Low-Cost Option for Working Adults

With support from big-city mayors in California, for-profit college offers working adults with employer-paid tuition aid a college option with no out-of-pocket costs.

December 17, 2012

By forgoing federal financial aid and awarding credits to students based on the skills and knowledge they prove they have mastered rather than the amount of time they spend in courses, UniversityNow is trying to redefine what it means to be a for-profit university. And as its latest innovation proves, it is continuing to win friends in high places -- notably in government.

The company announced last week that its two institutions -- the fully online New Charter University and Patten University, the formerly nonprofit California institution that it took over last summer -- would provide an online education at no out-of-pocket cost to workers in three California cities whose employers provide them with tuition assistance reimbursement funds.

Under the plan, which the mayors of San Francisco, Oakland and Sacramento endorsed for municipal workers who receive tuition assistance from the cities' own programs, UniversityNow will cap annual tuition for workers at the amount their companies (or organizations or cities) pay annually in tuition assistance. For some companies, that's $5,250, which is the federal limit that a worker can receive without paying taxes on the benefit.

But many smaller companies and nonprofit entities provide much less -- the city of Sacramento provides $1,500, for instance, says Gene Wade, CEO of UniversityNow -- and for those employees, New Charter and Patten will significantly discount the roughly $4,000 cost of a year's worth of courses.

Wade estimates that there are several hundred thousand working adults in the Northern California region who may be eligible for employer-paid college assistance, and that some meaningful number of them are either taking out loans to supplement their employer-paid assistance or not getting an education at all now, in some cases because they don't believe their employer-paid assistance will cover enough of their tuitions. Under this arrangement, he said, they won't pay anything out of pocket.

"They just got a ticket to college -- it's free now," he said.

In addition to urging their own cities' employees to take advantage of the UniversityNow option, the mayors of the three Bay Area cities are expected to encourage local employers to get more education for their workers. With some of California's public colleges having limited their enrollments in recent years because of budget cuts -- and with the City College of San Francisco facing serious financial and accreditation problems -- the mayors see the low-cost for-profit option as a legitimate alternative.

"Due to cutbacks in public higher education funding, earning a college degree is out of reach for many working adults," Kevin Johnson, Sacramento's mayor, said in a news release. "I am excited that UniversityNow can offer Sacramento City residents and workers access to its quality online degree programs, cutting-edge learning platform and committed faculty -- at no cost to the student."

Kind words like that have been hard to come by for many for-profit colleges in recent years, but that may be changing with what might be described as a new breed of commercial institutions that have very low tuitions and in many cases are not dependent on public dollars, as is the case with UniversityNow. When the company announced in September that it would make its courses available at a price equivalent to the state's community colleges, given their capacity problems, it elicited praise from someone who is widely seen as a harsh critic of for-profit colleges: Robert Shireman.

"If the community colleges aren't going to get creative in this crisis in figuring out how to serve the students who need courses and training, we need others stepping in to fill the gap in a way that doesn't put the students into the poorhouse," said Shireman, who led the U.S. Education Department's 2010 crackdown on for-profit colleges and now runs California Competes, a nonprofit advocacy group. "Those who don't like this solution had better find something else besides wishing for billions in new tax revenue."


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