To attract and retain workers in today’s tight labor market, the largest employers in the United States have turned to promoting college tuition and education benefits. In 2021, Amazon announced a plan to revamp its college benefit program, with perhaps the most impactful feature being that Amazon will directly pay its contracted education providers rather than requiring its employees to request a reimbursement after paying out of their own pockets. Amazon’s announcement follows on the heels of other large corporations announcing similar college access initiatives, including Target and Walmart. If done right, not only will these companies improve their employee retention, but also they potentially will benefit from a more educated, engaged, and productive workforce.
Historically, employee education benefit programs have been haphazardly administered. In typical programs, an employee is given a list of schools from which they can choose to attend and then receive a tuition reimbursement. This model presents a major barrier to access, especially for workers making minimum and near-minimum wages. Further, the lists that employers circulate may drive students to low-quality, predatory, and for-profit programs, because they create the impression that the schools have been validated or are valued by the employer.
Direct tuition payment programs like the ones recently offered by Amazon and Walmart are generally a net positive in the education benefit world, because they absolve the employee from the burden of having to pay up front for courses and then seek reimbursement. However, the role of middleman companies that act as agents between employers and schools in providing tuition benefit programs also raises questions about possible conflicts of interest, and what those conflicts may ultimately mean for employee-students.
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