The goal of attending higher education is becoming more and more common in today’s professional world. With a competitive job market and higher tuition rates, however, many workers find it difficult to carry the financial burden that often comes with college or university. A recent study by EdAssist found that 84% of employees said tuition assistance was an important factor in their career decisions. Offering tuition reimbursement to employees is an extremely valuable and sought after asset that is becoming increasingly popular in the workforce for many reasons.
What is a tuition reimbursement program?
A tuition reimbursement program is a type of educational assistance program that is offered to employees from an employer. Educational assistance programs are offered in a variety of ways, including student loan repayment programs, 529 plans, and on-the-job training programs, but the most common form is tuition assistance. An employer-provided tuition reimbursement program involves an employer paying for a percentage or all of an employee’s tuition costs.
Benefits of offering a tuition reimbursement program
Educational assistance programs and tuition reimbursement programs are highly beneficial to offer as a company, for both you, the employer, and your employees. Here are just some of the many benefits you can expect when offering a tuition reimbursement program:
1. Increase employee retention
One of the most prominent issues business owners face today is high turnover rates. For example, U.S. Labor Department data shows that restaurant workers are quitting their jobs at the highest rate in twenty years. Other factors, such as the COVID-19 pandemic, are only contributing to the problem. Offering a well-designed tuition reimbursement program for employees is a highly effective way to retain employees as they are more likely to feel valued in their workplace, which thereby creates more loyal and overall more motivated employees.
2. Increase employee recruitment
Similar to employee retention, offering a tuition reimbursement program encourages employees to achieve their educational goals while working, which is a common goal among millennial and Gen Z workers. A tuition reimbursement program creates a distinct advantage for you as an employer to offer highly sought-after benefits in a competitive job market,
3. Reduce benefit costs
Despite how it may seem, tuition reimbursement programs can cost very little for employers to offer. Section 127 of the Internal Revenue Codes allows employers to offer up to $5,250, per employee, of tuition reimbursement annually without being taxed. Under this section, a written tuition reimbursement policy will qualify as tax-free employer-provided assistance. There are a few important requirements to a well-designed tuition reimbursement program that must be followed in order to remain tax-free.
4. Boost employee engagement
When employees feel valued in a job, statistics show that they are much more likely to produce high quality work. Implementing this program program creates satisfaction among employees, which builds an esteemed reputation of your company and creates inspired employees who want to work for you.
5. Create a stronger company
The offering and encouragement of employees to enroll in higher education institutions simply creates a more educated workforce. Tuition reimbursement programs also show that an employer is interested in advancing employees’ careers and professional development. This concept is highly enticing for high-value potential employees during their job search.
Offering educational assistance is a highly effective way to grow as a company and attract and retain high quality employees. Simply put, there are only advantages to implementing a tuition reimbursement program, for both you and your employees.