Whether you’re earning your degree at a local community college or living halfway around the world to save money attending a foreign university, you’ve probably considered pursuinginternship opportunities in your field.

You’re not alone. According to the National Association of Colleges and Employers’ Class of 2015 Student Survey, 62.8% of students in the class of 2015 participated in an internship at some point during their college careers. That represented an uptick from the previous year.

At some colleges and universities, internship participation is much higher. U.S. News identified 10 American institutions where “almost everyone gets internships.” Even at the lowest-ranked school, 94% of students wore the “intern” badge during their college careers.

There’s an endless variety of internships out there, covering hundreds of specialties, dozens of industries, myriad different types of work. However, the biggest and simplest distinction of all involves compensation: Does the internship come with a wage or stipend? If so, how generous is it?

According to NACE, approximately 39% of all internships are unpaid. Unpaid internships are most common in the nonprofit sector, where they account for 67% of all internships. The state and local government sector is a close second, with 61.7% of all interns in that category forgoing pay.

What Is an Unpaid Internship?

First, it’s important for prospective interns to understand what an unpaid internship is and is not– and what it legally can and cannot be.

The short answer to this question is simple: An unpaid intern is one who receives no financial compensation for their duties.

The For-Profit Unpaid Internship Test

However, there’s a longer, more legalistic answer that acknowledges legitimate concerns about the potential for abuse and exploitation in unpaid internship programs. The Department of Labor’s Fact Sheet #71 outlines six conditions that must be met by unpaid internships created and offered by for-profit companies:

  1. The internship is “similar to training which would be given in an educational environment,” despite occurring on the employer’s premises.
  2. The intern does not replace or displace existing employees and works under the supervision of existing staff members.
  3. The internship is given for the benefit of the intern. “Benefit” is broadly defined, but can include teaching and learning new skills relevant to the intern’s profession, imparting relevant knowledge, completing self-directed projects in a real world setting, and earning college credit toward the intern’s graduation or degree requirements.
  4. The employer “derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded.”
  5. The intern is not automatically entitled to a paid position at the conclusion of the internship.
  6. The intern and employer mutually agree that the intern is not to be paid for the duration of the internship.

For-profit companies whose unpaid internships do not satisfy all six of these criteria may be in violation of federal minimum wage laws. The Department of Labor encourages unpaid interns who believe that their work does not meet all six criteria, or who otherwise feel that they are being abused or taken advantage of, to file a complaint online or by phone. All complaints are strictly confidential, though the DOL has limited authority to compel employers to pay back wages.

The rules governing unpaid internships are much looser for nonprofit and public-sector organizations. At nonprofit and public organizations and agencies, unpaid interns are equated with volunteers, and are allowed to perform tasks that benefit themselves and the sponsoring organization. In Fact Sheet #71, the Department of Labor does stress that it is exploring whether additional regulations are needed to govern the activities and duties of unpaid interns outside the for-profit world, so this is subject to change in the future. And the National Council of Nonprofits does advise its members to clearly categorize interns as volunteers, trainees, or employees, to minimize ambiguity and maximize legal compliance.

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Advantages of Unpaid Internships

Money isn’t everything. Even so, the lack of compensation can be a deal-breaker for students considering unpaid internships, particularly if they don’t have a part-time job, savings, or financial help from their parents.

So, why should you consider an unpaid internship over a paid alternative? These are among the biggest benefits of unpaid internships.

1. They’re Easier to Get

Especially in the nonprofit sector, unpaid internships are more akin to volunteering opportunities than true jobs. Many under-staffed, under-budgeted organizations welcome interns, who provide critical support and can quickly find themselves handling important tasks.

2. They Offer Valuable Real World Experience

Real world experience is always a great complement to classroom learning, even in scholarly disciplines such as the social sciences and mathematics. For instance, a summer internship in the risk management department of an investment bank can open a math major’s eyes to the wealth of potentially lucrative, enriching opportunities available to the discipline’s graduates. That’s hard to see from the classroom, or even from the career counselor’s office.

3. They Look Good on Your CV

Internships of any kind look good on your resume or CV. Employers seek well-rounded, agile candidates who’ve sought opportunities outside the classroom and have added practical skills atop a foundation of relevant knowledge. Even if you don’t receive a job offer at the completion of an unpaid internship, your experience is likely to open new doors in the future.

4. They Can Earn Course Credit

Most universities happily provide course credit for qualifying internships, paid or unpaid. Depending on the internship’s rigor, time commitment, and final project or report requirements (if any), it can qualify for anywhere from a single credit or less, to the equivalent of a full course. If you’re looking for any excuse to earn credits outside the classroom, an unpaid internship could be the path of least resistance.

