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Tuition assistance programs gaining greater attention

Posted February 8, 2017

By Michael Henckel, associate editor, J. J. Keller & Associates

Tuition assistance programs have long been offered by employers as part of their benefit program as a means to recruit new talent, retain current employees, and keep employees’ skills current. Employers offering tuition assistance should evaluate their program to ensure it is not only valuable to employees but is something that can be sustained by the company.

Expectations are changing

While tuition assistance programs provide benefits for both employees and employers, the value of tuition assistance might be rising. Why? The growing Millennial workforce not only expects employers to offer professional development opportunities, but also to help foot the bill, particularly when they’re looking to advance via formal education.

In fact, a 2015 EdAssist survey found that in addition to professional growth being very important to Millennials, nearly 60 percent of them would choose an employer with strong potential for professional development over one with regular pay raises.

You decide what your program offers

Your company is free to set the guidelines of a tuition assistance program as it sees fit. You can decide what type of education is reimbursable, as well as the maximum amount that will be reimbursed. Some other factors to consider when designing your program include the following:

Job-related study – While a tuition assistance program is a great way for your employees to expand their knowledge and learn new skills, you might consider limiting the course of study to programs where the skills learned will be applicable to your company.

Grade requirements – You may require that employees achieve a certain grade to receive reimbursement under your program. Such requirements could be based on an overall grade point average or could have reimbursement based on the achievement in individual classes (such as full reimbursement for an A, and a lower percentage reimbursement for grades below an A).

Direct payment or reimbursement – This may relate directly to the grade requirements section of your program. Some employers will pay a tuition bill up front, but many expect the employee to make the initial payment and will then reimburse the employee based on the grades received in the course.

Books and other fees – In addition to the cost of the course, registration fees, books, or lab materials can add up quickly. You’ll want to determine whether your company will consider these costs as part of the tuition assistance program.

Deductible value – The Internal Revenue Service allows you to offer up to $5,250 per year, per employee, and deduct it as a business expense. Any additional employer tuition assistance is considered compensation to the employee, and the employee is taxed for that income.

About the author:

Michael Henckel

Michael Henckel is an associate editor at J. J. Keller & Associates, a nationally recognized compliance resource company that offers products and services to address the range of responsibilities held by human resources and corporate professionals. Henckel specializes in topics such as the Fair Labor Standards Act, employee classification, and compensation. He is the author of J. J. Keller’s FSLA Essentials guidance manual. For more information, visit