Amazon to Use Free College as a Recruiting Tool

by: Trace Urdan | Blog |Oct 14th, 2021

A higher education state system administrator recently told us that employer partnerships are like flossing: valuable sure, but tedious and sometimes painful, and not nearly as prevalent as often claimed. Yet from Starbucks to Walmart to Amazon they are an increasingly prominent part of the higher education landscape and public institutions in particular given their broad missions must reckon with how they will serve and support this new class of student and new category of sponsor. Not unlike the decision about how to best serve online students, one meaningful aspect of that decision is whether to work with a private sector partner.

In their purest form employer partnerships may involve custom programming and can include both credit-bearing and non-credit-bearing courses to suit the needs of specific employers. Historically these arrangements have been developed most assiduously by community colleges and for-profit institutions highly focused on employment outcomes. But among research-oriented, four-year institutions they have been far less common. Entrenched silos between continuing education and traditional degree programs and consensus-based decision making around course development and enrollment among the latter have been contributing factors to this lag.

Nevertheless, their importance seems to be growing. As large publics have embraced serving non-traditional and working adult students as central to their missions, and as employers in a tight labor market have increasingly embraced education as a benefit to improve the recruitment and retention of employees, including non-exempt workers, the pressure from both sides to improve points of connection has increased.

This trend has been building for several years, beginning with the headline grabbing announcement by Starbucks in 2014 that it would provide free tuition to all its associates for online undergraduate degree programs from Arizona State (ASU) to last month’s announcement that Amazon will cover the cost of tuition and books for staff pursuing bachelor’s degrees at various universities nationwide. The online retailer’s hourly employees will be eligible for the new perk after 90 days on the job and the program could impact as many as 750,000 U.S.-based employees.

Several private service providers have jumped in to support, and arguably accelerate, this trend. Bright Horizons, which is the leading provider of childcare as a benefit, has expanded into other areas and works to match employers with schools through its EdAssist offering. And from the initial Starbucks relationship and a handful of others, ASU incubated InStride to aid institutions creating their own, similar types of arrangements. But the 800-pound (or rather $3.75 billion) gorilla in the space is Guild Education which boasts high profile relationships with Walmart, Target, Chipotle, and Waste Management.

Recently, Walmart’s Guild-developed program dropped the University of Florida from its roster, citing a low rate of admission, (46% of Walmart applications were admitted according to UF), and raising questions of whether employers together with Guild might be exerting too much influence on institutional admissions. For its part, UF quickly announced its own program Gator Pathways and insisted that focusing on local Florida employers, without an intermediary, would lead to better results for all involved. It will also allow UF to focus on extending employer sponsorship to middle market employers.

But despite questions about these programs, one recent report sponsored by the Lumina Foundation, indicated that Walmart’s student employees have been well served by the program. The study indicated that hourly employees participating in the program, which began in 2018, were less likely to leave the company and more likely to receive promotions than other employees across both gender and racial lines. Among program participants, black hourly employees were 88% more likely to receive promotions relative to their peers, while Latinx employees were 71% more likely and white participants were 80% more likely. Among all the program participants in the study, 17% received promotions. The study did not address any discrepancies between the different institutions in which the students were enrolled. Nor did it comment on the relative success of the student support strategies provided by Guild.

In speaking with institutions, we hear a range of reactions to this burgeoning new phenomenon of large employer-sponsored tuition programs. The new revenue streams remain exciting in an environment where resources are perennially scarce, but school administrators are divided about the cost-value benefits of intermediaries. On the one hand, the partners handle what for most large schools is the flossing: reaching out and negotiating with employers. On the other hand, most also acknowledge that these skills are important to develop internally and that the future of higher education requires better communication with employers to continue to deliver on the promised ROI of higher education. If you would like to discuss your own institution’s approach to employer partnerships, we are at your disposal.

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