How Does Industry-Run Education Work?

By Yolander Prinzel | December 08, 2011 AAA
How Does Industry-Run Education Work?

According to the Department of Labor, 68.1% of new high-school graduates were enrolled in a college or university in 2010. That breaks down to roughly 2.2 million new college students attending public and private institutions in 2010. This number likely doesn't include the number of students enrolled in an industry-run college which focuses on training students to be better, high-level employees of their current employer.

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For a recent high-school graduate, choosing between educational institutions can be difficult. After all, which institution's educational approach and reputation creates enough post-graduation opportunities to completely justify the time, expense and debt incurred upon attending?

Exploring Corporate Classrooms
Many businesses, from the financial sector to the fast food industry, have set up corporate-run, unaccredited, proprietary universities to provide a post-secondary education focused solely on the needs and concerns of the sponsoring business and its industry. Perhaps the most well-known example of this is Hamburger University, the corporate program developed by fast food restaurant McDonald's, in 1961. It's estimated that this program graduates about 5,000 employees every year, allowing them to move forward into careers as managers and franchise owners.

These industry-run colleges have no tuition fees, because this is an investment in current employees that will help create the future of the company. However, their educational focus is so narrow that if the student decides to leave the company, he or she may find that his or her corporate college education has little or no value to another employer. For older students who feel committed to their employers and are looking for a free way to invest time in their careers and get a return, these classrooms could be the perfect solution. However, new, young employees without enough work experience to be certain about their commitment to their current employer, may want instead to put their time into a traditional college experience.

Public or Private?
The average annual cost for a four-year education at a public university during the 2007-2008 school year, was just under $20,000. The cost per year for a private, non-profit university during the same period was $35,000. That difference of $17,000 per year could equal a startling $68,000 in student loan debt by the time the student graduates. Some of the other differences between the two include:

  • Private universities often have smaller class sizes and more opportunities for one-on-one attention.
  • In addition to being less expensive, public universities may be easier to get into than a private institution.
  • Private schools may have a far-reaching reputation for having very well-educated students.

The Jobs
Generally, people assume that the cost of a college education, and the interest charged against student loan debt over the years, is worth the higher income you can earn as a college graduate. However, what is the average income that college graduates from public, private and corporate-run universities are receiving?

It's estimated that a McDonald's store manager makes about $27,000 per year. It's important to note that this is made without the burden of student loan payments. However, Hamburger U isn't the only corporate college out there, so while we can't give an accurate range across multiple industries, it's a valid option to consider. Hamburger U graduates who go on to become franchise owners, face a big commitment in terms of licensing and franchise purchases, but stand to make a few hundred thousand per year.

Across the board, 2011 college graduates have seen an average salary of $50,034 upon graduation. While Pay scale.com lists the average salary offered to graduates of both private and public universities, there seems to be no data giving an average for these groups, exclusive of each other. Instead, it looks as though the field the graduate went into after graduation, was of a bigger influence on pay than the school they attended.

It's important to note that this information leaves out many other options available to would-be students, such as technical schools, trade schools, career programs, such as nursing, and two-year education options.

The Bottom Line
There are both tangible and intangible benefits to attending one college over another, but when considering the economics of your education, it may be more important to look at the field you want to enter, its average pay and your likelihood of getting a job after graduation. Once you do that, you will have a better handle on whether or not the amount of student loan debt you need to attend a certain school is worth it. (For more on post-secondary, read Investing In Your Child's Education, Invest In Yourself With A College Education, and 5 Ways To Fund A College Education.)


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