How a program works
There are a number of options when implementing an employee tuition assistance program. An employee may arrive as a new hire with student loans to pay off. The cost of higher education has steadily exceeded the rate of inflation for decades. A university education used to be manageable with a minimum-wage summer job, but now can require years of professional compensation to pay off.
The result is that more and more skilled applicants carry high student debt loads. Employee tuition assistance programs take the form of student loan repayment benefits, where an employee can receive help in paying off their student loans through their employer.
An employee tuition assistance program may be implemented when an employer offers to pay for further professional development or education. An employer educational assistance program can either help to defray or entirely pay for certifications or degrees for eligible employees.
When an employee tuition assistance programs involves continuing education, there is often a stipulation that the training be relevant to the work the employee performs. For example, a network administrator could receive training in new software or implementation standards in order to expand their work skills. The employee may be required to work at the organization for a certain period of time before or after receiving their benefit.
The employer’s human resources department may administer the employee tuition assistance program through an internal program, or they may partner with another company to provide these services.
Advantages for an employer
A company or organization that offers tuition assistance has a powerful tool available for attracting and retaining talented employees. In addition, a promising applicant that may flourish with more formal education can be tapped early in their careers. Hiring an employee that may require more training can build loyalty to the employer early, and when an employer offers tuition assistance they signal that they are invested in helping their employees grow.
In addition, employers can pair tuition assistance with an obligation to remain with an employer for a given amount of time. The disruption that is caused by employee turnover can range from a mere nuisance to a significant problem. In the healthcare industry, patient complications increase when turnover increases. Nurse tuition reimbursement programs can improve employee retention in healthcare, which means patients have better treatment outcomes. Using an employee tuition assistance program to improve healthcare employee retention can actually improve the quality of healthcare a patient receives.
And of course, having a more highly educated workforce provides an employer with an edge in the service and information economy.
Reducing other negatives
When an employee tuition assistance program involves student loan repayments, there is a reduction in many negative effects. When the repayments are tied with a contractual obligation to remain with an organization, turnover at that organization is reduced. However, turnover can also be reduced by simply offering the benefit as a condition of employment. Some companies have found that, on average, employees taking advantage of student loan repayment benefits stay two and half times longer than other employees.
Reducing the amount of debt an employee carries actually reduces the amount of sick days they use. Higher household debt is associated with higher rates of depression and higher diastolic blood pressure, both significant health issues on their own, as well as precursors to other conditions.
Studies of workplace financial wellness have found that the more debt an employee carries, the more likely they are to miss work. By both reducing existing student debt, and helping to avoid garnering new debts, an employee tuition assistance program can reduce absenteeism and healthcare costs.
A bonus for employees
Employees that utilize a tuition assistance or reimbursement program get a number of benefits. Employees are provided with an opportunity to expand their skill set and educational credentials without having to take on significant debt.
Also, employee tuition assistance may be more tax efficient. This is because tuition reimbursement and assistance below around $5,000 is not counted as compensation by the Internal Revenue Service. This means an employee can receive a financial benefit from their employer without having to pay taxes on it.