Filed under: Personal Finance, News, The Economy, Lynnette Khalfani-Cox
These students -- and their families -- are paying as much as $9,000 to third-party companies that promise guaranteed internship placements for the students, including sought-after internships in Washington D.C. I hate to sound so harsh, but this is just plain stupid. At the very least, it's very short-sighted and sends Corporate America the wrong message. It smacks of desperation and it devalues student labor. It's one thing to pay a head-hunter or executive recruiter who will land you a paid gig. But to pay someone for getting you an unpaid position? That's ludicrous!
I've written a book about how cash-strapped young people are, especially when they finish their college studies. The book is called Zero Debt for College Grads: From Student Loans to Financial Freedom. As I point out in the book, the average college student now comes out of school with more than $20,000 in student loans, not to mention thousands in credit card debt. Therefore, students these days can't afford to take on internships that are unpaid.As a Money Coach, I always tell students what I wish someone had told me when I was in school: Do not accept any unpaid internships. If you do, working unpaid for 15-to-20 hours a week or more means you'll likely have to take out federal or private student loans. Those loans will take you 15 years, on average, to repay. Instead, focus your efforts on landing a paid internship. I certainly wish I had when I was an undergraduate student back at the University of California, Irvine.
I counted myself "lucky" during my junior year when I landed an unpaid internship at an ABC television affiliate in Pensacola, Florida. I was so glad to get that internship that I didn't mind not getting a salary to compensate me for my hard work. I did, however, get a meager "stipend" at the end of my summer stint. Unfortunately, it came very late -- as in weeks after my internship ended. I didn't even have money for a plane ticket back home to Southern California upon completing my internship. Thankfully, a friend's mother loaned me money to get home in time to finish my studies. That was 20 years ago, before college tuition began skyrocketing by about 9% annually, as it currently does.
Accepting an unpaid internship now -- amid the tough economy, and with ever-escalating college costs -- is foolish enough. But paying a company or an employer for the "privilege" of getting a "coveted" internship takes the foolishness to another level.
What About Non-Financial Benefits?
Employers and these third-party entities that find internships will tell anyone who'll listen all about the "non-financial" benefits of unpaid internship. And for the most part, it's not even a hard sell. In fact, most college students don't object to unpaid internships. Laboring for no pay wouldn't go over well with most working professionals. But it's not hard to see why it's different for young people in school.
Think about it for a moment: You've got energetic, but inexperienced college students worried about landing a job. Of course they're open to hearing all about the "intangible" (read: non-economic) perks of unpaid internships: things like experience, connections, college credit, exposure to an industry and a foot in the door. That's all fine and good. But what about another big thing that really matters: a paycheck?
Students forking over thousands of dollars for these unpaid internships are unwittingly hurting themselves in the long run. And whether they realize it or not, they are telling employers (and prospective employers) that the students' work and contributions are pretty much worthless. I know the work of most college students is anything but worthless. On the contrary, these young adults are hard working, ambitious and full of promise. So it's a shame that they're really being taken advantage of in this case. Unfortunately, I suspect that many of them will later regret paying for these internships, the same way a lot of people regret taking out student loans to pay for college.
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What other desperate things have you heard of people doing to get a job or land an internship amid the recession?
Lynnette Khalfani-Cox, an award-winning financial news journalist and former Wall Street Journal reporter for CNBC, has been featured in the Washington Post, USA Today, and the New York Times, as well as magazines ranging from Essence and Redbook to Black Enterprise and Smart Money. Check out her New York Times best seller 'Zero Debt: The Ultimate Guide to Financial Freedom.'