Recruit Top Talent With Tuition Assistance Programs
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.
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?