Historically, the “unpaid internship” was likened to a rite of passage. One could have seen it as a trade-off: the intern provided the organization with free labor, and the bank added an invaluable line to their resume, serving as a potentially powerful catalyst for their career. There was a clear mutual benefit.

Unfortunately, around 2010, the math stopped working. In the wake of the 2008 financial crisis, many firms began relying on unpaid interns to complete the work of entry-level employees. This was closely tied to the 2008 financial crisis and the ensuing Great Recession, when companies faced budget cuts, hiring freezes, and a surge in job seekers (including recent graduates) willing to work for experience rather than pay. This perceived exploitation led to increased public backlash, lawsuits, and, in 2010, U.S. Department of Labor guidance clarifying when interns must be paid under the Fair Labor Standards Act.

How does the organization make the distinction between a learning-based shadowing period and the start of formal, compensated responsibilities? The answer depends on who primarily benefits from the internship.

There were several legal battles between 2010 and 2018 that sparked changes from unpaid to paid. In 2010, the Department of Labor introduced a test to determine whether an intern could legally be unpaid.

 

There are currently seven factors to determine whether the intern should be paid.

The courts stated that the test is flexible, meaning no single factor is determinative. Those factors are listed below:

1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, expressed or implied, suggests that the intern is an employee.
2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
3. The extent to which the internship is tied to the intern’s formal education program is determined by integrated coursework or the receipt of academic credit.
4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
5. The extent to which the internship’s duration is limited to the period during which the internship provides the intern with beneficial learning.
6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

 

Current estimates suggest roughly 40–60% of internships are paid, depending on the field and whether they meet Department of Labor criteria for unpaid programs. The National Association of Colleges and Employers (NACE) reports that the average wage for an intern is $23.04, but this varies by degree.

 

High-Range Majors	Engineering, Computer Science, IT, Finance/Consulting	~$22-35/hr avg.
Mid-Range Majors	Business, Accounting, Economics	~$20-28/hr avg.
Lowest Majors	Nonprofits, Arts, Social Services	Often unpaid or stipend-based

 

It also varies by which year in college the student has attained.

 

Freshman / Early Sophomore	~$15-18/hr.	Often unpaid or exploratory roles
Sophomore / Junior	~$18-25/hr.	First “real” internships with meaningful work
Junior / Senior (most competitive group)	~$22-30+/hr.	Many tied to full-time recruiting pipelines
Graduate Students (MBA, MS, etc.)	$25-40+/hr.	Consulting, finance, and tech spike significantly higher

 

All of these figures would need to be adjusted for the specific geographic wage differential in your recruiting market.

 

It was concluded that if the beneficiary of the work being performed is the employer and the work “moved the dial,” as we like to say, or directly benefited the bottom line, then the intern must be paid. You may have inferred by now that for banks and credit unions, the thought/risk of a lawsuit over this matter far outweighed the cost of an hourly wage. “Unpaid” slowly became “unclean” across HR. Let’s be clear: unpaid internships are still legal as long as the primary purpose of the internship is to benefit the intern, not to increase productivity for the organization.

Internship pay is not solely a private contract, but a public proclamation of your organization’s values. Older executives may remember interning for free, but in 2026, an unpaid intern could potentially be a ticking time bomb of legal liability.

​The difference between an internship that boosts your talent pipeline and one that causes a massive legal migraine comes down to market accuracy.

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This is where BalancedComp turns the “internship conundrum” into a strategy for your workplace. As the leading compensation experts for the financial industry, we don’t give you “general” numbers-we give you bank and credit union-specific data.

We provide asset-sized benchmarking: No need to compare your local branch to a global investment firm. We tailor these ranges for your asset size and region. Our web-based software helps stay in the talent hunt and out of the courtroom.

Request a demo with BalancedComp today, tomorrow, or next week and see for yourself how our innovative methodology and system can help you market price roles with credibility and accuracy.

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