing to an emerg­ing trend.

“It used to be that health in­sur­ance, life in­sur­ance and a re­tire­ment plan was enough — that got you re­ten­tion, and that got peo­ple in the door,” Stich says, adding that there are no avail­able statis­tics on the preva­lence of free tu­ition ben­e­fits from her group or SHRM. “But now there are more and more things em­ploy­ers have to of­fer. Some­times we see these ‘wow’ ben­e­fits crop up, and right now, it looks like [free tu­ition] is the next one.”

Rachel Carlson, CEO of Guild Ed­u­ca­tion, a Den­ver-based com­pany that ad-

min­is­ters tu­ition ben­e­fits for em­ploy­ers and part­ners with Dis­ney, Dis­cover and Wal­mart on their pro­grams, says the emerg­ing of­fer­ing sig­ni­fies a pri­or­ity shift among ben­e­fits de­part­ments.

“HR lead­ers have his­tor­i­cally thought of ben­e­fits as a cost cen­ter,” she says. “But when com­pa­nies do the math, it’s cheaper to in­vest in the college ed­u­ca­tion of a cur­rent em­ployee than to watch that em­ployee walk out the door.”

Jon Ka­plan, vice pres­i­dent of train­ing and de­vel­op­ment at Dis­cover, which ear­lier this sum­mer an­nounced it is of­fer­ing its 16,500 em­ploy­ees the chance to get full-ride tu­ition, agrees. “In or­der to be com­pet­i­tive in the job mar­ket, we need to step up and pro­vide ben­e­fits that are dis­tinc­tive,” he says.

Em­ploy­ees of the credit card gi­ant can earn a bach­e­lor’s de­gree on­line from three dif­fer­ent uni­ver­si­ties: the Univer­sity of Florida, Wilm­ing­ton Univer­sity and Brand­man Univer­sity. Dubbed the Dis­cover College Com­mit­ment, the ben­e­fit cov­ers tu­ition and re­quired fees, books and sup­plies.

About 99% of the com­pany’s em­ploy­ees will qual­ify for the ben­e­fit, in­clud­ing full-time and part­time work­ers who work at least 30 hours a week, Ka­plan says. Dis­cover ex­pects a num­ber of its cus­tomer call cen­ter em­ploy­ees, many of whom do not have a college de­gree, to take ad­van­tage of the ben­e­fit.

“We want to in­vest and de­velop our em­ploy­ees,” he says. “We feel that pro­vid­ing a no-cost college ed­u­ca­tion to em­ploy­ees will not only help each em­ployee who takes part, but the com­pany over­all.”

Do­ing the right thing is a sen­ti­ment echoed by other em­ploy­ers that are im­ple­ment­ing the ben­e­fit. Jayne Parker, se­nior ex­ec­u­tive vice pres­i­dent and chief HR of­fi­cer of Dis­ney, says the en­ter­tain­ment gi­ant’s new of­fer­ing was born of its de­sire to “em­power and sup­port em­ploy­ees in their pro­fes­sional and per­sonal lives.”

“We are con­stantly look­ing at ways to help peo­ple re­al­ize their am­bi­tions and ful­fill their dreams,” she says. “This pro­gram is the lat­est in that ef­fort.”

Dis­ney’s As­pire pro­gram, an­nounced in Au­gust, is de­signed for the 80,000-plus hourly wage earn­ers who work at Dis­ney’s stu­dio, theme parks and stores. Its pro­gram through Guild Ed­u­ca­tion of­fers Dis­ney em­ploy­ees “max­i­mum choice and flex­i­bil­ity with their stud­ies, re­gard­less of whether the pro­gram and classes they choose are tied to their cur­rent role at Dis­ney,” the com­pany says. A net­work of schools and a range of de­grees and dis­ci­plines — in­clud­ing bach­e­lor’s and mas­ter’s de­grees, high school equiv­a­lency, English-lan­guage learn­ing and vo­ca­tional train­ing — will be avail­able.

Com­pa­nies like Dis­ney are pay­ing the costs up­front — avert­ing a cost bar­rier that of­ten de­ters lower-in­come work­ers.

Re­cruit­ing hard-to-reach work­ers

Part of the mo­tive be­hind of­fer­ing free tu­ition as a ben­e­fit is re­cruit­ing hard-to-reach work­ers in in­dus­tries that are strug­gling.

