Employee compensation and benefits planning can be a tricky challenge with four generations currently in the workforce. The ability to pursue continuing education and develop as professionals is popular at most career stages, and surveys show that Millennials strongly prefer jobs with either tuition reimbursement or student loan payment assistance programs.
Nearly five out of every six organizations offer an educational assistance or tuition reimbursement benefit for their employees, according to a survey by the International Foundation of Employee Benefit Plans. Read on to find out about the employer benefits of a tuition reimbursement program and nine factors you should consider when developing your policy.
Do employers really benefit from tuition reimbursement?
Companies that offer tuition reimbursement place themselves in a stronger position to compete for talent across the labor force–and especially with Millennials. An EdAssist survey presented Millennials with two similar jobs and found that “nearly 60 percent would pick the job with strong potential for professional development over one with regular pay raises.”
But it isn’t only Millennials who value jobs with tuition reimbursement. Older workers use tuition reimbursement to transition into new roles or future-proof their careers. Overall, 84% of employees felt tuition assistance was an important factor in joining the company.
Beyond recruiting success, companies that offer tuition reimbursement have better educated workers who keep their skills updated. With the modern workplace transforming through technology, additional education provides a means of keeping pace in a rapidly changing world.
Tuition reimbursement programs create greater employee loyalty and reduce turnover. Employees feel good about employers who help them with educational goals. Many employers also insert a clause in the contract that requires employees to stay for three to five years after receiving the benefit or pay money back.
A study conducted of insurance company Cigna’s tuition reimbursement program illustrated the employer benefits when it found that employees who received tuition reimbursement were 10% more likely to be promoted and 8% more likely to be retained. Cigna also saved $1.29 in talent management costs for every $1 spent on tuition reimbursement, leading the company to significantly increase its investment in the program.
How does tuition reimbursement work?
Typically in a tuition reimbursement program, employers pay back employees for costs they incur while taking courses at the university level. Or the employer can help the employee pay the cost of tuition upfront, thus alleviating some of the financial burden. Whatever the details of your tuition reimbursement program, it is essential to develop a comprehensive written policy and an employee tuition reimbursement contract.
9 factors to consider when creating tuition reimbursement programs
As you develop a written policy and employee contract for tuition reimbursement, work through your company’s answers to these questions:
1. What is the maximum amount the company will pay per employee, per year? There are tax implications involved for the company and the employee in both the U.S. and UK.
2. Will the reimbursement maximum differ between graduate students and undergraduates? Graduate hours cost more, so additional help may be merited.
3. Which expenses will be reimbursed? Will you pay only for tuition? Fees? Books?
4. When will the company pay? Most programs reimburse after coursework is completed, but upfront assistance could boost participation and create more opportunities.
5. Is reimbursement contingent on performance in the class? Will students need to submit their grades before receiving payments?
6. Are employees required to pursue a degree? Will you consider programs such as graduate certificates or certifications as eligible? What if an employee just needs to learn a specific new skill, such as another programming language?
7. What schools will you accept? Do you require certain accreditation?
8. Are employees restricted to courses directly related to their current role? Many employers only see a benefit to the company if the degree or course taken is directly related to the role or department where an employee currently works. But does that factor in employees who might wish to make lateral transitions?
9. Will you include a retention clause? Will employees be required to stay a certain number of years or pay back all/part of the tuition?
Developing an effective tuition reimbursement policy can strengthen your company’s recruiting and retention while offering employees a chance to enhance their careers and lives. Asure Software Human Capital Management solutions can help you plan and manage your benefits programs to stand out from the crowd.