Unpaid Internships Can Cost -- or Pay Off

In some cases, students pay hundreds of dollars more for the college credits that employers require their interns to receive. Despite the financial burden, the pipeline is crowded with young people trying to get a foot in the door, especially in a tight economy.

The Department of Labor, DOL, and the Bureau of Labor Statistics do not track the number of paid and unpaid internships. But according to a survey by the National Association of Colleges and Employers, 90% of employers representing 20 different industries say they pay their interns.

The DOL, concerned about companies taking advantage of interns, reissued guidelines recently that have been in effect since 1947, when the Supreme Court established rules under the Fair Labor Standards Act that employers must follow to offer unpaid internships. Included are requirements that:

• Training is "similar to what would be given in a vocational school or academic educational instruction."
• Training benefits the trainees.
• "Trainees do not displace regular employees" but work under their observation.

Often, employers try to ensure that unpaid interns get something in return by requiring them to get college credit. Unpaid interns are not required to obtain credit under Department of Labor guidelines, but many employers allow internships only for those who do. The wording of the labor act is unclear, and businesses are confused about whether they must require students to get credit, says Barbara Hewitt of the University of Pennsylvania's Career Service Office, who works with Wharton school undergrads.

On top of the living costs, the cost of paying for the credits, as part of the tuition, discourages many students from applying for unpaid internships in the first place, says Jennifer Antonini, an internship coordinator at George Mason University, GMU, in Fairfax, Va. At GMU, a one-credit internship costs $1,052 for out-of-state students and $353.50 for in-state students. Requiring students to receive credit puts stress on those who need to make money.

University of Michigan senior Stephanie Durphey is interning 20 hours a week doing public relations work for a start-up company in Ann Arbor, Mich., called CreateMyTee.com. Because the internship is unpaid, Durphey spends another 20 hours working at a paid job at the U-M Hospital.

Durphey, who wants a career in public relations, says the internship is necessary because companies hire employees with experience. "I wanted some experience doing PR and marketing, and I wasn't getting that from working at the hospital," she says.

Isabel Roth, 20, took a paid summer internship at the National Institutes of Mental Health in Bethesda, Md. Roth, who works 40 hours each week in a lab that studies anxiety disorders, is using her earnings to pay expenses at Ohio's Oberlin College, where she will be a senior in the fall. She says she would have accepted the internship even if it was unpaid.

"It's really a great opportunity to spend time here and be mentored by world-class researchers," she says.

Source: USA Today, Stephanie Steinberg, 7/27/2010