Why paying for employees' tuition may pay off for companies

Nearly 1 in 5 jobs requires a certificate on top of a bachelor's degree

More than 60% of companies now provide some form of tuition-assistance program, Mikhail Zinshteyn reports for The Atlantic.

The trend comes as American adults head to college later—and more frequently, says Nicole Smith, an economist at the Georgetown Center on Education and Workforce. Today the education landscape is less of a "pipeline" and "more of an ecosystem," in that adults often are forced to go back to school to earn another degree.

"It's no longer, 'Okay, I graduated, I throw my mortarboard in the air and it's done; I'm never going back," Smith says.

About 20% of jobs require a certificate in addition to a bachelor's degree. At the same time, families now bear 50% of education costs—compared with the 7% they carried in the 1980s.

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An upcoming report from the Georgetown Center found that one-third of undergraduates younger than 30 work full-time, and that rate jumps to three-fourths when looking at undergraduates over 30.

The programs not only provide discounts for students but also serve as ways for companies to close the skills gap among their workers and improve retention.

Starbucks partnered with Arizona State University Online to offer tuition reimbursement for employees who work at least 20 hours a week. More recently, the U.S. division of Fiat Chrysler Automobiles paired with Strayer University to provide 118,000 employees a full-ride.

Strayer and Chrysler discussed the partnership for about two years, and the university revamped its curriculum to address the car company's needs. Now, classes address automotive industry issues, such as sales and supply-chain logistics.

Chrysler took on the financial risk in order to improve employee retention, Zinshteyn writes. Up to 60% of its dealership employees quit every year. Strayer CEO Karl McDonnell says his school can reduce that rate by half.

Research has found turnover costs vary from 90% to 200% of annual salary, so McDonnell says the partnership will ultimately result in revenue gains for the Chrysler (Zinshteyn, The Atlantic, 10/17).

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