Wal­mart, for in­stance, is cater­ing its tu­ition ben­e­fit to its em­ploy­ees in re­tail — an in­dus­try in which it’s in­creas­ingly dif­fi­cult to hire and keep em­ploy­ees, es­pe­cially as po­ten­tial work­ers seek po­si­tions with more flex­i­ble hours and higher pay. Ac­cord­ing to data from the Bureau of La­bor Statis­tics, job open­ings within the re­tail trade sec­tor have risen each year since 2010 to reach a record monthly av­er­age high of 651,000.

Wal­mart’s pro­gram, which de­buted in May, isn’t to­tally free, but it’s close, al­low­ing el­i­gi­ble em­ploy­ees to pay just $1 a day to earn a de­gree. All Wal­mart and Sam’s Club work­ers in the U.S. will be el­i­gi­ble as soon as they’ve been with the com­pany for 90 days. It ap­plies to all part-time, full-time and salaried em­ploy­ees.

It’s the lat­est in a string of wage and ben­e­fits en­hance­ments for the na­tion’s largest pri­vate em­ployer, which in the last year alone has raised hourly wages, ex­panded parental leave and added an adop­tion ben­e­fit. It’s part of an ef­fort by Wal­mart to keep and woo work­ers, while pos­si­bly shed­ding its im­age as a less-than-pro­gres­sive em­ployer. As many as 68,000 em­ploy­ees might sign up for the tu­ition ben­e­fit, Wal­mart ex­ec­u­tives es­ti­mate.

Truck­ing com­pany U.S. Xpress En­ter­prises, which em­ploys more than 7,000 driv­ers across the coun­try, in Septem­ber an­nounced free tu­ition in a bid to lure and keep more driv­ers be­hind the wheel — his­tor­i­cally a huge prob­lem. Like most truck­ing com­pa­nies, U.S. Xpress has a nearly 100% an­nual turnover rate among its driv­ers, re­quir­ing the com­pany to re­cruit, hire and train about 7,500 driv­ers ev­ery year.

“We be­lieve the [tu­ition] pro­gram will at­tract peo­ple to our in­dus­try who may have not pre­vi­ous-

“HR lead­ers have his­tor­i­cally thought of ben­e­fits as a cost cen­ter,” says Rachel Carlson, CEO of Guild Ed­u­ca­tion. “But when com­pa­nies do the math, it’s cheaper to in­vest in the college ed­u­ca­tion of a cur­rent em­ployee than to watch that em­ployee walk out the door.”

ly thought about driv­ing a truck,” says CEO Eric Fuller, adding that it typ­i­cally costs the com­pany more than $5,000 to re­cruit and train a new driver.

U.S. Xpress part­nered di­rectly with Ash­ford Univer­sity to al­low its em­ploy­ees — as well as their chil­dren — the op­por­tu­nity to earn an as­so­ciate’s, bach­e­lor’s or mas­ter’s de­gree in the field of their choice at no cost through on­line cour­ses of­fered by the school.

Sim­i­larly, MGM Re­sorts, which said it will be­gin to of­fer its U.S. em­ploy­ees a free on­line college ed­u­ca­tion pro­gram this fall, is part­ner­ing di­rectly with the Ne­vada Sys­tem of Higher Ed­u­ca­tion for its ben­e­fit.

Bright Hori­zons is of­fer­ing the perk as a vol­ley to at­tract peo­ple work­ing in ed­u­ca­tion — an ef­fort made es­pe­cially vi­tal by a de­cline in stu­dents seek­ing de­grees in ed­u­ca­tion.

Ac­cord­ing to the U.S. Cen­sus Bureau, the num­ber of peo­ple pur­su­ing ed­u­ca­tion de­grees has de­clined to 7.6% in 2018 from 21.6% in 1975. That num­ber is even lower for those spe­cial­iz­ing in early child­hood ed­u­ca­tion: Ac­cord­ing to the Na­tional Cen­ter for Ed­u­ca­tion Statis­tics, early ed­u­ca­tion ac­counts for less than 3% of de­grees.

