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Recruit Top Talent With Tuition Assistance Programs

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What do Apple, Disney, Verizon, Google, and Starbucks have in common? They’re all multi-billion dollar companies, and they all offer tuition reimbursement to their employees. And they’re showing that a company benefits by paying fees for their employees’ education. Tuition assistance is a win for both employers and employees.

A Growing Trend in Employee Benefits

Tuition assistance programs are a type of employee benefits in which the employer pays for a predetermined amount of continuing education costs for their employees. Assistance may come in the form of reimbursements for tuition, fees, and books.

Some employers may opt to cover the full cost associated with the education, while others may choose to pay a portion. Some might pay upfront; others per course/semester.

To protect themselves from employees taking advantage of the program and leaving the company, employers take various measures, such as requiring the beneficiaries of the program to remain in the company for a specified time — or be required to reimburse the company for part of the fees paid on their behalf.

The Benefit for Companies

As skilled talent becomes harder to find, many companies are looking to grow from within. As of 2018, 85% of US employers surveyed were offering tuition assistance to some or all employees, according to a study by WorldatWork. Here’s what companies gain:

1. Reduced Tax Burden

Companies with tuition assistance policies for their employees can benefit from tax breaks. That’s because money spent on paying employee education expenses is tax-deductible if it meets the IRS requirements.

Under section 127 of the Internal Revenue Code, an employer can deduct up to $5,250 per year for each employee that qualifies and participates in the employer’s education assistance plan.

With the US government facilitating the implementation and adoption of tuition assistance programs, there is no reason for an organization not to take advantage of this opportunity.   

2. Free Part-time Work (Depending on a Company’s Tuition Assistance Policy)

Besides the tax break, companies can also get free part-time work and increased brand awareness by offering tuition reimbursement.

For example, Finnegan, a Washington-based law firm that specializes in intellectual property law has an attractive reimbursement program that covers 100% of employee’s tuition fees.

To qualify for the program, staffers must work as “student associates” while they attend law school. This program is a win-win for all; the company gets part-time work from the student and the student gets free tuition. What’s not to like, especially if you’re going to a top law school like Harvard on someone else’s dime.

According to BLS, lawyers make $122,960 on average but can expect to pay anywhere from $12,000 to $70,000 for the LLM (Master of Law) program. But with a tuition reimbursement program, like the one for Finnegan, the cost can be reduced to nil.

3. Help Businesses Attract Top Talent

It’s no secret that every company wants to attract, recruit, and retain top talents.

To achieve this, many companies offer attractive benefits and perks. Some will opt for vacation days, others gym membership, and a few will stick to industry-standard salaries.

But when you look at the various generational cohorts in the workplace (Gen X, millennials, and Gen Z), you may come to realize that you’re not giving your employees what they actually want. For instance, millennials comprise a majority of the American workforce.

That means for a business to have the people it needs, it may need to fish from the millennials pond. And to attract and retain millennials, you’ll want to give them what motivates them most. And that is, you guessed right: tuition reimbursement.

Don’t take our word for it. In a recent Gallup’s survey on ‘The State of the American Workforce,’ 45% of millennials said they would change their current jobs for one that offers tuition reimbursement. By comparison, 24% of baby boomers and Gen Xers said they won’t change jobs on the basis of tuition reimbursement alone.

4. Helps Employers Reduce Turnover

Offering tuition assistance helps to reduce employee turnover and the associated costs.

And there is no better example to bring this point home than the case of Cigna, which was published by the Lumina Foundation.

From 2012 to 2014, Cigna Corporation invested millions of dollars in tuition assistance through its Education Reimbursement Program (ERP). By the end of 2014, ERP resulted in a staggering 129% increase in ROI as a result of the avoided talent management and recruitment costs.

When a company invests in its employees’ development and success, the employees feel obliged to reciprocate by helping the company grow. In a nutshell, a tuition reimbursement program fosters a sense of loyalty between the employee and the employer.

Wrapping Up

Tuition assistance provides an effective way for employers to nurture their employees’ skills through continuing education programs. 

But as businesses and schools around the world cancel physical meetings in response to COVID-19, in-class learning is emerging as one of the hardest-hit activities. However, businesses can’t afford to put capability building on hold. 

To foster employee development in the midst of COVID-19, employers can encourage their employees to do remote learning by offering tuition reimbursement programs. With remote learning, completions can be done from any location, and what better time than now when employees can’t do their normal jobs?

Those Employees With Financial Wellbeing Keep The Workplace Pumping

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“Big money got a heavy hand
Big money take control
Big money got a mean streak
Big money got no soul…”

—Rush, Big Money

Throughout commencement on that warm May morning over two decades ago I thought, I did it. Not the traditional seamless timeline of 4ish years, but I did it nonetheless. The first one in my immediate family to do it in fact. I did it and received a Bachelors of Arts degree in psychology with a minor in anthropology from San Jose State University. I financed most of it myself, working full-time at SJSU during the latter half of completing my degree.

