The list of large employers hoping to attract and retain workers with a free college education continues to grow. Amazon will begin helping its employees pay for bachelor's degrees starting in 2022.
More than 750,000 hourly employees, including those who work part-time, will be eligible for the e-commerce company's expanded educational benefits, which previously focused on certificate programs and associate degrees. Employees can soon receive up to $5,250 a year to cover tuition and other eligible expenses for a wide range of educational programs, including bachelor's degrees and GEDs, with no lifetime maximum.
Amazon employees have to choose from an approved list of programs in high-demand areas. The company is still determining the full list, and it may vary based on local labor market needs, but in the past, programs in the fields of mechanics, information technology and healthcare have all been included.
The tuition benefits, alongside new skills training programs, will cost Amazon $1.2 billion by 2025, according to a press release from the company. Amazon's announcement follows similar ones in the past month from Walmart, Amazon's largest competitor, and Target, as companies compete to fill job postings in a wildly competitive hiring market.
Amazon started Career Choice, its education benefits program, in 2012. About 50,000 employees have participated in the program, which currently covers 95% of the tuition and fees for certificate and associate degree programs in high-demand occupations, including aircraft mechanics, commercial trucking and nursing.
"We launched Career Choice almost ten years ago to help remove the biggest barriers to continuing education — time and money — and we are now expanding it even further to pay full tuition and add several new fields of study,” Dave Clark, CEO of Worldwide Consumer at Amazon, said in the release.
"Free" college for Amazon workers
Starting in January, employees will be able to access the benefits after working for the company for three months, instead of the current wait period of one year. In addition to covering bachelor's degrees, the program will cover courses for high school diplomas, GEDs and English as a Second Language (ESL) proficiency certifications.
The company will pay the costs for tuition, fees and books upfront, and employees who leave in the middle of a program will not be required to reimburse the company. Part-time employees will have 50% of their costs covered.
While Amazon is pitching the program as covering "full college tuition," the annual maximum of $5,250 may limit how many courses employees can take without having to pay out of their own pockets. The median charge for part-time students at four-year public colleges in 2020 was about $275 per credit hour, or $825 for a typical three-credit course, according to federal education data. (Credit hour prices at community colleges tend to be lower; at private colleges, they are often much higher.)
That means Amazon employees could enroll in about six courses a year at a four-year public school before hitting the maximum. It takes 120 credit hours, or about 40 courses, to complete a bachelor's degree.
More companies paying for college for workers
There's been a wave of companies announcing new or expanded college benefits for employees in 2021. Alongside Walmart and Target, Waste Management launched a free college degree program this year, and Chipotle expanded its debt-free college program to include new fields of study.
But corporate tuition benefits have long been available. Historically, those benefits have topped out around $5,250 a year, based on a tax rule that allows that amount of education assistance to be tax-free for employers and employees. Employees could typically use that money at any accredited college in the U.S.
In the past seven years, though, companies ranging from Starbucks to T-Mobile have introduced new versions of this older benefit in which they partner directly with specific colleges, often through a third party, to cover all or most of the tuition costs for their employees. (Amazon says it will work with hundreds of education partners across the country to offer employees postsecondary education, though it hasn't released a list of the approved partners.)
Most of these free tuition programs offered by employers cover only online degrees, but Amazon has built more than 100 classrooms at its fulfillment centers around the country and says that employees will have some in-person classes available.