'A real game changer' — Citi is the latest employer to offer workers a free college degree

In today’s job market, tuition assistance has become one of the more popular incentives companies are using to attract and keep workers.

Now, some employers are going a step further, with free college programs to provide even greater financial support.

Most recently, Citi announced it is offering fully funded degrees from partner schools, including the University of Maryland Global Campus, Walden University and Western Governors University, as well as tuition assistance for bachelor’s, graduate and certificate programs at other schools.

Roughly 38,000 Citi front-line consumer banking employees will now be eligible for the expanded education benefits program, including free college, according to the company, which is working in partnership with EdAssist by Bright Horizons.

More from Personal Finance:
Companies are slashing parental leave benefits
Here are the ‘most employable’ college degrees
Citi expands program to boost homeownership

The goal “is to lower the economic barrier for our colleagues to secure a formal certification or degree, while strengthening Citi’s competitive advantage,” said Cameron Hedrick, the chief learning officer at Citi — this “helps us do both.”

Among its clients, EdAssist has seen a 33% jump in the number of companies offering no-cost degree programs in 2022 alone, including employers such as McDonald’s, Synchrony, Raytheon Technologies and T-Mobile.

Other big names, including Amazon, Home Depot, Target, Walmart, UPS, FedEx, Chipotle and Starbucks, also have programs that help cover the cost of going back to school. Waste Management will not only pay for college degrees and professional certificates for employees but also offers this same benefit to their spouses and children.

Coming out of the pandemic, these types of benefits play a big part in the competition for talent and, as a result, more companies are offering opportunities to develop new skills, according to the Society for Human Resource Management’s recent employee benefits survey. 

Now, nearly half, or 48%, of employers said they offer undergraduate or graduate tuition assistance as a benefit.

Of course, employers paying for their employees to get a degree is not new. For decades, businesses have picked up the tab for white-collar workers’ graduate studies and MBAs.

However, many companies are now extending this benefit to front-line workers — such as drivers, cashiers and hourly employees — as well as heavily promoting the offering more than they have before.

For employers, education-as-a-benefit is a cost-effective addition to core offerings, according to Jill Buban, a workplace education expert and general manager of EdAssist.

“We’re seeing it shift a little in how they are thinking about attracting talent,” Buban said. Employers are finding “it is a lot more cost-efficient to upskill their current base,” she added, rather “than going out and trying to find workers.”

“For those who take advantage of this ‘no out-of-pocket’ education offering, the financial return is compelling, and Citi will benefit greatly from their development of new skills,” Citi’s Hedrick said.

Chipotle Chief Financial Officer Jack Hartung told CNBC that employees who take advantage of the company’s free degrees are 3½ times more likely to stay with the company and seven times more likely to move up into management.

Not only does free or discounted higher education improve recruitment and retention, it also cuts down on student debt while advancing the long-term well-being of employees, experts say.

Despite the advantages and what research shows is a strong desire among respondents to go back to school, less than half of employees said they have been able to pursue educational goals in the last several years, mostly due to the time commitment and financial obstacles, according to research by Bright Horizons.

The struggle is even greater among minority groups, Bright Horizons found.

To that point, 44% of Black employees said they are having trouble affording education, compared with 29% of white employees. There’s a similar discrepancy among men and women. Roughly 36% of working women report financial barriers to education, compared with 22% of men.

“There are still the constraints that all working adults have: time, the financial commitment and having the confidence to go back to the classroom,” Buban said.

“These benefits can give that extra boost — that can be a real game changer.”

Correction: This article has been updated to reflect the correct spelling of Western Governors University.

Subscribe to CNBC on YouTube.