But there were loans involved in bankrolling my degree. Not an excessive amount, but somewhere north of $15,000 worth of loans during those frenetic college years. In economic comparison, the full time job I had at the time with the university paid about $30,000 annually.

The future looked brighter than ever. I had my degree, I left the university job for one in the exciting world of high-tech marketing and the dot.com boom – all was well in my world.

Until it wasn’t and I was swimming in other debt plus the student loans and lots of other life choices hitting the skids.

As the saying goes – life happens and not all the choices we make work out – but I made it and fortunately many people with similar stories did and do as well, especially since we’ve had two economic busts within the booms since. But today student loan debt had increased dramatically. With smaller savings (if any) and continually rising tuition, there are over 40 million Americans with at least one outstanding student loan, which is up from 29 million consumers in 2008.

Of those, the average student loan balance is about $30,000 per borrower. For those who finish graduate school the total can be over $80,000. Medical school debt is twice that or much more. Today the nationwide student loan debt is at an all-time high of over $1.2 trillion, an 84% jump since the great recession, according to a study from Experian, which analyzed student loan trends from 2008 through 2014.

Plus there’s the fact that “student loans surpassed home equity loans/lines of credit, credit card and automotive debt.” Yet, for the millions who struggle with student loan debt, not many loan relief and repayment programs have been available to these borrowers, unlike those with underwater mortgages over the past seven years.

There is the Federal Student Aid website that provides resources and recommendations on how to manage and repay federal loans, which accounts for the majority of student loans, but otherwise repayment and refinancing programs have been limited.

Dan Macklin, co-founder and vice president of the nation’s second largest marketplace lender called SoFi, told us on the TalentCulture #TChat Show that the student-lending market is a very strange one indeed. When he and his co-founders started SoFi about four years ago – which offers mortgages, personal loans, student loan refinancing and more including free services for employers and employees – they looked into the market and there was no one refinancing federal student loan debt at the time. In fact, they almost didn’t launch the company because they thought there must be a reason there weren’t any lenders offering these services.

Financial wellbeing has finally gained traction in the workplace and I’ve had the opportunity to work with a few startups in the space years ago, GuideSpark being one of them. According to a survey by benefits consulting firm Aon Hewitt, more than 90 percent of 250 large employers said they want to introduce or expand their financial wellness programs this year. These programs have been on the rise and help employees understand and manage their personal finances, save money for emergencies and employ strategies for dealing with economics ups and downs.

The impact of debt can be overwhelming. Add to that the instability of the job market and the world of work and life become a pressure cooker affecting productivity, psychological and physical wellbeing. Too many student loan debtors are delaying saving for retirement until they’ve paid off their debt, which seems like it’ll never happen and exacerbates helplessness exponentially.

More and more companies obviously do great things (and creative things) around 401K, retirement planning, financial wellbeing and other healthcare benefits, with HR taking the lead here. Cost-benefit analysis of higher education aside, the reality is that when you come out of college with tens of thousands or hundreds of thousands of dollars of student loan debt, you’re probably more worried about that for the first few years or even decades and getting that off your back until you’re really able to think about starting a family, buy a house, retirement and so on.

Big money may have no soul, but it’s always been a means to beginnings, middles and ends. Those employees with financial wellbeing keep the workplace pumping.

It’s Time For A New Job-Skills Training Model

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I attended a presentation by Mary Owens at a local financial advisory firm. In her well-presented talk about the return of manufacturing to the U.S., she articulated a number of facts that got me thinking:

  • Manufacturing was returning because North American fuel (read: natural gas) is now becoming cheaper than the combination of diesel and Asian labor.
  • U.S. factories are utilizing the most advanced technologies.
  • And last, we can put millions of people to work.

This is good news, right? I think so. But we still have a major gap in fulfilling the training that these factories need. She described quite succinctly these additional points that I have been thinking a lot about:

  • Many industries are beginning to (re)grow, and they are using new technologies to do it.
  • In many industries, employers can’t find “locked and loaded” employees who have the skills to perform the jobs they need filled.
  • The current higher education and vocational system isn’t serving the employment needs of employers or job seekers.

Mary’s plea, as I understand it, is to invite the wealth community to invest in an educational system to feed these employers’ needs. I like Mary’s pluck. She is not the first to say it or practice it. It makes sense to see the need and fill it.

But … not so fast. Since writing about workplace apprenticeship a few weeks ago, I’ve continued to ruminate about these additional convergent problems:

  1. Trade schools and career colleges, while making a comeback, are not prolific enough to be a relevant source of fulfillment for these factory and other supporting jobs.
  2. Higher education has too many of the wrong students and isn’t coming close to fulfilling its pledge to any students or fulfilling its own historical role.
  3. Job seekers can no longer afford to create the debt that higher education is demanding.
  4. The public can no longer afford to support this Herculean effort in the form of needed government subsidies.
  5. Employers want to shift responsibility away from themselves and blame everything else—from schools to generational birth year, from government to parents.

