Tuition assistance programs are a type of employee benefit in which an employer reimburses employees for the costs associated with continuing education. Assistance usually comes in the form of reimbursements for tuition, fees, and books. Many progressive companies pay for an unlimited number of courses that may or may not be directly related to an employee's current job. In fact, a 2005 survey conducted by the Society for Human Resource Management and reported on in an HR Magazine article found that 60 percent of corporations offer some form of tuition assistance. These companies reason that today's rapidly changing work environment requires employees to possess a wide variety of skills, and that education provides a way for them to improve their skills and adapt to the new realities of the business world. Other companies adopt tuition assistance programs on a smaller scale, providing partial reimbursement of certain costs associated with job-related courses.
Although tuition assistance programs can be costly for businesses, there are a number of proven strategies that can be applied to help keep costs down. In addition, tuition assistance programs offer companies a number of important benefits. For example, companies that provide their employees with tuition assistance are building a more educated work force by encouraging workers to pursue higher education. Tuition assistance programs can also provide companies with an effective recruiting tool, and enabling them to attract highly motivated people. Finally, tuition assistance can lead to reduced employee turnover and increased loyalty to the company.
Many companies resist instituting tuition assistance programs because of the cost involved. In fact, poorly planned tuition assistance programs do waste money. But as Heather Kirkwood observed in Kansas City Business Journal, "experts say a well-designed tuition reimbursement program can turn what seems like a cash-sucking recruiting tool into a revenue-increasing program that creates loyal employees."
There are a number of different strategies that businesses can take to limit the expense of tuition assistance programs. The first step is to determine the specific educational goals of employees in order to better focus their course selections. Outside educational advisory services can help employees understand their goals and thus decrease the chance that they will begin one course of study only to quit and start another. Similarly, specialists within the company can be made available to advise employees about their educational options, rather than simply explaining the features of the tuition assistance program to them. These individuals can help guide employees in educational directions that will benefit both themselves and the company for which they work.
Experts also recommend that employers reimburse fees as well as tuition in order to reduce costs. State-supported universities tend to charge lower tuition rates but higher additional fees than private colleges, which might cause some employees to choose to attend the more expensive private colleges in order to save on out-of-pocket expenses. Another way companies can save money in their tuition assistance programs is to investigate negotiating discounts with the schools. Larger companies or even smaller ones with specific educational needs may be able to save money by providing a certain number of students for a course. If, for example, a dozen employees from one company need to take a basic class, that company may be able to arrange a reduced rate or even a special class just for employees. Employers may also find it beneficial to arrange to pay certain local colleges and universities directly in order to reduce paperwork and other hassles for their employees.
Another way for companies to save money, as well as make the idea of continuing education more attractive to employees, is to provide nontraditional education options, such as correspondence, television, videotape, or Internet classes. Thousands of accredited courses are available through these alternative means, which allow busy employees with family responsibilities to fulfill course requirements on their own time without having to sit in a formal classroom. Collectively known as "distance learning," these options offer employees a great deal of flexibility. However, it is important to make sure that such programs are regionally accredited so any credits earned will transfer to traditional schools if necessary.
Employers can also save money on tuition assistance programs by helping employees receive college credit for skills and knowledge they may already possess. For example, about 600 colleges offer students the opportunity to demonstrate their knowledge of various subjects through a life-experience portfolio. When employees have mastered the content of a course through work experience, they may be able to obtain college credit without actually having to spend time or money on a class. This option might, for instance, enable a person employed as a bookkeeper to pass out of an intermediate accounting course.
Assessment tests, offered by college testing services, provide a similar, relatively inexpensive, option. Such testing enables some employees to reduce the amount of formal education they need to obtain a degree, which also reduces the time and cost involved in their education. In addition, gaining credit for skills and knowledge can enhance employees' self-esteem and bring them recognition for their skills at work.
Some firms worry that offering a liberal tuition reimbursement policy will not be fully taken advantage of if participants do not invest the effort required to earn passing grades. These firms will often include guidelines and restrictions in their tuition reimbursement policies that attempt to guard against this possibility. For instance, companies can tie reimbursement to grades—a certain percentage for an A, a B, a C and so on. Employers can also avoid this potential problem by requiring students who fail a course to either repeat it or pay back the company for related tuition and fees.
Many businesses providing tuition assistance to employees fear that the worker will depart for greener pastures after taking advantage of the program. In order to reduce the likelihood of losing newly educated employees, some companies require participants in their tuition assistance programs to remain at the company for a certain length of time or else reimburse the company for part of the tuition paid on their behalf. Many businesses also limit enrollment in such programs to individuals who have already been with the company for a certain amount of time (typically six months to one year). Other companies take the more positive step of rewarding employees who earn their degrees with a gift of company stock. The stock can be set up to mature over a few years, thus giving the employee added incentive to remain at the company.
Finally, some companies are reluctant to establish tuition assistance programs for their employees because of the paperwork related to tax compliance. Some forms of tuition assistance to workers are tax-deductible especially if the coursework is necessary to maintain professional licenses or otherwise ensure that the employee in question can adequately fulfill his/her workplace obligations and responsibilities. Businesses interested in establishing tuition assistance programs for their employees should first consult with an accounting/tax professional to discuss these and other potential factors.
Bolch, Matt. "Bearing Fruit: Usage rates for traditional tuition assistance programs are low, so employers are tempting employees with free tuition and bonuses." HR Magazine. March 2006.
Burzawa, Sue. "Employers Can Use State Programs to Help Employees Save for College Education." Employee Benefit Plan Review. December 2000.
Kirkwood, Heather. "Education Perks Benefit Employers, Too." Kansas City Business Journal. 14 January 2000.
U.S. Small Business Administration. Roberts, Gary, Gary Seldon, and Carlotta Roberts. Human Resources Management. n.d.