Companies lure hourly workers with tuition benefits
NEW YORK (AP) — When Daniella Malave started working for Chipotle at age 17, the main perk she sought was free food. It turned out that she also got a free college education.
While working full-time for the channel, Malave completed two years of college with annual stipends of $5,250 from Chipotle. After that, she enrolled in the company’s free online college program, through which she earned a bachelor’s degree in business management from Wilmington University in 2020.
“I didn’t have to pay for my education,” said Malave, 24, who now works as a recruiting analyst for Chipotle in New Jersey. “Every time I say it out loud, I’m like, ‘Is this real?'”
Chipotle is one of more than a dozen companies that have launched free or nearly free college programs for their frontline workers over the past decade. Since 2021 alone, Walmart, Amazon, Target, Macy’s, Citi and Lowe’s have made free college available to more than 3 million working Americans.
Companies see the programs as a way to recruit and retain workers in a tight labor market or train them for leadership positions. For hourly employees, the programs remove financial barriers to graduation.
Thousands of people are now benefiting from it. Starbucks, which runs an online college program through Arizona State University, says 22,000 workers are currently enrolled in its program. Guild Education, which administers programs for Walmart, Hilton, Disney and others and offers online programs at more than 140 schools, says it worked with 130,000 students in the past year.
But some critics question whether the programs hide deeper problems, like a salary so low workers can’t afford college without them or hours so erratic it’s too hard to attend school. in person.
“I think they’re coming up with these programs to get around the issue of just paying people more, giving them more certainty, improving their quality of life,” said Stephanie Hall, senior fellow at the Century Foundation, a nonprofit think tank. partisan.
Hall said a lack of data also makes it difficult to judge the effectiveness of programs. Chipotle, Walmart, Amazon and Starbucks, for example, don’t share graduation rates, in part because they’re hard to calculate because students often take a semester off or take more than four years to graduate. Rachel Carlson, CEO of Guild Education, which also does not reveal graduation rates, says the most relevant data is whether college courses help employees get promotions or pay raises.
Others question the quality of online programs and whether students’ degrees will be marketable or help them pursue other careers, especially since many companies limit what employees can study. Discover only fully funds 18 bachelor’s degrees at eight universities through Guild, for example.
“My feeling is that most of these programs are hoping that employees stay with the company,” said Katharine Meyer, a fellow in the governance studies program at the Brookings Institution’s Brown Center on Policy Education.
Amazon, for its part, touts college programs that offer opportunities outside of the workplace, such as nursing. But Walmart cut the number of programs it offers from 100 to 60 because it wanted to focus on skills that would align with careers at the company.
More than 89,000 workers have participated in Walmart’s college program and more than 15,000 have graduated, said Lorraine Stomski, senior vice president of associate learning and leadership at Walmart.
Tanner Humphreys is one of them. He started working at Walmart in 2016, bouncing on hourly jobs as he tried to fit into his in-person class schedule at Idaho State University. But as part of the company’s online program, launched with Guild in 2018, he transferred his credits to Southern New Hampshire University and earned a bachelor’s degree in computer science in February. At 27, he now works at Walmart headquarters for its cybersecurity team as an employee.
“I was working paycheck to paycheck, living with a whole bunch of friends to pay my rent and stuff,” he said. “Moving from an hourly wage to a salary is truly life changing.”
Companies that pay for college or higher education are nothing new. But for decades, the benefit was mostly available to salaried professionals. In many cases, workers had to spend thousands of dollars on tuition up front and then get reimbursed by their company.
Starbucks’ program, which launched in 2014, was initially a tuition reimbursement program, but in 2021 it began covering tuition upfront. Now, 85% of the company’s stores have at least one employee in the program, which will celebrate its 10,000th graduate in December.
Carlson said companies see an average return of $2-3 for every dollar invested in education, as it saves on recruitment and retention costs. Walmart said participants leave the company at four times the rate of non-participants and are twice as likely to be promoted.
“If I know it’s going to cost me $7,000 if my cashier doesn’t show up tomorrow, I’d rather spend our partner average today – $3,000 to $5,000 – on her going to college “Carlson said.
The companies say the programs also provide opportunities for minorities. Macy’s, which launched its program with Guild earlier this year, said half of the women enrolled are women of color.
Some companies, like Chipotle and JPMorgan Chase, offer online programs through Guild as well as stipends that students can spend on in-person learning at local institutions. Amazon’s university programs offer a mix of online and in-person learning at community colleges or local universities.
Hall said she’d like to see more companies offer this kind of flexibility because online learning isn’t ideal for everyone.
Zachary Hecker, 26, a Starbucks employee in New Braunfels, Texas, began working on his bachelor’s degree in electrical engineering last summer as part of the company’s college program.
Hecker appreciates the free tuition, but often wishes he could attend classes in person or have more choices beyond the state of Arizona. His classes are difficult, he said, and professors are not always able to meet and offer advice.
But Carlson said the online courses are ideal for the average Guild enrollee, who is a 33-year-old woman with children. Carlson said students in his programs often don’t have constant access to a car and need to be able to study at all times, such as after the kids are in bed.
The chance to get a free degree can be life changing. Angela Batista was 16 and homeless when she started working for a Starbucks in New York.
“College was never part of my dreams,” said Batista, now 38. “I didn’t even have the audacity to fantasize about it.”
In December, she will graduate from Arizona State University with a degree in organizational leadership paid for by Starbucks. And now her son, who also works at Starbucks, is starting to work toward his own degree.
Copyright 2022 The Associated Press. All rights reserved.