Tuition Reimbursement – Are You Wasting Your Fringe Benefits?

September 2008
M	T	W	T	F	S	S
« Aug
1	2	3	4	5	6	7
8	9	10	11	12	13	14
15	16	17	18	19	20	21
22	23	24	25	26	27	28
29	30

If you are working for a major corporation or government entity that provides free education via tuition reimbursement and you are not in school, you might be too stupid for online education.

Half of all major U.S. corporations provide 100% tuition reimbursement for their employees. Why would you want to foot the bill for your education, or leave this benefit on the table, if your employer is anxious to help you advance your skills?

Tuition reimbursement policies are also known as Employer Reimbursement Programs (ERP) or Tuition Assistance Plans (TAP).

Even in a down economy, employers are investing in tuition for their employees. Yet the International Foundation of Employee Benefit Plans estimates that fewer than 15% of eligible employees take advantage of their tuition reimbursement benefits.

Tuition reimbursement is the ultimate win-win for employers and employees. Corporations make tax-free contributions for education and job training. Employees improve their skills and value in the marketplace at little or zero cost out-of-pocket.

Companies and employees both benefit from the competitive edge as employees earn undergraduate or advanced degrees. Corporations depend on education benefits to boost productivity, employee retention, and recruitment efforts.

If your company does not offer tuition reimbursement, you should corner someone in HR and ask why not. If you company does have a plan, you need to read it carefully. I have seen hundreds of plans, and there is no one size fits all.

On the other end of the spectrum, some companies create partnership or discount agreements with specific universities. When speaking with prospective colleges, check to see if your company has any special arrangements.

Tuition reimbursement policies have strict rules regarding approved schools, acceptable courses and programs, different reimbursement levels depending on the grade in the course, and maximum reimbursement per course or year. Others may have policies that limit the amount reimbursed per course or credit hour.

Company ERPs also vary as to which of any fees they will pay, say an application fee or technology fee, as well as books. Books have become quite expensive, from $20 to $200 each. A few of the better online universities, such as Kaplan University, include textbooks and instructional materials in with the tuition. Kaplan also does not have an application or graduation fee as do many online colleges and universities. Most employers pay per credit hour, so these arrangements can mean no out-of-pocket expenses for the employee.

Some companies require that you have been employed for a term of time before becoming eligible – for example, six months – or that you remain on the job for a specific time after receiving benefits. Most companies open tuition reimbursement to full-time employees only, and obviously want to protect themselves from paying for education of employees who leave after obtaining their degrees.

In industries with high turnover, tuition reimbursement can actually save money in the long run through retention of key employees.

Depending on the company, an employee may be eligible for academic, technical, or vocational courses. The classes may be part of a degree program, certificate, or stand alone.

The IRS allows corporations to provide up to $5,250 per tax year in tax-free education assistance to employees, but most companies cover much more, up to and including MBAs. The courses taken must be part of a degree program and reasonably related to the company business.

Employers and employees should check IRS Publication 15-B to determine the tax consequences and timing of tuition reimbursement benefits which can be accessed and downloaded here - http://www.irs.gov/pub/irs-pdf/p15b.pdf.

As the economy gets worse, employers will likely shed marginal employees and attempt to hang onto their stars. Tuition reimbursement is one of the most valuable forms of tax-free compensation which increases loyalty to the company and reduces expensive employee turnover.

As tuition costs rise at traditional, campus based universities faster than inflation, employers will find themselves sending more adults back to school. Working adults can take advantage of opportunities not available when they were younger – or which they squandered when too young to appreciate the value of a college degree in the business world.

If you have a change to earn an online college degree at your employer’s expense – and you choose not to do so – you may have to settle for crumbs while your co-workers take those promotions away.

====

Ransom Stone is an online education advisor available to help you understand your company’s tuition reimbursement policy. Contact him by email at rstone@virtualjoefriday.com with any questions you may have about online colleges and universities.