Taking Advantage of Your Employer’s Education Benefits A Guide to Employer-Provided Tuition Assistance for Nontraditional Students
Many people go to college because the education can help them get a job, but learning doesn’t have to stop after people are established in their careers. Working adults may want to go back to school to advance or diversify their job-related skills, work toward a higher-paying position or for personal fulfillment. However, attending school while maintaining a career can be challenging. Fortunately, employers increasingly understand that their employees aren’t the only ones who benefit from increased education — their companies do, too.
Because of the mutual benefits of having well-educated employees, many workplaces offer tuition assistance to make going back to school more feasible. The Society for Human Resource Management’s 2017 Employee Benefits Survey found that around 50 percent of employers offer some form of assistance for undergraduate degrees and 53 percent for graduate degrees. This is actually a decrease in educational benefit offerings from the previous five years, but more recent pushes to improve educational benefit offerings by large companies like Discover and Walmart may indicate a trend toward focusing on education as an important employee benefit.
Employer Education Benefits Explained
Employers are increasingly aware that providing good benefits can be the key to attracting and retaining high-caliber employees, but premium benefit packages can cost employers a lot of money. Tuition assistance has become a popular employer benefit because it’s not only a perk that many workers highly value, but the results can end up outweighing the initial costs of providing education assistance. “It’s becoming more common to see employers reimbursing employees for their student loans or paying for their current education. Companies are starting to see the value it will bring by furthering education and helping employees move forward,” says D.W. Bobst, founder and CEO of TrendHR. “This also gives employees an incentive to stay with the company long term.”
When employers help their employees further their educations, they are making an investment in their workers. Those who go back to school to advance their educations may become more qualified in their field, which can yield higher earnings for both the individual and the business. Even when employees go to college to explore subjects unrelated to their work, employers can still benefit from having satisfied, well-rounded employees who appreciate that their workplace invests in their personal enrichment and quality of life. “In this market, retaining current talent is equally important to attracting new talent. Education benefits assist with both.”
Employers may offer education benefits in a few different ways. The most common are tuition reimbursement, tuition assistance and employer-sponsored scholarships.
With tuition reimbursement, employees pay the up-front cost of tuition, and their employers pay them back. Some employers reimburse their employees after each year of schooling, and others only reimburse upon program completion. “As in any benefit, the employer wants the employee to do the up-front work to get the benefit,” notes Bobst. “For example, the employee needs to enroll in the benefit, fill out paperwork, pay the tuition upfront and then be reimbursed a portion or the whole tuition depending on the company.”
The amount of tuition covered often has a yearly limit. If the amount reimbursed is $5,250 or less, the benefit is not considered income, and the employee doesn’t have to pay taxes on it. However, if an employer reimburses an employee for more than that amount, any benefit exceeding $5,250 would be taxed. Because of this tax arrangements, it’s common for employers to cap their education benefits at or below $5,250. To cover costs exceeding their employer’s specified reimbursement amount, students can and should apply for federal financial aid. When applying for aid, students must notify their school of the amount of their employer-provided tuition assistance, as this may affect the amount of institutional and federal aid the student can receive. Students who can’t pay for school upfront can talk with their school about making incremental payments through a payment plan or see if their school will allow them to hold off on payment until they receive the tuition reimbursement from their employer.
Employer-provided tuition assistance programs are often very similar to tuition reimbursement arrangements, except that tuition assistance programs generally provide aid upfront. This means the amount employees have to pay upfront for their education can be greatly reduced or eliminated entirely.
This form of aid is pretty straightforward. Some workplaces offer scholarships to employees and, sometimes, their family members. While scholarships don’t necessarily fall under the employment benefit umbrella because they aren’t inherently available to all employees, they are still a useful form of aid employers may provide in lieu of or in conjunction with other education benefits. Scholarships may be limited in quantity, and employees may need to apply for them each academic year.
Employer education benefits often have stipulations employees must meet. “Employers put this in place to ensure their investment is used wisely, and in some way contributes back to the business,” says Bobst. Common requisites include:
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GPA minimum. Employers often want their employees to make good grades to receive the benefit. Bobst notes that most require employers to get B or better grades for reimbursement.
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Choosing an approved course of study or making sure to take employer-specified courses. Some benefit programs only apply to specific courses of study, generally related to the work done at a given company.
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Attending an approved or partner school. Companies can make the most of their education benefits by partnering with certain schools, so it’s good to check if employees must choose from a select list of colleges.
