Employer-Sponsored Tuition-Assistance Options

Tuition assistance, or tuition reimbursement as it is also known, is an employer-provided employee benefit. This process is a win-win for your workplace and for you. In a tuition-assistance program, an employer pays all or part of an employee's cost to attend college or university classes.

Building Employee Retention

A solid employee retention tool, tuition assistance helps employers build employee loyalty and longevity. It is also a recruiting tool that benefits employers with high-potential employees who are focused on growth and learning. Tuition assistance is a benefit that many potential employees seek.

Tuition assistance enables employees to continue the expansion of their knowledge and skills while working. Employee continuing development is definitely a plus for the employer, too. The employer benefits from any learning that an employee pursues, even if it is indirectly through such factors as retention and commitment.

What Subjects Are Covered?

Tuition assistance comes in several different formats depending on the employer. Some employers will cover the cost of any class an employee takes even if the class is completely off-topic for the employee's job. Other employers cover only the cost of classes relevant to the employee's current or next position.

In the first instance, the employer takes the position that any class that keeps the employee learning and developing is equally advantageous for the employer. These employers also appreciate the retention benefits of allowing employees to choose their own courses of learning.

In the second, the employer is focused on the value of the course curriculum to the employee's specific job.

Whichever route employers choose to take, an approach less controlling to further employee empowerment and commitment often best-serves all.

How Tuition Assistance Works

Many employers who offer a tuition assistance program pay the full cost of the employee's tuition, lab fees, and books. Others pay a portion of the employee's educational expenses. When a class is required by an employer, the employer usually pays the complete cost and often includes mileage reimbursement.

When tuition assistance is available, the most common method for administering the program requires employees to pay for their own tuition and books when they register for classes. The employee is then reimbursed when he or she submits the receipts and evidence of earning a C or above grade upon completion of the course.

Employees must frequently turn in copies of their transcript or grade report papers to receive tuition-reimbursement payment. Tuition-assistance programs require employee submission of verification of a passing grade of C or better to ensure that the employee is spending the employer's money wisely.

In most cases, employers cap the amount of tuition assistance available for employees. Employers either set a limit in terms of dollars available per employee per year or they establish the number of classes they will pay for per year per employee through tuition assistance.

Tuition Assistance Payback

In some cases, where extensive funds are spent on tuition assistance, the employer requires that the employee sign an agreement to pay back the tuition assistance if he or she leaves the organization within a certain period of time.

In these cases, the employer forgives a percentage of the tuition assistance for every year the employee stays with the organization following the utilization of the tuition assistance. 

For example, companies have promised tuition assistance to cover the cost of a long-term, valued employee's MBA. Since this can cost $100,000 or more, employers want to make certain that they experience a return on their investment. If the employee leaves within a stated period of time, the employee owes the employer all or a portion of their tuition assistance.

This is generally a written contract that the employee is legally required to fulfill on separation from his tuition-funding employer.

The number of years an employee must continue working for an employer generally ranges from two to five years. Imposing heavier lengths of obligation can prove at least as detrimental to benefactor employers as to the employee. The impact not only for morale but also the bottom line, in attempting to retain obligated employees hanging on solely to fulfill a monetary commitment can resonate negatively for months or even years.

The Bottom Line

Tuition assistance is often negotiated in an employment contract. In an effort to attract hard-to-find talent, this tuition assistance may be above and beyond what other employees receive in tuition assistance in the same organization.

Tuition assistance makes sense for employers because empowered employees continue to grow and develop knowledge, and they bring both back to your organization. Employees who remain in the practice of learning actively seek opportunities and methods to learn from every environment.