of the most important and generous benefits a company can offer
is tuition reimbursement, a contractual arrangement between employer
and employee that outlines specific terms under which the employer
may pay for the employee's continuing education. Today, tuition
reimbursement benefits are also called tuition assistance,
and vary greatly from company to company.
generally takes a solid, well-established company to be able to
offer what could amount to $10,000 per semester or more for eligible
employees. So don't look for too many startups to include tuition
assistance as a regular part of their compensation package. However,
distance learning technologies are providing new opportunities for
employees to receive degrees from virtual (and nonvirtual) universities
at much lower cost than traditional study programs.
because a company says it believes in personal development, though,
don't assume it offers tuition reimbursement. If this benefit is
important to you, perhaps because you want to complete a bachelor's
degree or earn an advanced degree, it makes sense to clarify the
scope of your intentions and the company's capabilities up front.
hard - or get stuck with the bill
Most companies that offer tuition reimbursement base the amount
on the employee's grade in the course or courses. If the employee
earns a grade below a B, many companies won't pay. In addition,
some companies pay for the course at registration, but others reimburse
the cost only after successful completion of the coursework. When
investigating a tuition assistance program, ask about timing of
reimbursement, since that could make a difference in how many classes
you take at one time.
companies say reimbursable coursework has to be "work-related,"
but definitions of "work-related" vary. For example, some companies
pay only for classes related to the job an employee is doing now,
while others pay for classes that develop professional skills such
as management that help employees grow into new positions. Companies
that are truly concerned with career development will pay for future-oriented
tuition reimbursement is such an expensive benefit, some companies
withhold payments for up to a year, so that students can prove themselves
on the job. Withholding the money is also a way to ensure that employees
don't leave right after they earn a degree at the company's expense.
Other companies simply deduct what they paid for education from
an employee's final paycheck - and continue to send bills - if the
employee leaves sooner than the company considers appropriate.
scholars reap tax benefits
Tuition reimbursement used to be treated as taxable income to the
employee. In 1996, however, Congress approved some sweeping changes
that resulted in lower taxes for a number of sectors, and "employee
scholars" were among the lucky ones. The tax-free status is good
for up to $5,250 of annual employer-provided assistance benefits
through the year 2010. Starting in 2002, it applies to both the
undergraduate and graduate levels. Visit the IRS site page on Educational
Expenses to find out more about educational tax credits and
many companies, if the course is not job-related, but still approved
by the firm, it is considered a taxable benefit and the relevant
amount is withheld from the employee's reimbursement.
doesn't hurt to ask
Tuition assistance is a powerful benefit. And sometimes the benefit
is completely at the discretion of the manager, so it's important
companies that don't offer college assistance may permit other kinds
of learning. For instance, one large company Salary.com spoke to
has no written policy on training. But inquisitive employees may
learn that it offers up to $1,500 per year per employee for training
programs and unlimited access to an online university.
companies have strict policies that outline how much they'll pay
and how they'll pay it (e.g., 75 percent for degree and certificate
programs, up to $3,000 per associate per calendar year, or 50 percent
for personal growth and development coursework, up to $1,000 per
associate per calendar year), using the institution's tuition deferral
policy as the preferred method.
employee is usually responsible for the administration behind the
courses - varying waiting periods, managerial approvals, documentation
from the school, and so on. But it's well worth the effort.
institutions value educated employees the most
So what kind of employer respects learning the most? It's no surprise
that universities top the list. Major metropolitan area colleges
that we spoke to provide unlimited course privileges and degrees
at no cost to their employees - for as long as they are employed
by the institution. Similarly, after five years of employment, all
of an employee's children who apply for undergraduate admission
and who can meet the academic requirements receive a tuition waiver.
A very big benefit indeed.
Linda Jenkins, Salary.com contributor