Citi is the latest employer to offer free college to its workers

Why Americans are drowning in debt

In today’s job market, tuition assistance has become one of the more popular incentives companies use to attract and retain workers.

Now, some employers are going a step further with free college programs to provide even greater financial support.

related investment news

This little-known senior healthcare stock could rise more than 60%, says Goldman Sachs

CNBC Pro
This little-known senior healthcare stock could rise more than 60%, says Goldman Sachs

Most recently, Citi announced that it offers fully funded degrees from partner schools, including the University of Maryland Global Campus, Walden University and Western Governor’s University, as well as tuition assistance for undergraduate, graduate and certificate programs.

About 38,000 Citi frontline consumer banking employees will now be eligible for the expanded education program, including free college, according to the company, which is working in partnership with EdAssist by Bright Horizons.

More from Private Finance:
Companies are cutting back on parental leave benefits
Here are the ‘most employable’ university degrees
Citi expands program to increase homeownership

The goal “is to lower the financial barrier for our colleagues to secure a formal certification or degree, while strengthening Citi’s competitive advantage,” said Cameron Hedrick, chief learning officer at Citi — this “helps us do both.”

Among its clients, EdAssist has seen a 33% jump in the number of companies offering free education in 2022 alone, including employers such as McDonald’s, Synchrony, Raytheon Technologies and T-Mobile.

Other big names, including Amazon, Home Depot, Target, Walmart UPS, FedEx, Chipotle and Starbucks, also have programs to help defray the costs of going back to school. Waste Management will not only pay for college degrees and professional certificates for employees, but also offer the same benefit to their spouses and children.

Coming out of the pandemic, these types of benefits are playing a big role in the competition for talent, and as a result, more companies are offering opportunities to develop new skills, according to the Society for Human Resource Management’s latest employee benefits survey.

Now, nearly half, or 48%, of employers said they offer tuition assistance for undergraduate or graduate programs as a benefit.

Of course, employers paying for their employees to get a degree is nothing new. For decades, companies have picked up the tab for white-collar graduate studies and MBAs.

But many companies are now extending this benefit to front-line workers — such as drivers, cashiers and hourly workers — as well as heavily promoting the offer more than they have in the past.

For employers, training as a benefit is a cost-effective addition to core offerings, according to Jill Buban, a workplace training expert and general manager of EdAssist.

Developing talent in-house trumps headhunting

Chipotle CFO says debt-free degree is a way to invest in employees

“We’re seeing it change a little bit in how they think about attracting talent,” Buban said. Employers find “it’s much more cost-effective to upskill their current base,” she added, rather than “going out and trying to find workers.”

“For those who take advantage of this ‘no out-of-pocket’ training offering, the financial return is compelling and Citi will benefit greatly from their development of new skills,” said Citi’s Hedrick.

Chipotle Chief Financial Officer Jack Hartung told CNBC that employees who take advantage of the company’s free degrees are 3½ times more likely to stay with the company and seven times more likely to advance into management.

Not only does free or discounted higher education improve recruitment and retention, it also cuts down on student debt and promotes long-term employee well-being, experts say.

Despite a strong desire to go back to school, less than half of employees said they have been able to pursue educational goals in the past several years, mostly due to time commitment and financial obstacles, according to research from Bright Horizons.

The struggle is even greater among minority groups, Bright Horizons found.

To that point, 44% of black employees said they had trouble affording education, compared to 29% of white employees. There is a similar discrepancy among men and women. About 36% of working women report financial barriers to education, compared to 22% of men.

“There are still the constraints that all working adults have: time, the financial commitment and the confidence to go back into the classroom,” Buban said.

“These benefits can give it that extra boost – it can be a real game changer.”

Subscribe to CNBC on YouTube.

Leave a Reply

Your email address will not be published. Required fields are marked *