The Opportunity Cost of Internships for Your College Student

Students and new graduates will soon inundate workplaces for summer internships. In addition to a college education, internships provide practical work experience, help to ease the transition from being a student to entering the workforce, and are essential for future graduates to stand out in a tough job market.

In fact, employers cited internship experience as a more important factor than GPA when evaluating a recent graduate for employment, according to a survey conducted by The Chronicle of Higher Education and the American Public Media’s Marketplace.

If your student is looking to increase their knowledge and pad their resume with an internship, there are several important educational, legal, and financial factors both student and parent should consider.


Paid vs. Unpaid Internships

The National Association of Colleges and Employers (NACE) 2013 Student Survey found that 63.2 percent of the class of 2013 had an internship or co-op during their time in college. Among the class of 2013 graduating seniors, 52.2 percent were paid and 47.8 percent were unpaid.

The importance of internships for college students continues to grow. Oftentimes, employers use internships to decide if they want to offer “permanent” jobs.

But as the NACE Student Survey shows, paid internships seem to noticeably increase a student’s chance of landing a job by graduation, compared to unpaid internships which provide little to no edge over not interning at all.

According to a recent article on, unpaid internships tend to fall into two broad categories: The most common are at nonprofits. The other, more controversial, unpaid internships are offered by for-profit companies. These internships tend to involve majors seeking experience in low-demand fields such as law, communications, and business.

Students in high-demand fields like engineering and computer science typically work in co-ops or other structured programs and are far more likely to be paid.

Guidelines for Unpaid Interns

The internship landscape is changing following a flood of lawsuits in 2013 by unpaid interns at for-profit institutions. Legal concerns have forced many companies to re-evaluate their summer internship programs, with many switching to a paid model, while others, like Conde Nast, are ending their internships entirely.

Not every internship is legal according to the Fair Labor Standards Act.  Interns in the “for-profit” private sector must be paid at least minimum wage and overtime compensation for hours worked over forty in a workweek.

The US Department of Labor requires that the following six guidelines must be met in order to establish that an intern qualifies to work unpaid

1. The internship, even though it includes actual operation of the facilities of the employer, is similar training which would be given in an educational environment;

2. The internship experience is for the benefit of the intern;

3. The intern does not displace regular employees, but works under close supervision of existing staff;

4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;

5. The intern is not necessarily entitled to a job at the conclusion of the internship; and

6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

Nonprofits must also follow these standards. However, interns at nonprofits can be classified as volunteers as long as they are properly described as such. The Fact Sheet includes a footnote on this distinction.

In response to the controversy surrounding unpaid internships, New York University and Columbia University have tightened their internship policies by requiring employers posting on their job sites to follow the Labor Department’s six guidelines and to indicate that they are in compliance.

The Burden of Funding Unpaid Internships

While experience is important, not everyone can afford to work for free.

Colleges often grant credits to students who participate in internships, but to get those credits, tuition is often required.  Unpaid internships, plus the cost of tuition places huge financial burdens on both students and parents.

“Internships now have become a pay-to-play system. If you can’t essentially pay to work for free – that is, cover your rent in some of the most expensive cities in the country, food, living expenses, often pay for the academic credit that you might need to buy from your school to do it – you’re simply out of luck,” said author Ross Perlin when he appeared on MSNBC’s Dylan Ratigan Show to talk about the cost of unpaid internships.

The benchmark of any college or university lies in the success of its graduates.

That’s why some colleges are taking the steps to ensure that all students can afford internship opportunities. Brown University has committed half a million dollars for the summer of 2014 to support financial aid students who have opportunities for internships or research programs but not the financial means to take full advantage of them.

Still, many students and parents feel that an internship affords real-life experience that can’t be taught in a classroom.

It’s advisable that students have a clear strategy about what they want to learn, how the experience will aid their studies, what connections they want to build in their career field, and the costs associated before accepting an internship. Both parents and students should weigh the advantages and disadvantages of what it takes to get ahead.

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