Education Assistance Program Resources

Best practice recommendations for a successful tuition reimbursement program

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2020 Tuition Assistance & Student Loan Policy Best Practice Recommendations


TuitionManager is an easy-to-use, flexible, web-based application that manages the tuition reimbursement & assistance processes. As each new customer implements our tool for their organization, we make note of several things:

This document is intended to highlight the best practices and lessons learned across customers of all sizes and all industries that utilize TuitionManager, updated annually.

Recommendations


Best Practices


1. ELIMINATE UNNECESSARY COMPLEXITIES

Switching from a manual process to automated software is already a change in process and may also be the perfect time to re-evaluate policy complexities. No matter how simple your software tool is, policy complexity will often still result in:



2. REIMBURSE AT 100% UP TO LIMIT

A common practice is to reimburse a lower amount for part-time employees vs. full-time employees. For example, a full-time employee may be eligible for $3,000/yr while a part-time employee may receive only up to $1,500. How that difference in dollar limit is implemented can be a big difference in ease of administration:

Option 1: reimburse 100% up to $3,000 for FT; 50% of costs for PT.
This option creates several issues for the part-time employee population. For example, if the employee takes a college course for $100:

Option 2: reimburse 100% for all employees, but with different limits.
This option eliminates each issue above in option #1, because the limit is set at $3,000 for full-time and $1,500 for part-time. The end result is also the same: a part-time employee will never receive more than $1,500 for the year – they will just receive the money in a much more straight-forward manner.

This option will also increase the participation rate of part-time employees. A part-time employee, in general, is going to have a lower income than full-time employees, which translates to less disposable income. If a part-time employee is then required to pay 50% of their own costs, they are less likely to be able to participate due to financial limitations.

3. STANDARDIZE REQUIREMENTS, ADJUST AMOUNTS

Whether you categorize your policy by employment status, physical location, or some other segment, having a standard policy across each will streamline administration & reporting as well as minimize employee confusion as they transition between those segments. Consider standardizing the following:

Once you've standardized those components of your policy, you can more easily apply different amounts to those segments. This also allows employees to easily transition between segments without needing to process the application as an exception. For example, if an employee changes from part-time ($1,500) to full-time ($3,000), the only thing that changes with any of their applications is that their available balance is now higher.

However, if an employee moves from location A to location B, and location B has an individual degree dollar limit that wasn't part of location A's policy, you would need to spend additional time determining how to treat this application as an exception, and how that exception may factor into other applications for this employee for the same plan year.

4. CALCULATE DOLLAR LIMITS BASED ON COURSE START DATE

Balances can be calculated in one of two ways: based on the entered date (start or end), or paid date. While paid date will more accurately enforce IRS limits, it comes with several disadvantages:

The alternative to paid date is calculating based on the start or end date of the course, which includes several advantages, but the potential for the employee to owe tax:



5. TWO-STEP REIMBURSEMENT PROCESS

Two-step reimbursement process allows the employee to know prior to enrolling in a course if the employee is eligible and the educational costs are reimbursable. This eliminates questions or confusion when trying to be reimbursed after a course is completed and the educational costs are already paid. Below is the recommended two-step process and approval chain.

Approvals

HostedHR recommends the above approval chain and two-step process to simplify approval of tuition reimbursement. TuitionManager administers eligibility, program limits, balance calculations, routing tuition applications to the required approvers, taxability, and even the payment process.

Step 1

Step 2



6. ELIMINATE PREPAYMENT

HostedHR recommends building relationships with trusted school partners that offer Deferred Corporate Tuition Assistance Programs instead of offering prepayment. It is often difficult and cost-prohibitive to recover prepaid funds. Many schools offer deferred payment options in which employees are able to complete coursework and defer tuition payments until after course completion. This allows employees unable to cover the upfront cost of tuition to enroll and complete their degrees with the assistance of their employer's tuition reimbursement benefit.

7. OFFER TUITIONMANAGER'S EDUCATION NETWORK

HostedHR has built an extensive network of education partners that offer TuitionManager users education discounts. Employees can receive discounted tuition by enrolling in an education partner school. Our education partners offer programs and discounts that enable employees to graduate faster, with more flexibility, and at a lower cost. Communicating the benefits of our tuition partners and discounts helps employees eliminate student debt and saves employers money as a result of lower tuition costs and faster degree completion.

8. YEAR-END DEADLINE

HostedHR recommends including in your policy a December 15th year-end deadline for submitting tuition applications for payment in the current calendar year. This is to allow your administrators to have sufficient time to process tuition reimbursement requests and approve for payment in time for payroll to be able to include on the employee’s paycheck. Things to consider when creating a year-end deadline:

Student Loan Assistance

TuitionManager is an easy-to-use, flexible, web-based application that manages the employer student loan repayment process. There are three types of student loan assistance options that employers may offer:

  1. Student Loan Repayment Assistance Program (SLRAP)
  2. Student Loan PTO Exchange
  3. Student Loan Employer 401(k) Match

Policy Overviews

Student Loan Repayment Assistance Program (SLRAP)

SLRAPs are growing in popularity and receiving significant attention as a result of the improved recruitment and increased retention employers are experiencing from the new benefit. SLRAPs offer employees a monthly payment towards the principal of their student loans. Typically, there is a lifetime limit on the policy. Employers offer competitive SLRAPs in order to attract and retain the best talent. All amounts paid to a SLRAP are taxable income for an employee.

Student Loan PTO Exchange

Student Loan PTO Exchange is a creative solution to allow employees to elect to use accrued and unused PTO towards student loan relief. Employees are eligible to receive student loan relief based on the employee's hourly wage rate and hours earned toward PTO. Employers either offer a dollar limit to the policy so that all employees are eligible for the same annual payment amount or an hour limit, typically 40 hours, to the amount of PTO that can be exchanged for loan relief. Student Loan PTO Exchange is a substantial benefit for employees to utilize toward financial well-being.

Student Loan Employer 401(k) Match

Matching employee student loan payments with an employer contribution to the employee's 401(k) plan drastically improves the employee's ability to save for retirement at a younger age. Employees making student loan payments are eligible to receive their employer's 401(k) contribution match. Empowering employees to begin saving for retirement while still being able to pay off student debt is a significant long-term financial advantage and benefit for employees.


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