Economic Perspective: Some Employers Helping With College Costs

MARY WALDEN:

“Today’s program looks at employers helping with college costs. Mike, there are reports of more companies helping pay college costs for their employees going back to school. Is this a new trend? And if so, why is it happening?”

MIKE WALDEN:

“It’s not a new trend, but it has a new face. What’s been happening in the past is, yes, companies have helped some of their employees go back to school and get advanced degrees. But the employee generally had to pay those college costs initially, and then maybe their business would reimburse them later.”

“What’s happening now is there are some companies out there who are saying they’re going to put the money up front. They’re going to actually go ahead and pay some of the college expenses for their employees. That’s obviously a much better deal because then the employee doesn’t have to worry about getting as much money on their own for college.”

“And I think there are two factors that’s motivating these changes. Number one: Past education in many fields is becoming quickly outdated. So companies benefit when their employees go back and get up to date knowledge.”

“And then number two: We have a very tight labor market today, especially with people with advanced training, and business want to keep their better workers. And I think they’re seeing this as a way to actually get a twofer; keep the better workers and actually keep them with more updated skills. So it’s a win-win for both the employer and the employee”

“So if you’re someone working for a company, and if you feel as if you want to go back to school and get another degree or get updated in your skills, talk to your company. They may very well be willing to foot the bill upfront.”

Mike Walden is a William Neal Reynolds Distinguished Professor and Extension Economist in the Department of Agricultural and Resource Economics at North Carolina State University who teaches and writes on personal finance, economic outlook and public policy.