Middle class, minus debt: Apprenticeships, certificates offer low-cost option to college
- President Biden weighs canceling student debt ahead of the end of the repayment pause on Aug 31.
- As he continues to mull his options, others are forging a future with little to no student debt.
- They've found a path into companies and the middle class via apprenticeships and certifications.
No one knows what President Joe Biden will decide when student debt repayments are set to resume on Sept. 1, but for some people, it won’t matter. They’re already forging toward a future with little to no student debt to haggle over.
As an alternative to college, they’ve found organizations like nonprofit Merit America to learn skills or companies like Multiverse to help them find apprenticeships. Apprenticeships are meant to teach people skills they need for work without incurring a mountain of debt.
“It changed my life," said Halid Hamadi, who racked up $100,000 in debt studying economics at Penn State University and doesn’t even have a degree to show for it because he couldn’t get a loan to cover his final semester of college. He tried to find a way to finish college, working a myriad of jobs – Subway, Jimmy John's and as a bar and restaurant bouncer.
These aren't just blue-collar jobs
But he finally returned home to Maryland feeling dejected. “It wasn’t a great situation,” he said. “I came home. I had no plan. I was just trying to make it to the next day.”
That was when he stumbled upon Merit America while looking at the job site Indeed.com, he said. From there, things moved quickly, with a video interview about himself and why he was interested in the program, his acceptance, and then starting on his career path to now being an integration engineer.
One of the biggest misconceptions about these programs is that they’re only for people interested in trade jobs like plumber, chef, mechanic or construction worker. But it’s more than that. It’s also for software engineers, marketing specialists, data analysts, web developers, project managers and many more roles.
Though programs may differ slightly, they basically work the same way. Once candidates are accepted, they are paired with a counselor or mentor they can lean on for help who can help them through technical certifications and job hunts or find an appropriate apprenticeship, some of which are paid. That’s often supplemented by courses.
At places like Merit America or Multiverse, no money ever changes hands up front, not even for the application. Merit America learners might pay back for a limited time a small, set monthly payment, but only if their salaries meet certain thresholds. Otherwise, they pay nothing. People whose salaries leaving the program meet the salary requirement usually pay around $100 monthly, much less than what college would cost, to fund the next round of learners.
Multiverse is completely free.
Extinguishing debt:Dartmouth College eliminating loans from its financial aid packages
Companies and youth increasingly question value of college
While educators believe they’re doing well preparing their students for work, youths and companies are less impressed.
Forty-two percent of employers and 45% of youth believed new graduates were adequately prepared for entry-level jobs compared with 72% of education providers, according to a 2013 global study by McKinsey.
“The education-to-employment system fails for most employers and young people,” it said. “Examples of positive outcomes in education to employment are the exception rather than the rule.”
That’s leading more people to question the value of a college education, especially in the face of soaring costs. A recent Gallup poll showed that 46% of parents said they would prefer their child pursue something other than a bachelor’s degree, and more than one-third cited finances as an obstacle. Meanwhile, just 56% of adults under age 30 who went to college said the benefits of their education outweighed the costs, according to a Federal Reserve study released last month.
Retirement over college:I'm prioritizing my retirement savings over my son's college fund. Here's why.
What's being done to bridge the gap?
Dissatisfaction all around has given rise to what some call a “parallel higher education system” in which employers develop their own curricula and expand their credential offerings to the public instead of training their own employees or providing tuition assistance programs to send staff members to higher education.
IBM, for example, had awarded 3.7 million credentials as of March 2021, growing at a 61% pace from 2019 to 2020, according to National Student Clearinghouse CEO Rick Torres.
In February, Google announced a $100 million Google Career Certificates Fund to support nonprofits helping youth access skills-based training and supportive services. Google estimates 70,000 Americans have completed these certificates, which are available to anyone, no college degree required.
People in apprenticeships or who already have jobs but want to update their skills also take these courses.
These programs are becoming such a large part of the education system that Rick Torres, CEO of the National Student Clearinghouse, says “sectors within the higher education community will evolve. Schools are beginning to weave workforce credentials into their short form and traditional education, certificates and degrees. This trend will continue into the future.”
Getting pay raises quickly
After earning Google certificates, 75% of students report seeing a positive impact on their career within six months, including a raise or a new job, Google said.
“In the world of tech, there are so many people skipping college and going to companies for immersive courses that are 10 to 15 weeks,” said Gregg Walrod, engineering manager at Aclaimant, which helps companies automate their claims processes. Walrod, himself, is one of these people.
Bored with school, he dropped out of traditional high school for homeschooling, worked on the floor of Best Buy and slowly climbed the corporate ladder at Best Buy to manage Geek Squad in China. Other stints included head of software engineering at Nerdery and senior manager of engineering operations at Inspire11. Throughout his career, he’s taken certificate boot camp classes to continually update his skills and allow him to keep moving up the ranks.
“College has its place, and there are people like my sister who needed that structure,” he said. “But for others, college isn’t their thing.” He acknowledges though that to succeed, you need to be self-motivated and disciplined.
For Walrod, it was worth it. “In my 20s, I was able to take two- to three-week trips to Europe because I had no debt and a good job,” he said.
College worries:Top concerns when paying for college in 2022
Failing colleges?:More students want to skip college. Are schools prepared to help them?
Winning outcomes for companies, people and diversity
“The challenges are that businesses are struggling to get what they need, and college in its current form is incredibly expensive and not delivering a return for people who go and isn’t creating a more diverse workforce,” said Sophie Ruddock, vice president and general manager of Multiverse North America.
Those are all issues these programs aim to address. By giving people skills they can immediately use at their jobs helps companies cut training costs.
“Even if you’re a college grad, if you’re not learning the latest and greatest, then unfortunately, it can take a year or so to train you,” Walrod said. “We need someone who's self-sufficient. Someone else might have taken an online class in the last three months with something that’s more advanced.” That’s why his job listings don’t require a degree, he says.
Because the programs cost much less than traditional college and have a flexible learning schedule, they’re also great equalizers for people. They serve many lower-income people, women, people of color and low-wage workers looking for a career change or an alternative path to middle class.
Enterprising apprentices:Nursing homes can't find caregivers. Sending nursing assistants back to school could help
“College is so entwined with the American dream in the U.S., a source of pride and a badge of honor that it’s a source of shame if you don’t have a degree,” said Connor Diemand-Yauman, co-CEO of Merit America. “It’s degree discrimination and marginalizing 53 million Americans.”
A Brookings report in 2019 said more than 53 million Americans earn low hourly wages and noted that people without college degrees make up most of the low-wage workforce as well as the total labor force.
Because of the lower costs, the government could also help so many more people, said Walrod, who also mentors people interested in advancing in the tech industry. “The city can’t afford grants to send people to four-year colleges, but they can probably afford grants to send disadvantaged kids to a four-week or so camp.”
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at email@example.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.