HR Mavericks

Eddy’s HR Mavericks Encyclopedia

Tuition Reimbursement
Those who understand retention know that turnover is costly. Contrary to old school business, modern employees only stay with a company for an average of 2-5 years. It’s imperative that companies create initiatives to lengthen retention and develop their workforce to meet future needs.

Have you considered tuition reimbursement as a possible solution to this? Take a look and see if tuition reimbursement is right for your company.

What Is Tuition Reimbursement?

When you invest in people, they invest back into you. One creative way to invest in employees is through a tuition-reimbursement program. These programs usually involve a contract agreement between an employer and an individual to aid them with tuition costs for courses of study that will benefit the company. The agreement may be between a current employee or a student who is not yet an employee. In cases where a student is not an employee, they are usually required to sign a contract that obligates them to work for the company for a certain number of years or repay the tuition money. The payroll side of tuition reimbursement can get tricky though, so consider using an HR software program like Eddy to keep everything organized. Eddy's team of highly trained professionals can help turn your payroll processes into a breeze. Request a free, custom quote today to see how they can simplify your administrative tasks.

Benefits of Offering Tuition Reimbursement

So why would a company shovel out money to pay for someone to go to school? Wouldn’t you be losing money? Not exactly. In fact, offering a tuition program may save money in the long run. Here are a few ways a tuition reimbursement program can benefit a company. Use it as a recruiting tool. There’s no point in creating a free tuition program only to hide it from the public. You should spread the good news as much as you can. Post about it on your social media. Create online ads about it. Include it in job postings. People want to be part of a company that advertises “Free college tuition for qualifying employees!” Use it as a leadership development tool and to save money. A well-organized employee tuition program will significantly increase internal promotability. It's often better to hire an internal candidate who already knows the company, has verifiable experience and is a known quantity. If internal employees don’t have the education to fill a management role, help them get it! For many employees, a college degree is the next step in being eligible for the next promotion, and the skills and knowledge their studies provide will help them be a smarter, more efficient employee. Additionally, training and promoting from the inside may save the company money. The beginning salary for an external hire is 18-20% more than an internal hire, but when you also factor in advertising, time spent on job boards, and the cost to train someone new, it’s easy to see why external candidates cost up to 50% more than internal candidates. Use it as a way to increase employee engagement. Some call it employee engagement and others call it employee satisfaction, but whatever terminology you use, it’s important that employees feel valued and needed. Many employees quit jobs because they don’t feel they have a purpose.They are looking for someone who will appreciate them and what they do. Offering tuition assistance helps employees feel a purpose and a connection within the company. They will feel that the company sees great potential within them and will be motivated to prove them right. More satisfied employees means more retention and less turnover.

How to Design a Tuition Reimbursement Program

Step 1: Create a Cost-Benefit Analysis and Justification for the Program

If you are advocating for a tuition program at your company, you may have to convince some important people of its worth. Make sure the company can afford such a program, and analyze what the benefits and drawbacks may be. You may want to conduct a company survey to determine desire within the workforce for such a program. Consider the following questions as you approach this step:
  • Can the company afford such a program?
  • What is the purpose for creating this program?
  • What are the potential benefits and/or costs?

Step 2: Establish Policies Regarding Enrollment and Eligibility

It’s important to be very clear about who is eligible and what is covered.. Consider the following questions as you approach this step:
  • Is tuition reimbursement available for any employee, regardless of department?
  • Does the program provide tuition reimbursement or tuition assistance? (See section below for the difference.)
  • How long does an employee have to be with the company before they are eligible?
  • What degrees or programs are eligible?
  • Is there a certain GPA or standard enrolled students must maintain?
  • Does the program pay for books and class fees, or just the tuition?
  • If there are more people asking for the assistance than there is money, what is the selection process?

Step 3. Establish Partner Colleges and Universities

It’s very rare for companies to allow employees to study anywhere they’d like. Usually a company partners with specific colleges for the intended purpose. Establishing a firm relationship with a college will save a lot of time and may lead to a discounted tuition agreement. Consider these questions when determining which colleges are best to partner with.
  • What college offers the best value for between cost and quality?
  • Are there online options for employees who may not have time to go to a campus?
  • Is a community college or technical college a better option for your industry?

Step 4. Create a Marketing Plan

This step may or may not be carried out by Human Resources, but it’s critical that this program is properly marketed. If employees don’t know about the program, they won’t sign up for it. Consider the following questions when creating a marketing plan:
  • Who is the intended employee target market?
  • What can be done to excite employees about returning to school?
  • How can you use this in your recruiting efforts?

Tuition Reimbursement vs. Tuition Assistance

Tuition reimbursement involves repaying an employee for schooling costs once it is completed, or after a semester. Tuition assistance pays for the costs up front. Tuition assistance is generally considered the more risky of the two, as you risk employees slacking off or not attending class even though you've already paid for it. On the other hand, employees may be more receptive to the idea that they don’t have to pay anything out of pocket and wait for reimbursement. Carefully consider which of these two options works best for your company.

Examples of Companies that Offer Tuition Reimbursement

JBS USA's Better Futures Program. This company partners with local community and technical colleges to pay the tuition costs for any eligible employee to study whichever program they’d like. Walmart's Live Better U Program. Walmart offers to pay 100% of tuition costs for qualified employees to study business and supply chain management, business management, or cyber-security. Home Depot. The program offers to pay up to $1,500 per year for part-time employees, $3,000 for full-time hourly employees, and $5,000 for salaried employees. Employees must have served 90 days of employment to be eligible. These are just a few examples. If you research, you will find that most large companies have or at some point have had some type of college-tuition project. They wouldn’t be popular if they weren’t effective! If you're interested in offering tuition reimbursements for your college employees but are still unsure how to go about it, we'd be happy to give you a free, custom quote for our payroll services so we can help you through the process.
Chase Cragun, VP of Recruiting USU MHR

Chase Cragun, VP of Recruiting USU MHR

Chase carries HR experience in training, recruiting, labor and employee relations, team leadership, and as a generalist. He is always building and expanding on his skills as well as looking for ways to augment his network. When he can, he looks for ways to give back by mentoring new/upcoming HR professionals.
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