Discover the Employer Benefits of Tuition Reimbursement
People come and go — employee turnover isn’t some newfangled concept. Even the best companies will have a reasonable amount of layoffs, terminations, and resignations.
Yet, you’ll know you have a problem when you start spotting certain patterns that reveal out-of-the-ordinary work dynamics.
- Are some of your top performers chronically dissipating?
- Could this be down to employee dissatisfaction?
If you diagnose high employee turnover, plenty is at stake. It’s a drain on your money, time, and resources. Your staff morale and reputation can suffer too.
But how do you prevent that from happening?
Many organizations are turning to employee reimbursement programs to keep their talent engaged. HR teams are keeping their eye on modern employee demands, and corporate training and development is huge.
With college costs on the rise, stepping in to offset them increases your company’s perceived value.
It’s also a surefire way to attract new high performers to your organization. According to a report by Gallup, 45% of Millennials report they would change their job for tuition reimbursement benefits.
They’re also more likely to stay with the employer.
Want to attract, develop, and retain the highest-quality workforce? Our ultimate guide to tuition reimbursement will help.
What Is a Tuition Reimbursement Program?
Tuition reimbursement is an arrangement between an employer and an employee where a company shoulders a part (or the whole) of tuition expenses for an employee’s continuing education.
This way, people with funding issues are more likely to pursue further studies.
How Does Tuition Reimbursement Work?
No two tuition reimbursement programs are equal, and this gives freedom to organizations.
On average, employers pay $5,250 for undergraduate and $10,500 for graduate degrees. Yet, each organization places a cap on how much they cover, what courses qualify for reimbursement, etc.
Below are just some of the points to consider when framing your education assistance programs.
You can weigh your options, but don’t go too eclectic with it. Some of these choices may affect your tax benefit eligibility. Do a cross-check with a licensed tax professional before initiating a program of your own.
- Payment options Typically an employee pays upfront for a Bachelor’s degree or a graduate program. Upon class completion, a company reimburses a part of the expenses (or the full amount) to the employee. Other employers will help foot the bill right at the enrollment.
- Types of educational classes Some employers offer benefits only for approved educational classes relating to the employee’s existing career.
Others cover any qualified education expense, but may require that coursework is done through specific institutions.
- Tiered payment levels Some reimbursement programs include tiered payment levels, which rely on student grades.
For example, to qualify for a 100% reimbursement, a student must pass the course with an “A.” Those that score a “B” are in for an 85% reimbursement, and so on.
- Service requirements Companies typically require an employee to remain with the company for a set period of time to qualify for the reimbursement.
- Additional costs Some companies only bear direct tuition costs, while others shoulder extra coursework expenses such as books, internet connection fees, etc.
- Open applications and partnerships Many programs reimburse courses from any accredited institution. Yet forming exclusive partnerships with higher ed institutions is catching on among organizations.
About Employer-Provided Education Assistance
An education assistance program (EAP) is a benefit that includes several types of initiatives where an employer:
- Pays for education costs or offers tuition reductions to their employees.
- Offers scholarship grants to an employee’s immediate family members.
- Assists with student loans.
If certain requirements are in check, these initiatives also benefit the employer.
For more information on educational assistance-related tax exemptions see this IRS website page. The IRS laws are in constant flux, so be sure to seek legal advice from a licensed tax professional.
How Does Tuition Reimbursement Benefit the Employer?
Organizations that provide tuition reimbursement do it for strategic reasons. It’s how they create a supportive environment and a continuous learning culture in their organization.
But here is a more in-depth business case for integrating it as one of your HR objectives:
Companies that offer education assistance are likely to recruit top performers down the line.
These people are gunning for job positions that offer room for skills development. So, if you want to put yourself on the map as an attractive prospect for such workers, this factors in hugely.
A recent EdAssist study goes on to prove this in practice.
84% of employees cited tuition assistance as an important factor in their decision to join their companies. In fact, 71% of participants rated tuition assistance among the best benefits offered by their employers after healthcare.
Better Employee Engagement
Your job doesn’t stop at raking in top talent. One of the top HR challenges is tackling complacency and keeping hard-earned hires on the ball. Even the most engaged worker will fall asleep if you put him in an unsupportive environment.
High achievers need to be exposed to new opportunities to thrive. EAPs are a seamless solution.
Improved Employee Retention
More than 27% of employees each year are lost to companies thanks to lack of career development. Being the first to offer in-demand learning and development opportunities gives you a head start in attracting the better portion of this fluctuating workforce.
In more than 80% of cases, tuition assistance programs improved employee work satisfaction.
That said, tuition assistance programs can help you rake in long-term workers and reduce employee turnover. Cigna is a good case in point here.
You can say the program moved the needle for the company. They saw a 129% return on investment partly due to reduced employee turnover. This success was paired with 43% higher pay gains for the employees as well.
Tax Deduction Benefits
And here comes the best part: tuition reimbursement programs can help companies reduce their tax burdens. You can deduct up to $5,250 per employee a year.
Why Is Education Reimbursement a Valuable Benefit for Employees
Education reimbursement is as valuable to employees as it is to employers.
Businesses earn their brownie points with potential hires. Employees get a well-rounded acumen in their field of work.