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Employment tenure. While some companies allow employees to take advantage of their education benefits right away, others require employees to work at the company for a specified length of time, first.
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Employment commitment. Some employees must agree to work for the company for a certain length of time after receiving their education benefits or completing their education programs.
Bobst says that the conditions a company has in place are usually fairly easy to meet and should not deter prospective students from taking advantage of the aid. “Some personal time spent on doing the work should never be a detriment to trying to get some ‘free money,’” he says. “Not many employers do this, and it is an incredible benefit.”
Bobst also points out that finding out about employer-provided education benefits shouldn’t be difficult, because it’s an excellent opportunity for companies to appeal to prospective employees and advertise their company’s culture. “Employers that have unusual and great benefits should want candidates to know.” If the information isn’t readily available on the company’s website, Bobst recommends bringing up benefits during the interview or get information from appropriate sources in the office.
“Reach out to your manager or an HR representative. If it’s during the interview, don’t be shy; bring it up!”
If their workplace doesn’t have an established employee education program, employees can always ask to see if their employer would be willing to provide some sort of funding. These benefits can be invaluable to employee and employer alike, so it doesn’t hurt to ask. “If an employer does not have anything formal in place do not be discouraged, just ask, if that benefit is important to you,” says Bobst. “Maybe they will make an exception if they really want to hire you.” He continues by citing an instance when an employee successfully gained employer funding without a formal program in place: “We assisted an employee recently with an offer for a new employer — she was able to receive an education bonus as part of her offer. The education assistance is what solidified her acceptance of the job.”
Companies That Promote Continuing Education for Employees
More on Employer-Sponsored Education Benefits
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EdAssist
This company helps employers create and make the most of tuition assistance programs. Employees and employers alike can check out EdAssist’s resources to learn more about the personal and company benefits of employer-provided tuition assistance.
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Society for Human Resource Management (SHRM)
SHRM is a professional association and comprehensive resource on all things related to human resources, including tuition assistance and other education benefits for employees.
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"Did the new tax law accidentally eliminate employer-provided education benefits?"
This article provided by Greensfelder Attorneys at Law provides an in-depth breakdown of education benefit taxes and deduction as they relate to the 2017 Tax Cuts and Jobs Act (TCJA).
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Federal Student Aid Handbook - Application and Verification Guide (2018-2019)
This volume of the U.S. Department of Education’s Federal Student Aid Handbook provides detailed instructions on applying for federal financial aid. Chapter 2 covers filling out the FAFSA and includes specific instructions on how to address employer-provided tuition assistance.
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Tax Benefits for Education: Information Center
The IRS provides readers interested in learning more about tax credits and deductions for education expenses with this comprehensive breakdown of various scenarios, including education benefits provided by employers.
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Employer-provided Tuition Assistance – University of Maryland University College
Like many schools, UMUC provides students with instructions for informing the school of employer-sponsored tuition assistance. This page serves as a good example of what students can look for and expect from their particular school.
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University of Denver Employer Reimbursement Payment Option and PennState World Campus Employer Reimbursement and Tuition Deferment Program
Both schools provide good examples of payment and deferment options for students who must wait for their employers to reimburse them for education expenses.
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"How to Convince Your Boss to Invest in Your Education"
Online education platform, Udacity, provides readers with some steps they can take to receive financial aid from their employers if a benefit program isn’t already established at their workplace.
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"Sample Letter/Template for Requesting Employer Support and Financial Sponsorship"
Duke University’s Fuqua School of Business offers its students a template letter they can give to employers when requesting financial assistance for the school’s Executive MBA programs. However, students of all schools and educational pursuits can follow the letter’s general format and tailor it to their specific circumstances.
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Association for Nontraditional Students in Higher Education (ANTSHE)
ANTSHE is an association for nontraditional students and their educators and advisors. The organization provides a range of resources for nontraditional students, including scholarships and grants, which can help supplement college costs not covered by employer benefits.
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Alpha Sigma Lambda
This national honor society aims to recognize and provide educational and leadership opportunities for nontraditional students. The society also offers scholarships and networking opportunities to members.
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Adult Student Checklist for Academic and Financial Preparation
The U.S. Department of Education’s Federal Student Aid Office created a checklist specifically for adult learners who are getting their educational funding in order. The list includes suggestions for receiving financial assistance for school.
