It's one of the hottest HR trends in corporate America—debt-free education benefit programs where employers cover 100 percent of tuition costs in order to attract and retain workers in a hypercompetitive labor market. The list of companies announcing debt-free education benefits exploded during the pandemic and continues to grow each week.
"Given the increasing competition for talent, companies are seeing the value of providing employees with the opportunity to pursue higher education," said Rick Benbow, regional vice president at Western Governors University, an online learning provider and frequent partner in employer-provided education benefits. "These programs can reduce employee recruiting costs, improve employee satisfaction and loyalty, reduce employee turnover, and enhance business results."
Proponents of debt-free education say that these initiatives impart an even larger contribution to society that goes beyond talent attraction and retention—they provide opportunities for people with economic barriers to secure a formal education or develop new skills and experience upward mobility.
"Debt-free upskilling and reskilling is a head and heart decision," said Natalie McCullough, president and chief commercial officer at Guild Education, one of the leading providers of education assistance benefits. "Forward-thinking employers can invest in their employees, unlocking life-changing opportunities for personal and professional growth. There's the return on investment in improved engagement and retention, and there's knowing that you're doing the right thing by your employees by creating a culture of opportunity."
New York City-based Citigroup recently announced that roughly 38,000 front-line consumer banking employees will be eligible for the debt-free education benefit, working in partnership with EdAssist by Bright Horizons. Other companies like Papa John's, McDonald's and T-Mobile are also partnering with EdAssist to offer no-cost degree and certification programs.
Many employers, including Chipotle, Discover, Hilton, Macy's, PepsiCo, Target and Walmart are using Guild Education's career opportunity platform.
In the last 12 months, over 5 million employees had access to Guild's platform, McCullough said. Learners have access to over 2,000 programs that have been curated from various education providers. The programs go beyond education and include career services and coaching to help chart career pathways for learners.
The degree programs at Western Governors University attracting the most attention from working adult learners are those that meet industry demand like information technology, cybersecurity and business management, Benbow said.
New Model Supports Better Results
The traditional employee tuition assistance benefit—where students pay in full upfront and are then reimbursed—has been around for decades, but user adoption has typically been low and only realistically available for professional workers.
"We've pioneered how workers can advance their education and careers by developing a modern form of traditional tuition reimbursement that removes the greatest barrier to entry for higher education—skyrocketing price tags for tuition," McCullough said. "The old model has the unintended consequence of restricting programs to higher earners."
Partnering with Guild, employers pay tuition directly to the higher education providers, who typically pay Guild as students progress.
"It's a more effective model, especially for low- and middle-income Americans who can't make the choice to front the money to go back to school or who have to put it on credit cards or take out debt," McCullough said.
"Cost remains a primary barrier for many Americans who want to pursue a college degree," said Lorraine Stomski, senior vice president of learning and leadership at Walmart.
She added that Walmart has saved employees $333 million in tuition costs since launching Live Better U, Walmart's education benefits program, in 2018. The company experienced a 66 percent increase in program enrollment since announcing a partnership with Guild in which Walmart would pay 100 percent of tuition, taxes, books and fees for workers.
"Live Better U is a key ingredient in Walmart's culture of opportunity and our broader workforce strategy to attract, retain and grow talent," Stomski said. "Approximately 1.5 million U.S. part- and full-time associates are eligible for the program on their first day of work at Walmart or Sam's Club."
Macy's launched a partnership with Guild earlier this year, after hearing from employees during the pandemic that they were interested in more career development opportunities, said Danielle Kirgan, executive vice president, chief transformation and human resources officer at the New York City-based retailer.
The company is offering its 90,000 employees a library of 118 debt-free education options, ranging from English as a second language programs and professional certifications to four-year college degrees.
"We blew away benchmarks around enrollment," she said. "It shows how big the need for career paths was."
Kirgan explained that offering the benefit is a significant financial investment. "We had to close our doors in 2020, and we lost billions of dollars. But we did a total awards investment analysis and decided that part of our recovery will be investing in our workforce. We believe that if we invest in upskilling, it will be paid back to us in return by great customer service, ongoing commitment and loyalty to the company, and the top engagement scores we have."
Detroit-based professional services firm Rocket Central had a traditional tuition reimbursement benefit, but participation was very low, said KimArie Yowell, the company's chief learning officer. "Financial barriers to education were too high, and the enrollment process was manual and tedious," she said.
The company also realized that software engineering roles were critical to the business and the need for these roles would increase. So Rocket Central partnered with Guild to co-create and launch Rock Academy, providing access to more than 200 educational courses ranging from certificates to master's degrees to its 30,000 employees.
To specifically fill software engineering roles, Rocket Central designed a program called DevBuild for any team member to become a qualified software engineer in 20 weeks.
Yowell said that over 1,000 employees have been accepted into different courses within the first year of Rock Academy's launch; there's been a 500 percent increase in participation since shifting away from tuition reimbursement; and a 95 percent placement rate for DevBuild participants among the organization.
The experience of Walmart employee Benny Ojeda is representative of thousands of workers at the company who are pursuing degrees and moving into new careers, Stomski said.
"An associate since 2016, Benny was most recently a licensed optician in one of our stores. After completing a degree in cybersecurity from Bellevue University, he's now a cybersecurity engineer."