Time to Talk Tuition Reimbursement
Freshman orientation – check. Registration completed – check. Dorm room assignments – check. Tuition Bill – Check, Check, Check! With colleges and universities across the country gearing up for the start of the upcoming school year, many moving parts are happening now in preparation for the big day. Navigating and managing college student financials can be a daunting prospect for some people. Luckily, many employers offer employee assistance via an employee tuition reimbursement benefit. While not all companies offer tuition reimbursement plans, the ones that do are making a smart and valuable investment in their employee population.
As the term indicates, tuition reimbursement or assistance is generally an employer benefit that offers to pay back employees for education expenses. Whether the employee is looking to complete a bachelor’s degree, expand their education with a Master’s or Doctorate degree program, and in some cases tuition for spouses and dependents, employer-sponsored tuition reimbursement plans offer a way to further invest in a higher education. What’s the catch? Depending on the employer, conditions for reimbursement may apply, but are usually fairly straightforward.
Conditions of a tuition reimbursement may include “length of employment” requirements. A length of employment or tenure condition often requires a specific length of continuous, and usually full time employment, with the employer in order to be eligible for the tuition benefit. If the condition is five years of continuous service, the employee must be able to demonstrate a five year work history for the sponsoring organization and benefits usually begin following the fifth year anniversary.
Another condition is “cost”. Many companies limit the amount of tuition costs that an employee may incur annually or over the life span of the college degree process. Limits may vary greatly between companies, but allow for both the employee and employer to better manage tax liabilities associated with tuition reimbursements payments. Employers may also set a time limit, such as a maximum of eight semesters (4 years) for an employee’s dependent to complete their degree. If the dependent changes degree plans or does not complete the degree process during the eight semester timeline, employers would no longer be required to extend the benefit beyond the established guidelines.
Condition number three is “academic standard” or grade received. An employer has the option to only pay reimbursement for completed classes with a passing grade, for bachelor’s degree level coursework only, or within a course of study relevant to the employer’s industry. Often, there is a minimum grade point average that must be achieved in order to qualify for reimbursement. If a class is dropped or the student stops attending, the employer may not reimburse the tuition.
Tuition reimbursement is a classic win-win scenario. The employee is getting tax free money (the IRS allows up to $5,250 per year for tax free tuition reimbursement) resulting in a higher education and expanded skill set. The employer benefits by getting a more educated, better trained, and likely more loyal employee making them more valuable in their workforce. Tuition reimbursement is one of the greatest employee perks available to incentivize employees to further their education, but be sure to understand the ins and outs of the particular plan before signing on the dotted line.
– Susan Amsler
– July 12, 2018
Randolph Business Resources, LLC.
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