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Deep Dive
What's Next: Will the pandemic dampen interest in tuition benefit programs?
Before COVID-19, employers were leaning into free or heavily subsidized
education benefits. We look at how the crisis could affect demand.
Hallie Busta
May 14, 2020
Tuition benefit programs aren't new, but several high-profile examples
have made headlines in the last few years as indicators that companies
are changing how they use education support. Beyond attracting workers,
these programs are designed to retain them and help employers expand
and diversify their talent pipelines.
This is particularly true in the retail and food service sectors, where
competition for frontline workers was fierce in a strong economy and
job-hopping was common. Such programs typically require employees to
work at the company for several months before starting and then
maintain a certain hourly threshold as they complete the program. In
exchange, workers can earn a credential for free or at little cost.
Colleges, meanwhile, embraced the pipeline of potential students as
they confronted forecasts that the supply of traditional-age learners
would shrink.
Then the pandemic happened, and furloughs and layoffs began, hitting
sectors like retail and food service hard. In retail alone, the
unemployment rate climbed from 5.3% in March to 18.6% in April,
according to federal data. Other sectors, including leisure and
hospitality, where the rate jumped from 8.1% to 39.3%, are even worse
off.
The duration of the economic impact is uncertain, but a recession is
expected. That could have an impact on tuition benefit programs. The
share of students in these programs and of companies offering them
decreased after the last recession. In 2008, around two-thirds of
employers offered tuition assistance for undergraduate programs,
according to data from the Society for Human Resource Management. In
2018, just over half did. Graduate programs, which are about as common
among employers, saw a similar drop.
Haley Glover, strategy director at Lumina Foundation, expects a comparable trend this time around.
Employers hold on — for now
Some companies have been loosening requirements to ensure workers still
qualify for tuition benefits as their hours are cut and positions are
furloughed in response to the crisis.
The fast-casual dining chain Chipotle made headlines last year when it
offered a new perk: a tuition-free degree in a selection of business
and technology fields. To be eligible, participants must have worked
for the company for 120 days and work an average of 15 hours a week.
As the company reduced workers' hours and furloughed some employees
because of the pandemic, it waived its requirement of how many hours
current participants must work to receive the benefit. It is evaluating
whether to change the requirement for students who want to join the
program. While terms start throughout the year, the next spike is
expected in May and June.
Over the next month, officials will track whether employees can access
hours and are willing and able to work. "We'll take a look at that to
see what are the barriers to getting that 15 hours a week," said
Marissa Andrada, the company's chief people officer.
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