Having spent far too much time away from school, last year I finally decided to return to improve my skills and make myself more marketable in the job market. My first attempt, fresh out of high school was less than impressive. I spent way too many hours playing with my friends and not nearly enough time hitting the books. It happens to lots of us, but not everyone gets the opportunity to return and has the courage to take it. That’s why I could not be happier that my employer is kind enough to offer tuition reimbursement. Without it, I’m not sure I would even be back in school at all.
What is Tuition Reimbursement?
Just as it sounds, tuition reimbursement is something that many employers offer as a way to pay back employees for education expenses. Those who choose to participate still have to pay out of pocket for the courses they take. When the course is over, the employee can get back some or all of the tuition expenses. At some institutions, students with financial constraints may qualify to defer payment until their coursework is complete.
Some employers choose to go above and beyond tuition alone, and reimburse other expenses associated with higher education. The program my company offers not only covers my tuition, but also covers the cost of my books and my Internet connection, as long as I can prove that at least one course I am enrolled in is online or “web-assisted,” meaning some coursework takes place over the web.
Is There a Catch?
Depending on the employer, conditions for reimbursement may apply. Luckily, dealing with tuition reimbursement guidelines is not quite as difficult as dealing with an insurance company or trying to redeem a store rebate. Most often, the conditions are easy to satisfy.
Condition 1: Program of Study
The first condition that may hinder eligibility is course of study. Many employers require that the courses, or degree sought, be applicable within the company paying the reimbursement. For example, if the company is a consulting firm, potential courses or degree-related material could be very broad. Conversely, if it’s a small IT firm that offers the reimbursement, then specific IT-related courses may be the only ones that are eligible for reimbursement.
Condition 2: Cost
The second condition is the level of cost that the company will take on. Most employers offering tuition reimbursement have an annual cap on what they’ll cover. While this limit varies greatly from company to company, it does serve a purpose and you’ll want to know it before you make a commitment. First, putting a cap on reimbursement ensures that students are not scamming their employers. Though this scenario is unlikely, due to the volume of checks and balances most employers have in place, employers tend to not take any chances. Secondly, it meets tax filing requirements for the employer. The IRS allows only $5,250 per year to be written off by an employer for an employee’s education costs, so anything above that amount will imply additional tax expenses for the employer.
Condition 3: Grade Point
My employer’s tuition reimbursement plan, up until a few years ago, had scaled grade requirements for compensation returns on courses. I do not remember the exact scale, but I do recall that an “A” grade received full reimbursement, a “B” grade was somewhere in the neighborhood of 80–85%, a “C” grade would garner 70–75%, and anything below a “C” was not eligible. Many employers adopt the same policy, and reimburse on a similar scale. My employer has since changed the policy, now reimbursing 100% on all “C” or better grades.
What Does the Employer Get by Offering Tuition Reimbursement Benefits?
1. Smarter Employees
It may sound silly, but an intelligent workforce is pretty hard to come by. Employees who take advantage of tuition reimbursement tend to stay with the company longer. In addition to improved employee retention, the employer may have more employees who are easily promotable, saving them money on recruiting new employees.
2. Tax Breaks
Up to that $5,250 annual maximum, your employer’s reimbursement program costs are tax-deductible. Essentially, after the tax benefit, your employer pays very little to offer you this perk. Since the costs balance out and the company reaps the benefits of a smarter workforce, it’s a highly-desirable win-win scenario for the company.
If you’re wondering which companies offer tuition reimbursement, FatWallet has a fairly comprehensive list you can check out.
By taking advantage of my tuition reimbursement plan, I don’t need to worry about applying for college scholarships and paying back student loans. In fact, I actually make money. Sure, I have a few up-front costs, but I get all of my tuition, the cost of my books, and even my Internet costs back, provided that I take a web-based or web-assisted class. Most courses meet that requirement nowadays, so it’s not hard at all to fulfill. Even Apple offers free online courses from various colleges and schools through it’s iTunes U program. I would have been paying for the Internet anyway, and the books can be resold upon completion of the course on sites like Amazon or eBay, leaving me just a bit ahead.
If your employer offers this benefit, there really is no reason not to take advantage. Even if you take only one or two classes at a time, you are still enriching your own life while someone else foots the bill. What could be better? I will certainly continue to collect my tuition reimbursement, and hope that I am able to stay with my current employer until my degree program is complete. Maybe even longer, if all goes well.