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Student interns aren’t entitled to the minimum wage and it’s costing them big time

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Student interns aren’t entitled to the minimum wage and it’s costing them big time

For university students, work placements are heralded as a highly valuable opportunity. Taking a year out from studying to work in their chosen industry gives students a chance to learn more about their sector and get real life experience. Placements also allow students time to make contacts and network and prove themselves in a working role.

Research has found that students are twelve times more likely to get higher grades after a placement. And that after a placement, student employability increases as many return to the same company for their first job.

Placements also allow universities to strengthen their reputation by building robust relationships with employers. And placement employers have the opportunity to try before they buy – assessing prospective employers in a real work situation without the drawbacks of interview. Other employers also gain from student placements, as they increasingly want graduates who can make an immediate impact on their organisation, and students who have completed a placement are able to offer this as evidence of their experience and skills.

There’s just one catch though – a lot of these placement years are unpaid. And this is perfectly legal – provided these placements are attached to a university course and last no more than one year.

Placement pressures

Students required to do an internship for less than one year as part of a UK-based further or higher education course aren’t entitled to the national minimum wage. And our new research shows that because of this, doing a placement can mean that many students get into debt and other financial difficulties.

The placement year is a time when students may have higher travel costs in actually getting to work, as well as additional expense of socialising in establishments that are more costly that the student union bar. Then there is also the work clothing to think about – students have to look smart when they are in the working world. Students are also liable for university fees during their placement – albeit at a lower rate than a tuition year. All of which can add up.

Placements can be a great opportunity for students but they can also end up being very costly. Shutterstock

The irony is of course that most interns are entitled to be paid the national minimum wage – but this doesn’t apply to so called “student internships”. So you could have an intern and a student on placement working side by side, doing the same job, and the same hours, with one entitled to the minimum wage and the other entitled to nothing.

This is something that impacts a lot of students – with more and more courses now offering an optional or even compulsory placement for students. It isn’t just smaller companies who aren’t paying people on placement either, even well-known, large companies have been found to be using unpaid interns.

Universities to some extent have acknowledged these extra outgoings and do provide small amounts of funding – for example to purchase an interview suit. They can also provide grants to help offset these costs and may also grant bursaries to help students. But other sources of funding are limited, and student loans are only available up to £1,850 for the placement year.

Financial headaches

But for students with savings, or those from wealthier families, the picture is quite different. These students are often better placed to do unpaid placements – and through connections can sometimes even find ones that pay quite well.

This is creating a two tired system, and means that those students from less fortunate backgrounds may opt out of the work placement simply because they can’t afford it. It also means that firms also miss out on the unique talents and skills students from diverse but poorer backgrounds may offer.

Students should be paid for their work, not paying to work. Shutterstock

Going back into your final year of university with a load of debt and financial worries on your mind is of course not a great place to be – and will undoubtedly impact students in their critical year of study.

It’s not surprising then that studies into student well-being have shown poor mental health is often linked to financial problems. And in some cases, these financial problems can even result in students abandoning their university study altogether. It is clear then that this is something that needs to change, because ultimately during placement, students should be working to develop their careers, and not simply working up their debt.

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