It’s hard to argue against the value of a good internship and how it can prepare a student for life after college.
A few weeks or months spent working in the real world can help build connections and confidence, further develop skills learned in class, and—perhaps most critically—bolster a new graduate’s chances of getting a job. An internship also can help students decide if they’ve chosen the right major and want to continue on the career path they’re on.
Responses to the McGraw-Hill 2018 Future Workforce Survey back up the importance of internships for college students–only four in 10 of those surveyed said they felt very or extremely prepared for their future careers. And more than half said an increase in access to internships and professional experiences would have helped them feel more qualified.
The Gallup-Purdue Index, created to measure and evaluate the long-term success of college graduates, also supports making internships a degree requirement.
That may explain why many universities are pushing for more academic internships and are requiring them for an increasing number of degree programs. Not just for doctors, dentists, accountants, and teachers, but for those seeking careers in sports or hospitality management, communications, technology, and the arts.
The Cost of College Credit Internships
According to the National Association of Colleges and Employers, 43% of internships at for-profit companies are unpaid. Which means that often, the students who take those internships are forgoing full-time, part-time, or seasonal employment to take an internship that doesn’t come with a paycheck.
Instead, that unpaid internship could add to their debt, especially if they have to relocate temporarily (maybe to a larger city or even overseas), buy a car, pay for gas or some other form of transportation, put together a work wardrobe, and pay for food.
Some students who take internships—paid or unpaid—wish to or are obligated to enroll for course credit. So depending on how many credit hours their internship entails (the average is three but it could be more), they could end up paying hundreds of dollars in tuition.
Some schools say the cost is justified because internships are resource intensive. Students who want the experience but not the expense—including those at Seton Hall University, where internships are required to graduate —say requiring students to pay for internship credits in order to register their participation is financially unjust and discriminatory.
Advocacy groups are pushing for more paid internships. And even prestigious gigs that qualify as unpaid—like interning for a member of Congress—are getting a second look after students complained about the financial burden. At Seton Hall, students started a change.org petition . And in recent years, unpaid interns have filed class-action lawsuits against companies they said treated them as employees and should have been paying them at least minimum wage.
In an effort to clear up federal guidelines determining whether an intern at a for-profit company must be paid under the Fair Labor Standards Act, the U.S. Department of Labor’s Wage and Hour Division issued “Fact Sheet #71 ” in 2018.
It relies on seven factors to determine who is the “primary beneficiary” of the intern-employer relationship, including “the extent to which the internship provides training that would be similar to that which would be given in an educational environment,” “the extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit,” and “the extent to which the intern’s work complements, rather than displaces the work of paid employees while providing significant education benefits to the intern.”
In other words, interns want to and are supposed to be doing relevant work, not making copies, fetching coffee, and running other errands that paid employees would be doing if the interns weren’t there.
How Much Do Paid Internships Pay?
Paid interns aren’t getting rich, but they are at least making minimum wage. According to the National Association of Colleges and Employers 2018 Internship & Co-op Survey , the average hourly wage earned by interns was up 3.7% from 2017, and the increase was across all degree levels and years.
Average hourly wages in 2018 ranged from $14.47 for first-year associate degree students to $32.35 for those pursuing doctoral degrees. Indeed.com estimates the average intern salary in the U.S. is about $13 per hour .
Those wages help pay some expenses, but not all—making an internship an opportunity many students and their parents simply can’t afford or they must struggle to pay for.
If you’re thinking, “Well, that’s what student loans are for,” you’re technically correct. Student loans are meant to cover educational expenses, so you can use the money from the government and (possibly) private loans to pay for the expenses that go along with your academic internship just as you would if you were in a class at school. That could include room and board, travel costs if you have to relocate, transportation, and equipment you need for the internship.
Of course, the debt you take on to get that internship experience could come back to haunt you when you’re out of school and those loans come due. So it’s important to weigh the costs of the internship against its benefits.
Particularly if it’s an unpaid internship, or if you’re required to complete an internship for college credit, you might consider doing some research to find companies that are known for offering applicable career skills and have a positive impact on your resume.
Ask your internship coordinator what tangible benefits you could see—is the internship approved for college credit? Will you get meaningful references? Will there be consequential networking opportunities?
Will the company offer you more than a form letter as a reference? How will this internship help you stand out from others hoping to get similar employment?
Before you commit, you also may want to create a financial plan, starting with figuring out where you’ll live and then working through your budget from there. And you might want to consider asking whether taking a side gig outside your internship is feasible and ok with the company.
Once you’ve finished your internship, gotten your degree, and moved on to full-time employment, you can buy a round of drinks for your old college buddies and commiserate about whether you actually got anything from your classes and internships, and whether the benefits were worth the cost.
Paying Back the Money You Owe
Before you even graduate, you may want to begin educating yourself about the best payback options for your situation (depending on what types of student loans you have), look at interest rates, and think about whether you would be interested in consolidating or refinancing your loans.
If you can’t find a better interest rate than you already have on your federal loans, you might want to leave things as they are. Federal student loans offer protections and benefits that won’t transfer to a private loan if you refinance. But you may find you can get a lower rate by refinancing with a private lender, which also could allow you to combine your loans into one manageable payment.
If you’re considering refinancing your student loans with SoFi, you may qualify for competitive interest rates and member benefits like unemployment protection. As a SoFi member, you’ll also have access to membership services that can help you continue working toward your career goals—and your life goals.
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SoFi Student Loan Refinance
If you are looking to refinance federal student loans, please be aware that the White House has announced up to $20,000 of student loan forgiveness for Pell Grant recipients and $10,000 for qualifying borrowers whose student loans are federally held. Additionally, the federal student loan payment pause and interest holiday has been extended beyond December 31, 2022. Please carefully consider these changes before refinancing federally held loans with SoFi, since the amount or portion of your federal student debt that you refinance will no longer qualify for the federal loan payment suspension, interest waiver, or any other current or future benefits applicable to federal loans. If you qualify for federal student loan forgiveness and still wish to refinance, leave unrefinanced the amount you expect to be forgiven to receive your federal benefit.
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