This is not a story-like narrative spectated through rose-tinted glasses. Education assistance programs (EAPs) help people gain a true professional advantage.
They’re being primed to advance into their dream jobs.
Below is how they play out in the real world (backed up with the data from Lumina Foundation research). EAP participants are:
- 10% more likely to be promoted.
- 43% more likely to advance to higher-paying positions.
- 7.5% more likely to receive an internal transfer.
- 8% more likely to stay with the employer.
Without an EAP, pursuing educational goals is not an option for many people. Paying for a potential hire to round out his or her education is a true perk.
Why Companies Should Pay for Employees’ College Tuition
Still not convinced employee assistance programs make business sense? Stay tuned as we’re bringing you some more note-worthy statistics from well-grounded research.
Tuition Reimbursement Statistics
What Percentage of Companies Offer Tuition Reimbursement?
Companies are finding new ways to respond to the challenges of the competitive market. Tuition assistance initiatives are one of those responses.
The ever-changing demands of new industries only add to this rationale. So, let’s take a peek at some stats.
Sources: ifebp.org, the SHRM Employee Benefits Survey
How Many Employees Use Tuition Reimbursement?
In the meantime, only two to five percent of eligible employees utilize tuition assistance programs. A staggering 43 percent of working professionals are unaware of this employee benefit.
How so? Information doesn’t always get to people — and this can be the possible culprit. But most of the time, the conditions people have to meet to qualify may thwart their plans to apply in the first place.
- Employees are often required to pay back tuition reimbursement if they leave within a certain timeframe.
- Time pressure and the money factor may also add to the low response rates.
- High levels of student debt should also be factored in.
Monetize from what you’ve just learned. Initiate and promote your training and advancement programs. Also, consider pre-paying for your employees’ coursework to prompt them to participate.
Tuition Reimbursement and Employee Engagement
A tuition reimbursement program can enhance your team’s academic development prospects. This alone carries weight that is likely to impact employee engagement in your organization.
But there’s more. Research shows these programs also make people better strategic thinkers. This, in turn, makes them more prone to assume higher leadership roles.
The graph below shows what a powerful driving force tuition assistance programs can be. It shows how effective they are in creating a highly-skilled team committed to their organizations.
The graph below is drawing from the data on a 2018 EdAssist study. The respondents assessed how tuition reimbursement programs impacted their career growth.
Companies That Provide Tuition Reimbursement
Many companies still have their educational assistance initiatives lined up, but which ones are already leveraging these impactful employee benefits?
Companies run policies with different cost coverage and eligibility requirements.
To illustrate, oil giant BP grants a generous 90 percent coverage of tuition costs, books, and fees. To qualify for the program, employees must enroll in approved classes and receive a passing grade.
Other big-name companies that provide tuition assistance programs:
- Home Depot
Designing Your Education Assistance Program
Kicking off a tuition reimbursement program is a complex long-term enterprise requiring strategy. Only a masterfully crafted plan will have overarching positive effects on your business.
So, first off, make sure you include expert guidance from accountants, attorneys, and consultants every step of the way.
The human resources department should make sure the initiative is in line with the organization’s strategic objectives.
Having an education assistance program in place is an excellent way to create new career pathing opportunities. If a CEO is not aware of such a policy’s benefits, an HR professional should present a business case and draw out the basic strategy.
Below are some factors to consider:
- Align company goals and employee goals. Draw up a plan for your company’s education assistance program. What’s the end goal? Once you have it figured out, see how to fit your employee’s goals within that framework.
- Weigh in your options before developing a learning plan. Is your program flexible enough, so it fits the unique needs of your employees? What about providing added flexibility by offering online education options?
- Stay transparent and maintain good internal communication. Staying on the same page with the participants will help you design a program that directly influences your business’s trajectory in the ways you want.
Corporate Tuition Reimbursement at Its Finest
Ready to up your HR game? Offering a tuition reimbursement program through Quantic School of Business and Technology will make you a magnet for top talent.
We pride ourselves in bringing rigorous MBA education to both early-career high achievers and well-rounded, highly accomplished leaders. And we’re radically affordable.
Our Executive MBA accredited degree program is your reliable ally in leadership development.
Don’t waste your organization’s human potential: join the list of companies that offer tuition reimbursement through Quantic.
Why, you ask? Well, the reasons are quite simple.
Here’s the sampling of a few companies that have offered tuition reimbursement to employees enrolled in Quantic’s programs:
- JP Morgan Chase
And there’s more. Our up-to-date accredited degrees are highly competitive — and for the following reasons. They:
- Are highly cost-effective. You can get our MBA programs at a fraction of the cost of traditional top business school programs.
While some of those programs run upwards of $200K, our program is available for just $950 USD per month over the 14-month duration of the program.
- Save you valuable time. Thanks to mobile-first technology, our programs are fast and flexible. Our 100% online coursework allows students to learn on a flexible schedule, allowing them to complete a degree within 14 months.
- Bring enviable results to organizations. Quantic is a digital alternative to top traditional MBA programs. Our programs are proven to be as effective as top-ranked business schools like Harvard, Wharton, and Fuqua.
Why waste your best resources — human potential, money, and time?
Join the world’s top companies that reimburse their employees for Quantic’s degree programs.