If business wants “locked and loaded” workers, then where should it get them?

In his post, “How Education Is Failing To Serve Business’ Needs,”  Mark Lukens  discusses this very topic. His analysis of the raging debate about education not serving humanity’s need to think creatively is extremely relevant. To that point, I agree.

Then he says,

“If the education system is to serve the needs of business, then we need to start by asking what those needs are.”

 Ugh. I cringe. Education should not be the bitch of business. Education should be its own system and its own reward. And yes, I agree, it should shift its focus to help us to learn the needed skill of creative thinking; however, I envision a world where we get to learn for a variety of reasons, at a variety of times, and not always for job skills.

This bears the question, “Where do we learn the skills needed for a rewarding job?”

The answer keeps pointing me to employers. If they are the ones with the needs and they want a consistent, customizable result, then it is on their shoulders.

I believe that it is time for a new model. A model of efficiency and fairness. Let’s take the burden off of higher-learning institutions and the public. Let’s take the financial burden off of the individual as well. Let’s institute a model that allows business to serve itself. The model would allow people with the right behavior profiles to enter into paid apprenticeships to learn the absolute needed skills, aptitudes, and values needed by the employer.

We have hundreds of years of history filled with examples of an apprenticeship model. The last 100-plus years have taken us off track and placed the “burden” elsewhere. I expect that employers are going to rebel against this responsibility. But when they see that it actually MAKES them money through efficiencies rather than turnover costs, possibly the whining will stop.

I envision higher education rebelling because it will see its head count retreat. But it is time to stop the churn of unsuccessful, unhappy, and broke students overfilling our colleges and universities. It is only in the last 50 years that “everyone” went to college. Now “everyone” doesn’t get a result. So let’s stop it.

If we are to get out of our current morass, grab opportunity by the nose, and get back to work, it is time for employers to see themselves as training organizations. Profitable training organizations.

The future of work is dependent upon it.

 

photo credit: Tweek via photopin cc

Higher Ed? Degree of Experience Counts #TChat Recap

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Remember in the 1970’s when the tech world was still in its infancy and engineers and developers walked in off the streets without college degrees?

And then again in the late 1990’s during the dot.com boom if you had any Web HTML experience and a pulse?


Ah, the good ol’ days when demand exceeded supply. Actually, the good ol’ anomalies, because for most of the recruiting and HR hiring pros of the world, a college degree tends to trump experience more often than not.

Not necessarily the name brand of the college, but the fact that you went to an accredited university and received the degree, in hand (not coming up 3 units short).

Of course that will vary from industry to company to position, but ask any recruiter today filling most if not all “technical” and “knowledge worker” reqs — you’ve got to have a college degree.

During last night’s #TChat, which was all about higher ed and what was more important — a degree or experience, veteran recruiter and co-founder of TruEvents Bill Boorman wrote, “The University of Life and the School of Hard Knocks has served me well.”

Many of us can attest to that. I know I do (and still do). But as I mentioned last night, I’m very proud of my college degree. I didn’t have the traditional college experience; I was working full-time already when I finally finished my undergrad and started (but haven’t finished, yet) grad school. I worked my butt off to complete my degree in psychology, owning every minute of every class and every world of every paper written until I walked proudly into the stadium in cap and gown on graduation day.

In a sense the University of Life started while I was still attending San Jose State University. Go Spartans!

So for me, when it comes to higher ed it’s the degree “of” experience, not the either “or”. Higher ed should inspire and light the inner fire. And the other way around. Employers should aspire to do the same when they recruit, hire and onboard because it’s good for business.

As for the ever-rising costs of higher ed, that’s a post for another time (although all the smart folks participating last night shared many insights).

A special thank you to Matt Charney for running the show and for his special guest Mark Kantrowitz.

Here were the questions from last night’s #TChat (you can read the transcript here):

  • Q1: Which matters more (and why) to Jobseekers/Recruiters: what your degree is in or which school it’s from? Answer J or R.
  • Q2: Should the goal of higher ed be to prepare students for the job market or to develop intellectual capabilities? Why?
  • Q3: What are some creative ways Employers can partner with Universities on talent identification and development?
  • Q4: Do student loans/debt impact employee productivity/performance? Can/should employers develop payback/performance incentives?
  • Q5: What are some ways, either direct or indirect, to offset the rising costs of college?
  • Q6: Are degrees from for-profit, online or foreign schools the same as traditional degrees as a hiring consideration?
  • Q7: Is going back to school for a professional degree a career booster or disruptor?

See you next week. Same time. Same place. #TChat every Tuesday evening 8-9 pm ET/5-6 pm PT

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