American employers like Walmart, Disney, Chipotle, among others, are turning into educators. At a time when Americans spend $30,000 per student per year on college, these companies are enabling and paying for their employees’ higher education. This desirable trend is the business pitch of a Denver-based startup, Guild Education, which mediates deals between companies and colleges to provide a learning platform to working adults. Founded in 2015, the startup raised a $40M Series C round led by Felicis ventures in July 2018.
Chipotle Mexican Grill, for instance, has unveiled a program in collaboration with Guild Education where after their first year, employees would be eligible to receive up to $5,250 per year toward their education. They could use this benefit to receive a high school diploma, a bachelor’s degree in courses like business, or attend language classes. Oscar Barca, manager at a Chipotle restaurant, has been one of the beneficiaries. He was 16 years old when he moved to the U.S. and while he worked his way up, he couldn’t afford to go to a university. Thankful for Chipotle’s support, he says, he can now show his wife and daughter that “success is possible if you put your mind to it”.
Lifelong Learning and No Debt
In the past, large employers have provided financial assistance to their staff members who want to study. This has involved a reimbursement up to the federal tax-exempt maximum of $5,250 a year—the same amount Chipotle is offering its employees. But others like Discover and Walmart claim to foot the entire bill. If the employee is getting a degree in supply-chain management or business at one of the universities Guild Education has partnered Walmart with, the organization will cover the cost of tuition, books and fees, asking employees to spend as little as $1 a day during the course of their education.
Another such company is a direct banking and payment services firm, Discover. Nearly 90% of the Discover employees who work in the company’s customer care centers are without a post-secondary degree. Across the country, about 10% of the U.S. population is without a high school diploma and the rate of attainment for a bachelor’s degree or higher is approximately 34%, as opposed to 55% in Asians.
Discover’s college commitment program, then, offers a life-changing opportunity to its people while doubling as a smart strategy to impress and retain them. “Obviously I’d like to keep as many employees as possible here, but if this program helps some employees graduate college and go on to have a bright future career elsewhere, God bless them. That’s an awesome downside to have,” Jon Kaplan, Discover’s vice president of training and development has said.
Work While Studying
In 2015, Rachel Carlson and Brittany Stich founded Guild Education to help people gain an education through their employer’s tuition benefits, “leading to increased employee satisfaction, and improved retention for employers.” Co-founder and CEO Carlson believes that “College-Business Partnerships Can Solve The Higher Education Affordability Crisis” in the US. She is right. College unaffordability is at an all-time high as is the struggle for companies to attract and retain workers. As the unemployment rate in the U.S. is at a two-decade low and the number of open jobs in retail — 723,000 as of March — has continued to grow, employers need to look at innovative ways to add real value to the employee’s experience. The question they are asking is, would an employee leave if we were paying for their college education?
This is also why most organizations that partner with Guild offer employees opportunities to gain expertise in those fields that are a need for their business. But the central message of Guild’s early success is that if employees are fearing technology and are conscious that jobs today require evolving skills, employers too are fearful about not finding skilled workers. “Employers are investing in degree-seeking employees,” Carson argues, “because they know that education as a benefit leads to better employee retention: the Lumina Foundation found that spending on education assistance provided employers a positive ROI of 129%-144%, due in part to increased retention.”
The genius of Guild Education also lies in the awareness that if employers are conceding that education could be a benefit provided like healthcare, colleges too must understand that if everything is at your fingertips, so can be education. Colleges face a retention problem as well. Carson has pointed out that a Guild enabled Starbucks, Arizona State University partnership has shown a higher retention rate for ASU than ASU’s population overall. This reinforces what is being called a key education trend: “Moving fluidly between working and learning, without having to take time off to go to – or back to – school will become non-negotiable.”
A business triad for Guild Education
It’s likely that Guild earns through both the college and the organization. It has been reported that, “To secure new corporate partners, Brandman (University) pays an undisclosed fee to Guild Education”, whereas Guild’s offering of personal assistance to employees would come at a cost too. Guild’s competition, however, are the proliferating online learning platforms and the fact that organizations can choose any for their employees. But they might not be able to broker affordable rates as Guild claims to.
Still, companies’ willingness to pay is reflected by the dollars they are pledging. Disney, for instance, has promised to spend $50M on its employees’ educations by mid-2019 and $25M a year after that. Employees, too, are becoming increasingly vocal in demanding educational perks. Frank Tucker, who leads the human resource management teams for Taco Bell (another Guild client) says, “When we surveyed our Taco Bell employees, education support was one of the top three things they wanted.”
The utility of a model where employers and colleges pay to attract and retain employees and students is obvious; but many, conscious of long work hours and poor pay, advice caution. David Weil, dean at Brandeis University’s Heller School of Social Policy and Management, calls it ‘strategic’ but not ‘generous’. Still, for many, it’s a chance to get that much-coveted college degree.
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