A survey by EdAssist found that half of millennials expected their employer to help pay for continued education. In particular, with college costs and student loan debt soaring, tuition reimbursement as a benefit offered by employers is gaining momentum.
Investing in your employees attracts and retains top talent. The top places to work all (Apple, Google, and Starbucks to name a few) offer tuition reimbursement as part of their benefits package.
If you’re unfamiliar with tuition reimbursement, here's how it typically works: an employee pays upfront for college, graduate, or continuing education classes. Then, once the class or semester is complete, the employer will refund a portion of the money spent—or the full amount.
This might seem contradictory. After all, why would companies benefit from spending money on their employees' education? Actually, employers benefit just as much as employees do from tuition reimbursement programs.
Here are the top 5 benefits to offering tuition reimbursement as an employer.
1. Offers Tax Breaks
Offering a tuition assistance program actually costs the employer very little. Money spent on repaying tuition or other education expenses for employees is tax-deductible up to $5,250 per employee each year, making this program cost-effective for companies.
As long as your company has a written policy meeting federal tax guidelines, employers can deduct up to $5,250 in reimbursements (per employee) from their own taxes each year. Additional government reimbursement may apply to employees taking courses specifically geared toward their job duties. These tax breaks allow companies to offer valuable benefits for their employees for a reduced and, sometimes, negligible cost.
When creating a tuition reimbursement program, you should seek legal guidance to comply with federal, state, and local labor laws.
2. Promotes Retention
In addition to attractive tax benefits, tuition assistance programs can help you train and retain high-quality staff. Employees who take advantage of the tuition reimbursement typically feel a sense of loyalty to your company and feel confident in the fact that they can grow at your company instead of seeking career growth elsewhere. Because the benefit is so directly personal, it keeps motivation high.
Education assistance can be particularly helpful for companies in industries with notoriously poor employee retention rates. For example, more than 70% of workers in the restaurant industry changed jobs in 2017, according to the Bureau of Labor Statistics.
Once you define your goals for your company's advancement, you can create a repayment assistance program with specific requirements and qualifications to match. The ability for employers to customize their programs makes tuition reimbursement one of the more flexible voluntary benefits for employers as well. For example, if your goal is to have employees with a rare set of skills, you might limit the education reimbursement plan to only cover courses for those skills.
Like any benefit, tuition reimbursement helps attract and retain qualified, hardworking employees while meeting the needs of your unique business.
3. Reduces Recruitment Costs
Similar to promoting retention, tuition reimbursement reduces turnover costs.
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, while promoting from within. A win-win!
A great example of this is Cigna Corporation. Cigna Corporation invested millions of dollars in its Education Reimbursement Program (ERP). By the end of 2014, ERP resulted in a staggering 129% increase in ROI as a result of the avoided talent management and recruitment costs.
Since tuition reimbursement is such a valuable benefit for employees, these employees stick around longer, reducing turnover, and saving your company the costs of finding and training new hires.
4. Signals Value
Offering tuition reimbursement can be a great way to build your company's reputation. It shows that you are dedicated to helping your employees learn and grow. Even if you have a minimum-wage team that doesn't need more advanced skills, you can offer education assistance with wide eligibility parameters for your employees to obtain a higher education.
For instance, Walmart and McDonald's have tuition reimbursement plans, which offer them good public relations stories when hiring minimum-wage workers. These programs are used as a way for employees to improve their situations in life.
5. Strengthens your Company
With a benefit like tuition reimbursement, you’ll be able to attract and entice job seekers. Offering tuition reimbursement shows high-value candidates that your company is invested in their professional and educational growth, and it might be the deciding factor between your company's job offer and a competing employer's offer.
An educational assistance program also fosters a sense of loyalty between the employee and employer. Meaning the employees are more willing to reciprocate and help the company grow because they know the company is invested in their development and success.
Relevant coursework can sharpen workers' skills and know-how, strengthening the company and growing your workforce. Your employees will be more educated with a development in their soft skills as well as more specialized skills. With more knowledge, your employees will increase their performance and productivity which translates to more value for your company.
Employers can also overcome any workforce talent gaps by educating employees they already have. Only 11% of employers strongly agreed that graduating students have the skills and competencies that their businesses need.
Offering tuition reimbursement to your employees can be a great way to maximize your return on investment. Turnover is reduced, your company is more attractive to high-quality candidates, and you are able to build trust with your employees. The cost to your company is also minimal due to tax deductions. It’s a win-win for both employee and employer.
At Meratas, we help employer tuition reimbursement programs find dedicated talent (or upskill existing employees) from various skills training programs on our Platform. If you’re interested in using your tuition reimbursement program to effectively train, retain, or capture new skilled employees, contact us at email@example.com to learn how.
Although every effort has been made to provide complete and accurate information, Meratas Inc. makes no warranties, express or implied, or representations as to the accuracy of content contained herein. Meratas Inc. assumes no liability or responsibility for any error or omissions in the information contained herein or the operation or use of these materials.
Topics: Professional Development