Here’s Why You Should Offer Tuition Reimbursement to Employees
May 10, 2021
More than half of employees say that tuition reimbursement is the best benefit their companies offer, even better than more traditional benefits like paid family leave, wellness benefits, and life insurance. But tuition reimbursement doesn’t just benefit your employees. Your company will reap rewards, too.
That’s because employees are more likely to stick around when they’re getting access to coveted benefits like tuition reimbursement, and you can even deduct some of the expenses from your taxes. Employees who take classes on your company’s dime will begin to put those new skills to use right away, and the fact that you’re offering a coveted benefit like tuition reimbursement will make your organization more appealing to the most qualified candidates.
Encourage Them to Stick Around
You might think that employees would take advantage of tuition reimbursement to get a new credential and then take that credential somewhere else, job-hopping into a pay increase as Millennials are wont to do. But that’s not actually how it usually plays out.
For one thing, most tuition reimbursement programs require employees to remain with the company for a set amount of time after finishing their studies. It’s only fair to request a certain amount of service to offset the investment you’ve made in a person’s professional development.
For another thing, employees who are working full-time aren’t going to be able to carry a full course load on top of it. They’ll have to take one or two classes at a time, and that’s going to make earning a degree a long process. An employee who wants to complete an online bachelor’s degree program using your tuition reimbursement program may need to take courses for longer than average, so that means he or she will stay with the company for more than four years just finishing his or her degree.
Cut Your Tax Bill
Both employers and employees can benefit from tax deductions related to tuition reimbursement. As an employer, you can deduct $5,250 per employee who qualifies for tuition assistance under a qualified education assistance program (EAP). Employees can also benefit from a W2 exclusion of up to $5,250, which can lessen their own burden at tax time, and creates additional incentive to remain with the company. Just make sure to put your EAP in writing, don’t offer benefits besides education, and don’t discriminate to favor highly compensated employees (those earning $130,000 a year or more).
Develop Your Talent Pool
It might take an employee years to earn a degree in his or her spare time, but that doesn’t mean he or she won’t be able to immediately put those new skills to use. Employees will bring what they’re learning in class into the workplace every day, so your investment in tuition reimbursement will immediately start paying for itself in its effect on your talent pool. With each class, your talent pool will become that much more talented, and you’ll start seeing those improvements in skill and effectiveness immediately, even if the first degrees don’t roll in for some time yet.
Attract Quality Candidates
The best candidates want to work for companies where they’ll be offered all the trendiest perks and most desirable fringe benefits — and, frankly, candidates who’ve worked hard to amass strong experience and earn impressive credentials deserve to be rewarded with more perks and a better working environment.
Because it’s so popular, tuition reimbursement is one of the perks that top quality candidates look for. A top candidate may be planning to earn a master’s degree one day, for example, and is therefore eyeing companies willing to defray those costs. Some of the best candidates may simply be looking for an environment where they can feel supported in pursuing a passion or encouraged to take on the extra challenge of earning a degree. In any case, you’ll be more likely to attract the sort of motivated, driven, and ambitious people who are interested in pursuing higher education to further their careers, even if they’re currently just slinging coffee.
Are you ready to improve your work force, attract better job candidates, and boost your company’s reputation? Tuition reimbursement programs could do all that and more. Start helping your employees improve and develop professionally. It’s not just the right thing to do — it’s the smart thing to do for your company’s future.
