Benefits and Compensation, Recruiting

Benefits of an Effective Tuition Reimbursement Program

When thinking about the benefits at any given company that prospective employees evaluate, varied items like vacation days, 401(k) plans, and gym memberships spring to mind. Of course, there’s a weight to many of these perks: Vacations last at least a certain number of days; gym memberships can go on for years; and 401(k) plans can stay with you for decades. But there’s another factor that many job candidates do consider when evaluating a future employer: the availability of a tuition reimbursement program.

Tuition

Source: Tero Vesalainen / Shutterstock

The importance of each given benefit (in addition to other obvious considerations, such as salary) is an individual determination. Certainly, some benefits are significant enough to influence an employment decision. But when candidates decide on job offers, the addition of an attractive variable like a reimbursement program should be considered as an offering that will distinguish one company from the next.

This isn’t always apparent on the surface, though, and some companies are simply unconcerned with putting tuition reimbursement programs in place. But they should be—it’s a great selling point!

1. It’s a Benefit

The value people place on different benefits cannot be overstated. You never know what job candidates will value; the same prospective employee scoffing at a company’s flexible spending plan might be jumping for joy over other benefits.

This is why every component of an organization’s reward package should be emphasized—they are all benefits, and they should all be treated as such. Workers will determine if they agree or not, and these days, many are increasingly pleased that more companies are now offering tuition reimbursement programs.

The numbers are still low, though, so companies can easily stand out from the pack by offering this as an incentive to jobseekers who are used to hearing about dental plans, entertainment discounts, and employee referral bonuses. While those perks are great, education is seen by most people as a necessity, not a luxury. So, let prospective candidates know you provide this benefit!

2. It’s a Personal Development Tool

There is both a time and a financial commitment when it comes to gaining an education. Many employees find work before realizing their educational goals, whether that means being unable to enroll in a certain program, complete a specific course, or attain a targeted degree. Who wouldn’t want a helping hand?

Educated employees are happier, have more confidence in their abilities, and make for better workers overall. Do you know who else exudes these traits? Employees who are currently being educated. They know that they are on the path to achieving their goals, and that knowledge is just as powerful. Personal and professional growth intersect when it comes to learning, with both employers and employees benefiting.

Some employees don’t even know what they want to go to school for when they start working. Sometimes, a direction doesn’t reveal itself until an employee has landed the right job in the right industry. At this point, both workers and companies can undergo growth simultaneously, with similar skills on the table for both. This case of “right place, right time” should show organizations that an investment in workers is an investment in themselves.

3. There Is a Return on Investment

Under Section 127 of the Internal Revenue Code, employers can offer up to $5,250 per employee annually in tax-deductible tuition costs; employees, in turn, are exempt from paying taxes on the same amount. This is truly a win for both sides, with the U.S. government (specifically the Internal Revenue Service) playing the role of facilitator. There is no reason for an organization not to take advantage of this opportunity.

Companies can go even further with this benefit by covering the costs of textbooks, providing bonuses for high grades, or offering transportation reimbursements for school commutes. All of these tuition-related programs help employers stand out. Under normal circumstances (and especially in times of real economic growth), perks such as these should be conceived, offered, and touted by employers looking for the best and the brightest.

We are in a competitive landscape, starting long before top talent even walks in an employer’s door for the first time. An effective tuition reimbursement program is an attractive benefit that will only increase in popularity as time goes on. The more employees are educated, the more focused, engaged, and agile they will become; and if employers provide that education, these workers will become more loyal, as well.

What did these employees learn in their recent course work? Their employers will find out in the weeks, months, and years to come.

Joan Burns is executive vice president of Human Resources, marketing, and communications and chief diversity officer at IDB Bank.