5. They Can Illuminate New Passions or Skills

Real world experiences can turn unpaid interns on to passions or skills that they didn’t know they had. These interests and abilities don’t have to be directly tied to interns’ majors or internship duties either. For example, a challenging, poignant evening internship at your local food shelf might convince you to switch your major from sociology to nonprofit management or something related to public policy. That decision could well change the course of your career (and life) for the better.

6. They May Expand Your Professional Network

Internships offer unmatched opportunities to forge new professional connections that can lead to future opportunities. Every staffer at the organization for which you’re interning is a potentially valuable contact. The network benefits can actually be better at smaller organizations, where the slimness of the available contact pool is offset by the likelihood that you’ll have direct contact with senior executives, whose larger networks tend to include people responsible for hiring and strategic decision-making at similar organizations.

7. They May Lead to a Real, Paid Job

Unpaid interns are not entitled paid job offers at their internships’ conclusion. However, such offers can and do happen in the real world. And, due to their network-expanding powers, unpaid internships that don’t directly lead to paid positions with the organization supervising the internship can lead to paid jobs (or, at least, interviews) with other organizations in the industry.

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Disadvantages of Unpaid Internships

1. They Don’t Include a Paycheck

Unpaid internships are, by definition, unpaid. While it’s true that money isn’t everything, and that the experiences and skills gained during an unpaid internship oftentimes lead to paying jobs (and higher pay, relative to candidates without those skills), devoting significant amounts of time to uncompensated work is difficult for many interns. This is especially true for interns expected to devote lots of time to their internships, and for those on tight budgets.

Millions of students lack personal savings, have limited or nonexistent income, and aren’t fortunate enough to receive financial support from their parents or other family members. For them, paid internships or part-time jobs are necessary to make ends meet.

2. They Can Actually Set You Back Financially

To add insult to injury, unpaid internships actually lighten your wallet. The typical internship carries a range of small and not-so-small costs: fuel or public transit fares, parking, and snacks or meals on the job. If your internship qualifies for course credit, you’ll potentially be on the hook for a much larger expense – the cost of each credit, which can range from a few hundred dollars at public universities, to well over $1,000 at more expensive private institutions.

3. They’re Not Common in All Professions

Unpaid internships are not uniformly distributed across all economic sectors. Very broadly speaking, they’re far more common in the nonprofit and public sectors than in the for-profit sector. Within the for-profit sector, they’re more common at smaller companies and startups, which are often unable or unwilling to add an extra person to the payroll, even at or near minimum wage. In the interest of avoiding legal ambiguity, companies that can afford to pay interns tend to do so.

4. They Can Be Dehumanizing

Though they’re supposed to be educational and horizon-expanding, unpaid internships are frequently monotonous and dehumanizing in the real world. The Department of Labor’s enforcement arm lacks the resources to detect the countless petty abuses that occur every day, such as interns made to fetch coffee or lunch when they should be shadowing a developer or project manager.

Therefore, while you shouldn’t expect to be treated like a lackey during your tenure as an unpaid intern, you shouldn’t be shocked if it happens. And if the treatment becomes downright abusive or contrary to the goals of your internship, you should be prepared to file a complaint with the DOL.

5. They Can Add to Your Workload

Unpaid internships obviously take time. If you’re already over-scheduled, it might be unwise to give up even more of your precious time to work without pay – however personally or professionally rewarding the experience may be.

Perhaps more importantly, unpaid internships can add to your academic workload. As a condition of receiving course credit for the internship, your university’s internship office or academic department might require you to complete a report or project at its conclusion. If the internship concludes near the end of a semester, that can add another time-consuming academic obligation to your plate when you’re already studying for finals exams and working on other end-of-term projects.

6. They’re Actually Worse Than Paid Internships for Job Prospects and Starting Salary

For students who’ve been told that unpaid internships offer high-probability, low-resistance paths to full-time jobs, this is a bombshell. But, according to the National Association of Colleges and Employers, it’s not even close.

NACE’s Class of 2015 Student Survey found that approximately 44% of students who worked as unpaid interns with private, for-profit companies received job offers after their internships ended. By contrast, approximately 72% of students who worked as paid interns with private, for-profit companies received offers. Unpaid interns’ starting salaries were significantly lower than their paid counterparts too – for new hires at private, for-profit companies, nearly 40% lower.

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Considerations for Internship Candidates

To ensure compliance with federal minimum wage laws, many for-profit employers forgo unpaid internships altogether. However, the for-profit sector is still swamped with unpaid internship opportunities, which are even more abundant in the nonprofit and public sectors.

In other words, you’re likely to have plenty of unpaid internships to choose from in your field. Use these key considerations to whittle down your list of potential opportunities.

