What’s Next: Will the pandemic dampen interest in tuition benefit programs?

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.

But she doesn’t expect Chipotle will cut the benefit, saying it’s still a good way to attract and retain talent. The company has rolled out a host of other benefits in the last year, including mental and financial wellness services.

Disney said its Aspire education benefit will remain available to participants who are furloughed. The company has reportedly furloughed some 100,000 workers as the pandemic ground the tourism industry to a halt.

Even if employers continue to offer tuition benefits, the crisis may dampen employees’ interest. 

At Thomas Edison State University, a public institution in New Jersey focused on adult learners, signups are down in fields such as ground transportation and logistics, said Dennis Devery, vice president for enrollment management. The drop-off is similar to what officials see around the year-end holidays, when prospective students are extra busy at work. Healthcare programs are experiencing similar declines. 

Frontline retail and food service workers who are the targets of other tuition benefit programs have a lot on their plates, too. For that group, “college is going to be a lot of time and a lot of effort and energy in the best of times,” Lumina’s Glover said.

Shift in demand

The programs in demand during tough economic times will likely be different from those sought after when the economy is roaring, said Gary Brahm, chancellor and CEO of Brandman University, an online college focused on adult learners.

In particular, embedded certificates could attract students in a down market by helping to quickly prepare them for specific occupations on their way to a degree. “We think that’s going to be popular in the current situation,” he said. The university is planning to launch several graduate and undergraduate certificates this fall, some of which will be part of degree programs.

Shorter and less-expensive programs could also garner interest, Lumina’s Glover said, particularly for regional campuses, community colleges and nondegree credential providers.

A shift in this direction was underway before the pandemic. Several employers told Education Dive last fall that they were considering or had begun offering coverage for shorter-term programs.

Last March, Chipotle expanded its tuition assistance program to cover job-related certifications and training, high school completion programs and English language classes. Previously, they could use it for a range of degrees and certain exam prep courses.

Program launches affected

Whether the crisis will stall new education benefit programs is another question. 

Shawn Hulsizer, vice president of the Product Lab at the Council for Adult and Experiential Learning, expects companies will continue to offer tuition benefits, citing their role in finding and developing talent. “I don’t see COVID stopping progress, nor do I really see it accelerating investment,” she said.

Brahm said the companies Brandman works with haven’t pulled back on their programs yet, and he hasn’t seen a significant number of students lose eligibility as a result of the economic crisis. However, he notes, the situation could discourage some companies from starting new programs.

Even if some combination of that happens, he doesn’t expect demand will evaporate. Instead, the number of students coming to the institution directly because of the high unemployment rate and higher ed’s counter-cyclical enrollment trend will increase, he predicts, balancing out the difference. 

Recent research suggests people who lose their jobs in the current crisis may find their way to college. Around a third of respondents to Strada Education Network’s weekly poll, which captures responses from more than 7,000 adults in the U.S., said if they lost their job they would need more education to get a new one. 

Mark Rudnick, vice president of academic partnerships at Guild, a company that helps employers provide education benefits through colleges, including Brandman, is starting to see companies looking for ways to offer skills-training programs to workers who have been furloughed or laid off. Short-term retraining programs will also likely crop up, he said in an email.

Brahm is cautious, though. “The speed of the change in the environment leads you to believe that you want to carefully monitor things to make sure this cycle and the patterns of returning students will be similar to prior cycles,” he said.