Advantages of tuition reimbursement programs

On average, however, only two to five percent of eligible employees use tuition assistance programs , and 43 percent of working professionals are unaware if their employer offers this benefit. Educational assistance programs vary by employer.

One company, for instance, may cover the full cost of tuition while another might cap reimbursement at a dollar amount. A majority of companies require employees to pay out of pocket initially, reimbursing them for some or all of the tuition expenses once the semester is completed.

Forty percent of organizations , however, will cover tuition expenses up front, allowing students to defer payments or establish individualized payment plans. Some tuition reimbursement programs have conditions that must be met in order for employees to qualify. Organizations may require employees achieve a minimum grade, such as a B, in order to receive their maximum benefit.

Other organizations may stipulate that employees pursue courses or degrees directly related to their current role. For example, an IT company may be more likely to reimburse an employee pursuing computer science coursework as opposed to a history degree. Regardless of the conditions of a tuition reimbursement program, you should be taking advantage of these types of professional development opportunities.

These programs give individuals with financial hardships the opportunity to earn a degree and get ahead. By utilizing these programs, you can avoid taking out loans and save yourself thousands of dollars over the course of your education. A recent Accenture and Lumina study found that those who participated in a tuition reimbursement program were 21 percent more likely to be promoted and saw a 40 percent higher wage increase over a three-year period. From an employer perspective, there are many benefits to offering tuition assistance benefits to employees.

Providing these incentives allows employees to develop critical competencies and skills that can have an immediate positive impact on the organization.

Employers who offer professional development opportunities also have employees who are more engaged. Plus, it can take months for the new hire to acclimate to company culture and become fully productive. On the other hand, promoting people from within generates little if any additional cost to the company.

To qualify for this tax perk, the tuition reimbursement plan has to be in writing and meet other requirements, including:. Employers can determine their conditions for reimbursement of employee tuition.

Some common conditions include:. The first condition that may limit eligibility is length of service. Many employers offer tuition reimbursement only to full-time employees who have worked at the company for at least six months to a year.

They also require the employee to still be employed with the company when they complete the course. The definition of discipline can vary from company to company but typically includes written warnings, demotions, or suspensions. The next condition that may hinder eligibility is course of study.

Many employers require that the courses or degree program can be applied within the organization. For example, a consulting firm may broadly define relevant subjects; on the other hand, a small IT firm may only reimburse specific technology-related courses. The program can also require the employee to take classes only at a pre-approved educational institution such as a local university or community college or an accredited online college.

Another potential condition is the level of cost the company is willing to reimburse. Reduce Employee Turnover Offering tuition assistance also reduces employee turnover. Tax Deductions Offering a tuition assistance program actually costs an employer very little. Company-Designed Programs Any company that offers tuition assistance or reimbursement decides exactly how the program will be designed.

The company can reserve the right to not offer any assistance at all below a certain grade. Time Limit Some companies also require that employees complete their course of study within a certain period of time. About the Author. Share this article! How many employees are in your organization? United States Canada Other.

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