Educational Assistance Programs: What You Don't Know May Be Costing You
The same might be said about educational assistance program strategies. Too many people these days look at them as the straight-forward employee perks they were 40 years ago. They might have been originally designed that way. But such a shortsighted view misses out on an enormous amount of potential.
There's incredible opportunity for employers to use educational assistance programs not just to inspire people on the job, but also to improve employee retention, mobility, and bridge skill gaps. But to do so, you have to rethink the definition of educational assistance and the opportunities it offers.
What kind of opportunities are we talking about?
Tuition Management to Power Your SkillsSection 127 under the IRS code allows an employee to exclude from gross income up to $5,250 per year in educational expenses (tuition, fees, and similar payments, books, supplies and equipment). More than just the degrees themselves, it also includes educational tools to help employees earn them. However, some employers don't include all of the tools in their corporate education policies because they don't realize Section 127 covers them.
Credit by Examination (CBE), for example, can dramatically expedite a degree program by allowing students to test out of courses to prove proficiency in a specific subject area. That means they can check a class off their list without the $1500-3600 per-course cost at a traditional private college or university. For an employee who already knows the subject matter well, this allows them to prove their mastery of the subject without spending a whole semester completing sitting in a classroom.
Prior Learning Assessment is another a way for employees to earn college credit, outside of the classroom, for what they already know. The PLA doesn't bypass coursework; rather it evaluates an employee's knowledge (via detailed portfolio) gained from work and life outside of an academic setting. It requires an employee to reflect on skills, articulate knowledge in writing, and sometimes provide supporting examples.
Both help employees avoid spending time and money taking a course they don't need.
Power ROI: Learning & Business OutcomesDesigning your program for the skills you need (versus the random classes employees may want to try) gives educational assistance substantial ROI. A study of CIGNA's educational assistance program, for example, showed that for every dollar the insurer spent, they got that dollar back and saved an additional $1.29 on talent management costs. The $1.29 figure includes savings related to employee promotions, retentions, and transfers.
CIGNA's educational assistance participants were also 10% more likely than non-participants to be promoted, a significant fact since we know the more senior the position, the more difficult (and expensive) it is to fill through recruitment. From strictly a cost standpoint, retaining any employee is obviously vastly better than recruiting a replacement and the study found that CIGNA's participants were 8% more likely to be retained than other workers. The research also found that CIGNA's participants were 7.5% more likely to be transferred internally.
That's incredible ROI. But you're only going to find it if you're willing look beyond the traditional boundaries of what educational assistance programs can be used for.
Using Educational Assistance Programs in New WaysThose are just some of the modern benefits of educational assistance programs. The areas of opportunity are based on exploring the strategy and building it into your organization to match your goals. We see many employers who don't believe investment in education can have a profound impact on their business. But as the above shows, that's only if they're not looking at it the right way.
March 15, 2020