It’s not easy to persuade employers to invest in sending someone to school, knowing the person could use the new skills to leave for a better job.
It’s not easy to persuade someone to set aside money for school when the person’s paycheck already is stretched thin.
Yet, pilot programs encouraging this type of joint investment are popping up from Maine to California. Employers contribute matching dollars to Lifelong Learning Accounts, portable, interest-bearing accounts similar to 401(k)’s, with sometimes life-changing results.
A 40-year-old waiter at Chicago’s Rhapsody restaurant used his account to study addiction counseling and graduated magna cum laude this month from Loyola University Chicago’s School of Social Work. He starts graduate school at Loyola next week.
A 35-year-old heavy-equipment operator for the City of Ft. Wayne, Ind., is four credits away from his associate degree in construction management, an achievement the father of three hopes will qualify him for supervisory jobs.
A 44-year-old employee at the University of California at San Francisco was promoted three times, boosting her salary 60 percent, after earning certificates in English and human resources management.
“It changed my life, to be honest with you,” said Fanni Munoz, who immigrated with her family from Peru 10 years ago. “It was the opportunity I was looking for, and I really took advantage of it.”
Now, lawmakers are being urged to pass the U.S. Lifelong Learning Accounts Act, which would encourage participation by offering federal tax advantages.
Currently, workers can deduct education and training expenses that directly relate to their jobs, but they can’t deduct expenses to prepare for new careers. And there is no tax credit for employer contributions.
“401(k)’s have clearly revolutionized the way that workers save for their retirement,” U.S. Rep. Rahm Emanuel (D-Ill.) said last week when introducing the bill. “Lifelong Learning Accounts will hopefully revolutionize the way that workers invest in their education and training.”
Among the bill’s backers is IBM, which will offer learning accounts to its U.S. workers starting July 1. The company is among the first to offer portable, employee-directed educational savings plans.
Employees with at least five years of service can contribute up to $1,000 a year to an interest-bearing account, and IBM will match 50 cents per dollar.
Futurists predict the youngest generation of workers will change careers as many as 10 times during their working lives. Some financial planners urge clients to plan for their inevitable career makeovers by setting up savings accounts. Some people use tax-deferred Section 529 college tuition savings plans, naming themselves rather than their children as beneficiaries.
Lifelong Learning Accounts were pioneered with foundation backing starting in 2000 by the Chicago-based Council for Adult & Experiential Learning. New pilots are under way around the country with state backing.
Initially, the programs concentrated on helping lower-paid workers in industries where turnover is high or labor is scarce.
“I had a restaurant owner say, ‘This costs less money than recruiting a replacement worker,'” said Amy Sherman, the council’s associate vice president for policy alliances. “It increases morale and good will. I’m giving a message that I care about your future.”
Even lower-wage workers managed to contribute during the early pilots in Illinois, Northeast Indiana and San Francisco. Their contributions of up to $500 annually were matched dollar for dollar by employers. Foundations and other donors boosted the total match to $3 or $4 for every $1 employees contributed.
An enticing 4-1 match was the impetus that drove Nate Thompson, the heavy-equipment operator in Ft. Wayne back to school. “I’d been thinking about it probably close to 10 years,” the high school graduate said.
He enrolled in a construction management program in fall 2005, attending classes from 6 p.m. to 10 p.m. every weeknight.
“It was really exciting getting back in school and realizing you can still do math and put your brain to work doing applied science,” he said. Paul Kelvington, the waiter at Rhapsody, used his account to attend Harold Washington College, where he made the dean’s list and won a scholarship to finish his bachelor’s degree at Loyola.
“It still hasn’t sunk in yet that I have a degree,” he said. “I can remember in 2003, sitting in my little studio apartment, looking at this Harold Washington student ID, and I hadn’t cracked a book since I was 19.”
He and his wife, Alison, had a son, Will, now 17 months, and he continued working four shifts a week at Rhapsody while going to school. Even with financial assistance, he figures his student loans will total more than $100,000 by the time he completes his master’s degree, but he has no regrets.
“It’s like the whole world is right in front of me,” he said. “I would not have done it had it not been for [the program]. It’s one of the single-most life-changing things that’s ever been presented to me.”
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berose@tribune.com
