We live in a fast-paced society where people are forever on the go. There’s hardly ample time for work-life balance, let alone continuing education. Yet studies show that employees want opportunities for learning and development. Could tuition reimbursement be a solid investment for your company?
According to a Gallup survey, 87 percent of millennials say professional development is important in a job. Further, the Harvard Business Review concluded that lack of opportunities for promotion or growth is a key reason people quit their jobs. Employees want to take their careers to the next level — and employers are encouraging them via tuition reimbursement programs.
A study by the International Foundation of Employee Benefit Plans found that around 83 percent of surveyed organizations provided some type of tuition reimbursement or education assistance to their employees. In that same survey, nearly 75 percent of employers said their tuition assistance program was successful, having a positive impact on career outcomes, job satisfaction and employee loyalty.
Higher Retention Rates
According to EdAssist, nearly six in ten employees who use tuition assistance programs say “they were offered a promotion, new opportunities within the organization, or other professional benefits within two years of completing the program.”
Additionally, eight in ten employees say tuition assistance “makes them more likely to stay with their employer.” This finding contradicts the notion that the employer will be left “out in the cold” after the employee completes his or her degree or course of study.
Lower Recruiting Costs
After finishing the educational program, the employee becomes more promotable and an even stronger asset to the company. By promoting from within, the employer saves on recruiting costs while cementing its reputation as an employer willing to invest in its workforce’s future.
Tax Breaks: A Compelling Incentive
The IRS allows employers to write off tuition reimbursements of up to $5,250 per year. The employee, as well, may qualify for education-related tax credits and deductions.
The Case for Reimbursement
Tuition reimbursement programs are usually offered by larger employers with bigger budgets. In these companies, the program is likely to be utilized at a rate that justifies the investment. This doesn’t mean that small employers cannot benefit from providing tuition assistance, as it all comes down to the needs of the company.
Typically, the employer paying the reimbursement requires that the pursued degree or courses be applied within the organization. They may also request that the employee stay with the company for a set amount of time at a minimum, after completing the program. If there’s room for advancement or skill growth within the company, there’s a case to be made for tuition reimbursement — no matter the size of the business.
Keep in mind that the employer decides the level of tuition reimbursement, whether that’s up to the tax-deductible amount of $5,250 or more. Also, reimbursement can be for non-degree programs, such as workshops, certification programs and individual courses — which may cost less than degree programs.
Employees concerned about recruitment or retention might also consider a total rewards package.
Questions? Get in touch with us.