“Fewer and fewer peo­ple are study­ing early child­hood ed­u­ca­tion and join­ing the field,” says Bright Hori­zons CEO Stephen Kramer. “To be suc­cess­ful, we needed to think about how to get peo­ple to join the field and be in­ter­ested in early child­hood ed­u­ca­tion.”

Bright Hori­zons’ new ben­e­fit al­lows all of its full-time work­ers — in­clud­ing teach­ers, as­sis­tant teach­ers and other staff — to earn a full-ride de­gree in early child­hood ed­u­ca­tion at one of four on­line schools: Ash­ford Univer­sity, Northamp­ton Com­mu­nity College, Ras­mussen College and Walden Univer­sity.

“Our teach­ers are our great­est as­set,” Kramer says. “We did some dig­ging to find out what they thought about the tu­ition as­sis­tance ben­e­fit we were pre­vi­ously of­fer­ing. It turns out that pro­gram had fairly low uti­liza­tion be­cause even though the tu­ition pro­gram was help­ful, there were still bar­ri­ers to fi­nanc­ing a de­gree when the large ma­jor­ity [of costs] needed to be paid out of pocket.”

In ad­di­tion to tu­ition and ex­penses, in­di­vid­u­als who sign up for the ben­e­fit will have the sup­port of an ed­u­ca­tion ad­viser who will help them de­ter­mine the right pro­gram to meet their ca­reer goals and fit their per­sonal lives. The Early Ed­u­ca­tion De­gree Achieve­ment Plan will be ad­min­is­tered through EdAs­sist, provider of tu­ition as­sis­tance and stu­dent loan re­pay­ment ben­e­fits and a di­vi­sion of Bright Hori­zons.

Chang­ing work­ers’ lives

The com­pa­nies of­fer­ing the ben­e­fit say it’s pay­ing sub­stan­tial div­i­dends.

Mari­beth Bearfield, Bright Hori­zon’s chief hu­man re­sources of­fi­cer, says though the pro­gram just launched re­cently, it’s al­ready a hit, not­ing “strong in­ter­est in par­tic­i­pa­tion” and “in­cred­i­bly pos­i­tive” em­ployee re­ac­tion.

“In the first week the pro­gram was live, we re­ceived al­most 1,000 in­quiries from cen­ter em­ploy­ees and signed up over 700 em­ploy­ees for in­tro­duc­tory ad­vis­ing ses­sions,” she says. “The num­bers have con­tin­ued to grow since then.”

Free tu­ition ben­e­fits also are a way to take aim at stu­dent debt, a grow­ing pain point for em­ploy­ees and their em­ploy­ers. There are now 44mil­lion Amer­i­cans who owe a to­tal of $1.5 tril­lion in stu­dent loan debt, ex­ceed­ing both credit card debt and auto loan debt, ac­cord­ing to the Fed­eral Re­serve. That debt, ex­perts con­tend, is also tak­ing an enor­mous emo­tional toll on em­ploy­ees — and harm­ing pro­duc­tiv­ity and pre­sen­tism in the work­place.

“As em­ploy­ers in­ves­ti­gate the ways stu­dent debt af­fects their work­ers — and how they can help — I think some of them are think­ing, ‘Hey, let’s go back a bit and see if we can help peo­ple from in­cur­ring the debt to be­gin with,’” Stich says.

Of course, the ben­e­fit is a big bet for em­ploy­ers — and a costly one at that. While they are avert­ing higher costs by part­ner­ing with on­line schools — which cost thou­sands less than tra­di­tional school set­tings – there’s also the real chance that once em­ploy­ees get a de­gree through their em­ploy­ers, they may go leave to use that de­gree to its fullest po­ten­tial, Stich notes.

Those con­cerns will likely tem­per em­ployer fer­vor to of­fer the ben­e­fit, but the trend might make a dif­fer­ence in other ways, in­clud­ing by rais­ing the preva­lence of other tu­ition ben­e­fits.

“Em­ploy­ers may not dive in full force and pay for ev­ery­thing,” Stich says. “But I think they’ll look at what they’re of­fer­ing — maybe in­crease the dol­lar amount, cover more things, open it up or re­duce some of the lim­its they have had. It’s some­thing to watch.”

The Walt Dis­ney Com­pany is of­fer­ing to pay full tu­ition for its hourly work­ers who want to earn a college de­gree, fin­ish a high school diploma or learn a new skill.

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