Tuition reimbursement provides a lot of benefits for employees. They can return to school for a higher degree and recover some of the costs. Tuition reimbursement programs aren’t always limited to tuition. Other expenses, such as the cost of books, may also be included.
The benefits of tuition reimbursement programs aren’t only for employees. Employers stand to gain a lot from offering tuition assistance to their employees.
Highly Skilled Employees
The biggest benefit of offering tuition assistance is that your employees go back to school. They will learn skills and gain an education that is applicable to your company. Employees will be smarter and better skilled in their jobs.
Reduce Employee Turnover
Offering tuition assistance also reduces employee turnover. Employees who are offered tuition reimbursement usually stay longer with your company. They’re also more eligible for promotions. Therefore, the need to spend money on recruitment is reduced.
Offering a tuition assistance program actually costs an employer very little. Any money spent on repaying tuition or other education expenses for employees is tax deductible. There’s an annual maximum of $5,250 that can be deducted.
Any company that offers tuition assistance or reimbursement decides exactly how the program will be designed. The program can be limited to certain areas of study or to a certain amount. This means that tuition assistance is exactly what the employer wants to offer.
Most tuition reimbursement programs aren’t offered for any course of study an employee wants to take. The courses and degree chosen usually must be related to the company and the employee’s job. Depending on the type of company, the options for eligible courses could be broad or extremely narrow.
You can choose to offer tuition assistance only for those courses that would most benefit your company. What skills does your company need for its employees to have? Offering tuition reimbursement for courses in those areas can also encourage employees to gain those skills.
Most tuition assistance programs don’t necessarily require straight As for eligibility. Some do, however, offer higher rates of assistance for higher grades. Some offer full reimbursement only for As but do still offer a percentage of reimbursement for lower grades. For example, 85% tuition reimbursement for a B, while 75% could be offered for a C.
The company can reserve the right to not offer any assistance at all below a certain grade.
The IRS’ limit on the allowable tax deduction for tuition reimbursement is $5,250. Any cost over that amount will be taxed. Companies can restrict how much reimbursement they offer so that 100% of their contributions are tax-deductible. Employees still benefit even if only some of their tuition is paid.
Some companies also require that employees complete their course of study within a certain period of time. Companies want to benefit as soon as possible from the employee’s new skillset and may not offer reimbursement for any courses taken after the time limit has passed.
Should Your Company Offer Tuition Assistance?
Offering tuition reimbursement to your employees can be a great way to maximize your return on investment. Turnover is reduced while your company is more attractive to qualified candidates. The employees you have are better qualified and more eligible for advancement.
The cost to your company can be minimal with tax deductions. It’s a win-win for both employers and employees.