Why Employers Should Go Over the $5,250 Tuition Reimbursement Limit
According to Fortune.com, "About five in six -- or 83% -- of organizations surveyed by the International Foundation of Employee Benefit Plans last year offered some sort of educational assistance or tuition reimbursement to their employees."
Tuition assistance is an incredibly attractive benefit to prospective employees and with the majority of employers offering these programs, it's no longer the standout it once was. However, by offering more assistance than other employers, your company can - and will - catch the eye of the highest quality applicants in your industry.
This benefit has become so common that millennials are now expecting it to be offered by their employers. Fortune states: "While there's no doubt all employees would appreciate help paying for school, the benefit is especially popular among the fastest growing segment of the workforce -- millennials."
In a survey titled, "What Millennial Workers Want: How to Attract and Retain Gen Y Employees," respondents ranked the benefit of tuition reimbursement as 6.4 on a scale of 1-10, with 10 being the most important.
Yes, an employee will have to pay taxes on any tuition assistance you provide them past the $5,250 cap, but it, undeniably, still saves them an extensive amount of money.
Offering more assistance than other employers will mean your company will consistently draw in the most desirable talent in your industry, which can help you surpass competitors on a regular basis.
To lend credibility to this point, Cigna, after conducting a study that proved the financial ROI on tuition assistance, (An analysis of Cigna's Education Reimbursement Program revealed every dollar the company puts into the program is returned and generates an additional $1.29 in savings -- a 129% return on investment) decided to offer a substantial amount past the $5,250 limit.
"Cigna's leadership increased the maximum amount of tuition assistance the company offers workers in high-demand fields, from $5,250 for undergraduate courses or certificates and $8,000 for graduate courses each year, to maximum offerings of $10,000 and $12,000, respectively. The company also added advisory services to help students better navigate their higher education options and career pathways and mentoring to help ensure students' completion."
Cigna's chief learning officer, Karen Kocher, said, "Attracting and retaining talent is essential to our success as a company, and to advance those goals, we've made tuition reimbursement a priority. Knowing that tuition assistance also reaps a financial return -- and quantifying that return on investment -- has affirmed our belief in the program and prompted us to make changes that will make it even more impactful."
Increase Loyalty and Satisfaction
Standing out to top prospective employees (and retaining current talent) means employers must find a way to show their staff they are committed to their long-term career development and advancement.
One way to do this is through tuition reimbursement. If your budget allows, going past the $5,250 cap shows a strong commitment to your employees' future with your company, giving them reason to stay with your organization long-term.
It shouldn't take a study to prove to employers that when employees feel appreciated, they perform better, are more productive, and more loyal, but there are numbers that back up these claims regardless.
According to College for America, at Southern New Hampshire University, their tuition assistance partnership with a variety of employers resulted in the following statistics:
- More than half reported getting a promotion or increased responsibilities at work
- 70% say they now have new career goals
- Nine in 10 are still with the same employer
With so many benefits attributed to not only offering tuition assistance, but also offering as much as your budget will allow, employers should consider upping their limits to ensure their companies remain competitive as the landscape changes.
Making It Easier to Manage
A chief concern of employers is that a tuition assistance program, regardless of budget, will be hard to manage. Tuition reimbursement software will alleviate these concerns and allow HR administrators to easily handle requirements and applications.
Tuition reimbursement software also makes it easy to ensure employees never go over their allotted amount per calendar year, greatly reducing the potential for program recipients to become dissatisfied with the benefit, and subsequently, their jobs.
If you decide to offer employees more than the non-taxable IRS limit of $5,250, it's important you make this clear to employees. You can easily include a statement during the application process, whether within tuition reimbursement software, or on paper, that makes them check a box that states:
"I understand that if I receive more than $5,250 in a year, I am liable for paying taxes on that overage."
Once you've covered yourself legally, you can focus on the benefits your tuition reimbursement program will provide, which is a stronger, more talented, and more productive workforce who feels valued and rewards the company they work for as a result.