What if your employer could help you earn college credits? In a competitive labor market, employers are becoming increasingly creative with the voluntary benefits they offer.
A 2017 World at Work survey found that 92 percent of U.S. companies offer some form of tuition-assistance program. Tuition assistance can bring all sorts of advantages to both employers and employees — and ways to offer tuition assistance are changing all the time. Here’s what you need to know.
Tuition Assistance Is on the Rise
Lydia Jilek, director of voluntary benefits for Willis Towers Watson, says that employers are increasingly asking about financial benefits for employees beyond retirement and compensation. Not only are tuition-assistance programs for employees more common, but some companies even offer programs to pay for the tuition of employees’ children.
It’s partially because of the job market tightening and an influx of vendors in the space, Jilek explains. Another key factor is that millennials and members of Generation Z are entering the workforce in greater numbers, and employers are vying to attract them.
“A generous tuition-assistance program will help you in becoming an employer of choice for recruiting purposes,” says workforce-development consultant Dorothy Martin. Employers also hope such programs will reduce turnover, increase job productivity and improve career mobility for employees who take advantage of them.
Tech and Finance are Leading the Trend
Jane Kwon, a consultant for Aon Hewitt, confirms that the financial-services and tech industries have the steepest upswings in their tuition-assistance offerings. As these industries grow rapidly, there is increased focus on expanding benefits. Some companies, such as EY and Boston Consulting Group, are going so far as to offer unlimited tuition reimbursement.
Generally, employers place a cap on how much assistance they offer. The median amount of tuition assistance provided by employers per year is $5,250 for undergraduate education and $10,500 for graduate education.
According to Kwon, the most common concerns about tuition assistance are high cost and worries that the employees who benefit from such programs will not stay with the organization long enough for the company to get a full return on its investment.
Recent research is mitigating these concerns. When Chipotle began a tuition-assistance program, the retention rate for those in the program reached 89 percent after only five months, nearly twice the retention of those who did not enroll.
Based on her 10 years consulting with organizations on their benefits strategies, Martin attests that “especially when looking at the impact of tuition assistance in reducing turnover, companies can cover the majority of the costs of their tuition-assistance program.” It helps that employees are not immediately eligible for these benefits: Most organizations require six months to a year at the company before employees can take advantage of tuition assistance.
Despite the high percentage of companies offering tuition-assistance programs, average employee participation is still only around 5 percent. Aon Hewitt consultants project that to grow to over 10 percent by 2019 as the expansion of these opportunities plays out.