Education Assistance Program Resources

Best practice recommendations for a successful tuition reimbursement program

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Tracking and Calculating ROI From Your Tuition Assistance Program


Has your tuition assistance program been successful in retaining employees? Are the costs of offering your program outweighing the benefits or are you coming out on top?

If you don’t know the answers to these questions, then your program is missing something crucial: a way to calculate its return on investment.

According to the National Association of Colleges and Employers 2011 Student Survey, "tuition reimbursement came in as the third most desirable corporate benefit - just behind 100-percent employer-paid medical coverage and annual salary increases."

It's clear tuition assistance is a benefit employees want and actively seek in an employer - but is it paying off in clear, measurable ways for your company?

Determining Direct ROI

If you are using tuition reimbursement software, your ROI is likely to be higher than a company that relies on manual administration alone. An automated process allows program administrators to work faster and more efficiently, as well as produce fewer errors.

However, in order to determine the time and money savings you will see using tuition reimbursement software vs. manually managing your program, you will need to administer your program using each method for a direct baseline comparison.

To product a baseline, calculate the # of hours per year it takes to administer your program manually by the hourly rate of your program administrator(s). Once you have done so, perform the same calculation for using software after a pilot length of time.

Account for errors:

If HR is manually calculating how much money each employee is eligible for, there is a chance that overpayment could become an issue, and the probability of such errors increase at scale. If you are processing just a small number of applications per month or year, errors may not be an issue for you, and should not result in significant overpayment.

However, if you are processing a large amount of applications manually, this is when you will need to account for the inevitable errors.

To eliminate the potential for errors, utilize tuition reimbursement software and configure it so each employee's reimbursement limit is enforced automatically according to your policy and budget.

Take advantage of textbook and college/university discount partners

If you are a TuitionManager client, you will be eligible to receive discounts on textbooks, tuition, application fees, and more through our growing list of school partners. These savings will help ensure the ROI of your tuition reimbursement program is maximized, as our partners typically offer 10-20% off course costs and textbook savings up to 90%.

Determining Indirect ROI

"If you can't measure it, you can't manage it." This quote, by Peter Drucker, makes a lot of sense, yet, many companies don’t bother to even attempt to track indirect ROI of their programs.

In fact, according to CFO, "A survey of 180 companies conducted by the Corporate University Xchange (CUX) found that nearly half neither measure the impact of such programs on retention and recruitment nor follow up with employees and managers to learn how the programs affect job performance."

What are the different indirect ROIs you should be tracking?

If you're going to invest both time and money into a tuition assistance program, you should go one step further to ensure it's providing a return.

However, there is a simple way to track indirect ROI year after year - survey your employees. This is what Verizon Wireless did, according to CFO, and it revealed that offering tuition assistance was not only resulting in more loyal, long-term employees, but those employees were also more likely to grow and receive promotions.

The article states, "Those who earned degrees with the help of tuition assistance programs were more likely to have been promoted or to have made lateral moves (35 percent compared with 26 percent of overall employees), and 96 percent said they planned to stay with Verizon for at least two years beyond the completion of their degree. Nearly 40 percent of Verizon managers cited improved performance among employees who earned degrees with help from the company, including greater adaptability and a stronger appetite for more work and responsibility."

The article went on to cite Michael Flanagan, senior staff consultant for leadership development at Verizon Communications (the parent company of Verizon Wireless), as saying, "Any business has an obligation to make sure the investments it makes are sound. These measured outcomes prove to management that we have a strong program."

You will want to survey both HR administrators and current and past program participants to find out if your program has led to employee growth, increased loyalty and productivity.

Once you calculate both direct and indirect ROI of your program, you will be able to see if offering this benefit is valuable not only to your employees - but to your company too.

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