Learn About Employer Educational Assistance Program

workforce development through Bright Horizons

College at a minimum

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As the economy increases in specialization and sophistication, more and more jobs require at least a bachelor’s degree. Every year, automation consumes more and more complicated tasks that would previously have required a human being. This means that there are fewer options for a job seeker without higher education credentials.

Job growth following the Great Recession has overwhelmingly favored those with at least some college. In fact, since 2008 there has been a net loss of jobs for those who have not attended college. Increasingly, the American Dream doesn’t just require a steady job and hard work. For many, entering or remaining in the middle class means getting a college degree.

The demand for college degrees has helped fuel a rise in tuition costs that has outpaced inflation. It isn’t uncommon to find that acquiring the basic prerequisite for employment has entailed taking on significant student loans.

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A chance for employers

The fact that so many job openings require some college or a bachelor’s degree is an opportunity for employers. Many job applicants will have student loans they need to pay off. This means an employer educational assistance program that offers student loan repayment benefits will make an employer stand out to applicants. Having a specific benefit that meets the needs of an applicant can be an attractive draw.

 

Since advanced degrees are in such high demand, an employer that positions itself as a partner in their employee’s educational advancement can distinguish themselves from the rest of the pack. Applicants that are hoping to continue their education or complete a degree program can be attracted to an employee tuition assistance program.

 

Lastly, a comprehensive benefits package that includes health insurance, employer child care benefits, paid vacation, and parental leave have been found to be important for job seekers. 

Types of assistance

An employer educational assistance program may be implemented a number of ways. Educational assistance may take the form of an employer helping to pay off student loans. The employer will typically pay a set amount each month, either towards the principal of the loans or the interest on the loans.

 

An employer may also help an employee pay for tuition for a degree or certification pursued while employed. Instead of covering pre-existing costs, an employer partners with an employee to either help or entirely pay for tuition accrued while the employee is employed. An employee tuition assistance program may come with the stipulation that the degree or certification be relevant to the type of work the employee is expected to perform, or be useful to the organization offering the assistance.

A partnership

When an employer offers educational assistance, they signal that they are willing to partner with their employees. Instead of looking outside the organization for new hires with the perfect set of qualifications, an employer educational assistance program taps an internal talent pool. This can boost morale by communicating that the employer considers their people a resource that can’t be readily replaced. It is also of practical benefit, as an employee that expands their training keeps their institutional knowledge within the organization.

Cost effective

For fields where there is high turnover, such as healthcare, it can often be less expensive for the employer to offer tuition assistance than it is to hire someone with the desired credentials. It can cost healthcare organizations over $50,000 to replace a registered nurse, so a nurse tuition reimbursement program that is able to increase retention can be a wise outlay.

 

An employer educational assistance program that is able to increase retention and improve the credentials of an organization’s workforce is a win for both the company and employees.

 

In addition, employer educational assistance can prove to be tax-efficient for both the employer and employee. Employees are not taxed on tuition assistance or employer student loan repayments below around $5,000. Employers are legally able to treat employee educational assistance more tax efficiently than standard compensation.

FAQs on Employer Educational Assistance Programs

Can an employer require an employee to stay with a company if they pay for a degree?

OPEN
An employer educational assistance program that involves covering the cost of further education often requires the employee to serve that employer for a period of time following receipt of the benefit. The terms of how long an employee must remain with the employer will differ between employers, and even between employees at the same employer.

If a job requires a college degree, is an employer required to offer educational assistance?

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While an employer must compensate employees for time spent at employer-specific training, in the United States an employer is not required to offer educational assistance. Employer educational assistance programs are offered as benefits that serve to attract or retain valuable employees. Not all employers offer educational assistance benefits, and employers that do offer these benefits may not offer them to all employees.

Do you have to pay taxes on employer student loans repayment benefits?

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In the United States, the first $5,000 of student loan repayment benefits are not taxed. Any payments above $5,000 are considered taxable income.

Is an employer required to pay employees for time spent on job training?

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If there is required, job-specific training, an employer is required to compensate hourly employees for the time spent on that training.

Is preschool tuition included in employer educational assistance programs?

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Employer educational assistance programs are considered to be a different benefit than child care benefits. Benefits like employer provided child care may include preschool and pre-K tuition.

EXPLORE SOLUTIONS FOR YOUR EMPLOYEES

Family care benefits have never been more important. See how Bright Horizons can support your team.

Bright Horizons is a United States–based child-care provider and is the largest provider of employer-sponsored child care. Employees looking to become a child care teacher are offered the opportunity to earn an early education degree for free as part of their corporate benefits. Search by zip to find a child care center near you. Bright Horizons Global Headquarters are in Newton, Massachusetts, USA.