Tuition reimbursement for employees have existed in many workplaces as an incentive program to attract new hires and retain current workers. However, many employers don’t utilize them because they seem like an unnecessary expense without many direct benefits besides attracting new talent.
However, there are many “hidden” benefits to starting a tuition reimbursement program that benefits both employers and employees alike. Here are the employer benefits of tuition reimbursement programs that you may not know about.
- Perk #1: It Can Improve Employee’s Job Performance
- Perk #2: It Can Reduce Employee Turnover
- Perk #3: It Can Save You Big Bucks at Tax Time
- Perk #4: It Can Improve Employee Morale
- Perk #5: It Can Help You Attract Top Talent
- How to Create an Employee Reimbursement Program
Perk #1: It Can Improve Employee’s Job Performance
Many tuition reimbursement programs allow employees the option to go back to school to acquire new skills or earn a degree. While this obviously benefits your employees, it can be a huge win for your business as well. When employees have access to higher education, they learn valuable skills that they can apply to their jobs, which allows them to work more efficiently and productively, and may even enable them to solve difficult challenges your business is facing.
Perk #2: It Can Reduce Employee Turnover
A study conducted by the National Bureau of Economic Research in 2007 found that when employers offered a tuition reimbursement program to their employees, it reduced turnover rates at the 5-year mark by almost 50%. Not only does it serve as an incentive for employees to stay at their job while they’re in school, but they are also less likely to leave even after graduating.
This means that not only does it reduce turnover, but it often results in employers gaining more valuable employees over the long term.
Perk #3: It Can Save You Big Bucks at Tax Time
This is a big one. All expenses related to repaying employee tuition are tax-deductible. So by offering an employee tuition reimbursement program, you can save yourself big bucks come tax time (up to $5,250 can be deducted per employee, per year).
Perk #4: It Can Improve Employee Morale
This is similar to the effect of tuition reimbursement on reduced turnover. When employees have access to programs like these that are designed to help them succeed not just in their job but in their overall lives and careers, it can drastically improve morale. Good employee morale means more productive workers, less turnover, and a more symbiotic workplace.
Perk #5: It Can Help You Attract Top Talent
Not only can tuition reimbursement programs help keep your current employees happy, but they can also be a big factor in attracting top talent to your business. Many high-achieving employees are always looking for ways to continue advancing in their careers, and access to tuition reimbursement programs can be a big step in helping them “level up” their career path. If you’re looking to hire the best and the brightest, it may be worth adding this perk to your employee package.
How to Create an Employee Reimbursement Program
So you’ve discovered the benefits of offering tuition reimbursement to your employees, but how do you get a program started at your company?
Step 1: Decide on the specifics of your program
When it comes to employee tuition reimbursement, there is no “one way” to structure it. A good way to design a program that is right for your business is to answer the following questions:
- Which employees will be eligible to receive the tuition benefits?
- Will the benefits be available to all employees or only certain employees?
- Will the benefits also be available to employees’ spouses and dependents?
- If employees do not wish to participate in the program, will there be another benefit available to them instead? (For example, an annual cash bonus, upgraded healthcare package, etc.)
- Will student loan repayment options be offered for employees who have already completed their degrees?
A good way to create the right structure is to work closely with your HR department and accounting department to decide on what type of plan works best for your employees and your budget.
Step 2: Get Organized
You’ll need a way to track which employees are receiving the benefit and how much is being allotted to them. The best way to do this is with a digital expense tracking platform like Expense Sensei. Expense Sensei allows your employees to submit all of their expenses, including tuition reimbursement request forms, digitally. Once submitted, you or your accounting staff can easily review the documents and reimburse the employee in just a few clicks, all while keeping a seamless digital record of expenses coming in and money going out. This is a huge lifesaver around tax time.
Step 3: Familiarize Yourself With The Taxes
The IRS has some handy resources to help you understand what education expenses qualify for reimbursement and how to file your taxes accordingly. If this seems complicated, be sure to consult with a tax professional who can guide you through the steps necessary to claim your deductions come tax time.
Step 4: Announce Your Program to Your Employees
The benefits are only beneficial if your employees know about them! Once you have a program laid out, tell your employees about the benefits available to them and how to claim them so you can start reaping the benefits of a happier, more productive workforce.
So now you’ve learned about the benefits of the tuition reimbursement for employees, you know that such compensation programs benefit both companies and workers. When it comes to hiring the coveted millennials, tuition help hits the mark. For CEO and CFO, compensation programs help recruit skilled workers faster, while minimizing the cost of talent development. Strategic investments in education can build a robust talent portfolio while improving retention, hiring, and engagement.