  • What Are Your Duties? Carefully review the duties and responsibilities specified by the sponsoring organization. If these aren’t spelled out in writing, contact the person in charge for hiring and ask for more specifics. At minimum, you want to make sure that the internship doesn’t violate Department of Labor criteria, and that the work you’ll be expected to do is consistent with your field of study and professional goals.
  • Can You Get Course Credit? This is a huge consideration for most prospective interns. If you can’t get course credit toward your degree, the internship’s other benefits could fall flat.
  • How Much Time Must You Devote? There’s a big difference between a three-hour, once-weekly shift, and a three-hour, every-weekday shift. The former is akin to the low-key volunteeringcommitments that millions of American adults successfully juggle with other obligations. The latter is basically a part-time job. If you already need to work a part-time job to make ends meet, or you’re overscheduled for other reasons, you probably can’t afford a time-intensive internship. No matter how rewarding it is, your internship shouldn’t interfere with your academic responsibilities or high-priority extracurricular responsibilities, such as student government.
  • How Much Will It Cost? All jobs require some investment on the worker’s behalf. Anyone who’s looked for a job knows that job search expenses can cause budget problems too. But both of those activities have clear-cut financial benefits, whether immediate or delayed. If your unpaid internship’s costs force you to make deep cuts elsewhere in your already tight personal budget, consider a paid internship or part-time job instead.
  • Will It Be Convenient? Time is money. For a busy college student, an internship that requires an hour of travel each way is a lot less attractive than one located within easy walking or bike commuting distance of campus.
  • Will the Experience Be Professionally Rewarding? The Department of Labor requires internship instruction to be “similar to training which would be given in an educational environment.” In practice, this means that your internship’s curriculum needs to promote learning relevant to your course of study. Even if the internship is “educational” in a broad sense, its value is limited if that education has little value for what you want to do after graduation.
  • Will the Experience Be Personally Rewarding? Internships with limited professional value can still be rewarding in a personal sense. Look for internships that offer opportunities to learn a new skill, travel to places you wouldn’t otherwise visit (even nearby towns or neighborhoods), meet new people, or push you outside your comfort zone in other ways. Internships are worthwhile when they make interns better people, even if those interns’ future jobs have nothing to do with their internship duties.
  • Is It Likely to Result in a Full-Time Job? It’s impossible to know this for sure, and it is illegal for sponsoring organizations to make any representation otherwise. However, it never hurts to make an educated guess. Inquire with your university’s internship office, or talk to students with previous internship experience, to find sponsoring organizations that have previously offered paid full-time or part-time jobs to unpaid interns.

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Alternatives to Unpaid Internships

An unpaid internship isn’t the only extracurricular stepping stone to the career of your choice. In many cases, it’s not even the best option available.

Depending on your degree track and desired career, your alternatives could include:

  • Paid Internships: Paid internships are plentiful in many fields, especially in the for-profit sector. Though the application process can be more intense and competitive, it’s not fundamentally different from the unpaid internship application process. And if you’re seeking greater responsibility and duties that are more practical than educational, federal labor laws give employers more freedom to satisfy those needs.
  • Part-Time Work in Your Field: A part-time job is a great way to learn valuable skills, whether “soft” or directly related to your field, and earn real money in the process. Many university departments offer academic and administrative work-study positions for majors, such as teaching assistant and administrative assistant roles. Work-study positions are sometimes restricted to students who specifically qualify for work-study financial aid, so check with your financial aid office before applying. If you don’t qualify or would like to pursue other work opportunities while enrolled as a student, consult your institution’s career office for information about local employers seeking entry-level workers.
  • Research and Lab Assistant Work: Research isn’t a viable option for every student, as it generally requires the attention of a professor or mentor, plus some measure of funding (research grants). In certain fields, particularly STEM fields and social sciences, opportunities are more plentiful. At the undergraduate level, research is often done under the close supervision of a tenured professor or graduate student, possibly as part of a larger team. Self-directed projects are rarer, but definitely possible to set up. Research done by students acting as lab assistants or in other support roles is compensated hourly. If offered, compensation for self-directed research tends to be by stipend.
  • Contests and Incubators: Contests and incubators are nontraditional approaches to extracurricular enrichment. They provide entrepreneurial students (and, often, members of the general public) with opportunities to test prototypes and business models in front of business leaders and credentialed experts. Winners often receive monetary prizes funded by university endowments, government grants, for-profit companies, and charitable foundations. Some are quite generous – for example, the MIT $100K contests offer grand prizes ranging from $3,000 to $100,000. And even if you don’t win any money, you’ll gain valuable hands-on experience testing, pitching, and launching your ideas.

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Final Word

For many students, the decision to take an unpaid internship can be boiled down to a simple question: “Can I afford to work without compensation?” If you answer this question in the negative, you need to look for paid internship opportunities, part-time jobs, or research positions that offer stipends. If you can afford to devote a significant amount of your time to an endeavor with no guaranteed pay, unpaid internships or high-risk, high-reward projects such as entrepreneurship contests are viable options. The choice is yours.

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