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Businesses | Tuition Assistance Programs

Tuition Assistance Programs

Many employers understand the need to help their employees achieve their personal career goals with many employees desiring an Associate's, Bachelor's or Master's degree. The catch for many of these employees is the financial impact when taking on this endeavor. Tuition assistance programs can be extremely beneficial for employees if the policy is clear and concise.

  Here are a few tips to help you design a tuition assistance program:

Clear, concise program
Unfortunately, many times programs/policies can be intimidating and confusing making these programs almost useless. Make every effort to create a program that is easy to understand and has minimal steps for approval.  If employees don't understand it, they won't use it. Likewise, if they are required to "jump through hoops" to gain approval, they'll likely not find the program overly beneficial.

Who should I pay?
You'll need to determine who you would like to pay in your tuition assistance process. Some institutions will defer tuition to the end of the semester for students covered by a tuition assistance program which may allow employers to pay directly to the institution. There are a couple benefits to this program design. The employer knows the money is going direct to the employee's education and the employee does not need "foot the bill" for a significant expense and then wait for reimbursement.  The down-side to this design is that not all institutions allow tuition deferral so you may be paying benefits differently across your employee population. This may become administratively burdensome. 

On the other hand, you may consider a reimbursement program where the employee pays the tuition and is then reimbursed upon successful completion.  The upside to this design is a consistent process for all employees which is administratively appealing for the employer.  The downside, again, is that the employee will need to pay tuition at the beginning of the semester and then wait for reimbursement.  The cost of tuition is alarming to many people and they are reluctant to take on the cost even with tuition assistance available.  There is no "right" answer here - you'll need to make a decision based on your company's culture and values.

How much should I pay?
The federal government has a limit of $5,250 annually per employee for tuition assistance before tax withholdings become an issue.  Generally speaking, most plan designs will pay tuition for employees earning a grade of "C" or better. Some plan designs will pay more for an "A" versus a "B" versus a "C" (100% for an A, 80% for a B, etc.).  Tuition assistance programs that pay more for better grades are ideal if your company has a compensation model that is "pay for performance" or merit based since they align nicely with each other.  If you're considering implementing a tuition assistance program, you'll need to have an understanding of how many employees may use the benefit to help determine your appetite for this employee development program? These two items will help you determine how much you'd like to spend per employee annually.

Profession related coursework only?
 Many employer programs only pay for courses in a degree that are directly related to the employee's profession though it may not be necessary to have this provision. Consider the annual maximum benefit that your program allows. Does it matter which classes you pay for if you've capped your annual commitment to the employee? If the employee's advancement is largely dependent on obtaining their degree, supporting any course up to your annual maximum may make sense.  

Ensure that your program has a repayment commitment included in the program's policy.  A provision that states "employees that voluntarily or involuntarily terminate employment may be required to repay tuition assistance benefits paid in the previous one year/two year window from the termination date".  This policy language will help you recover costs that you will no longer reap a reward from the employee gaining the degree. You'll need to determine the appropriate repayment window for your company.


For more information, please contact the Fond du Lac Area Human Resources Association at info@fdlac.com.

Disclaimer: The Fond du Lac Area Human Resources Association ("Association") provides the above information for general purposes only. While the Association attempts to ensure that the information contained herein is accurate, the Association is not responsible for any errors or omissions in the information, or for the results obtained from the use of the information contained herein. All information is provided "as is" with no warranties, express or implied, 
including warranties of merchantability or fitness for a particular purposes. The Association provides no guarantee or completeness, accuracy, timeliness, or of the results to be obtained from the use of this information. In no event will the Association, the Fond du Lac Association of Commerce, or either's officers, directors, employees, agents, or insurers be liable to any person for any decision made or action taken in reliance of the information contained 
herein nor for any incidental, consequential, special, or other damages resulting therefrom, even if advised of the possibility of such damages.

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