The acquisition of professional skills is a hard-won reward achieved through years of experience, daily hard work, hours of training and a commitment to ongoing education. From the C-suite to the front line, each employee’s expertise helps define the entire organization’s potential.
Having recognized this link, many business leaders are incorporating education benefits in their companies. These benefits, offered as part of a larger employee compensation package, can be used to help cover the cost of attending a university.
Education benefits offer a cost-effective solution for upskilling entry-level staff, attracting new talent and retaining high performers long-term. In fact, 79% of workers said they would choose a job at an organization that invested in their education over one that did not, according to a recent survey Bright Horizons conducted of over 2,000 working adults.
There are two main forms of employer-sponsored education benefits: tuition assistance and tuition reimbursement.
What Is Tuition Assistance?
Sometimes referred to as “direct billing,” tuition assistance is an employment benefit wherein an employer pays a university directly on behalf of its employees. Tuition assistance programs may cover all or part of the cost associated with pursuing a degree or certificate.
What Is Tuition Reimbursement?
Tuition reimbursement benefits allow professionals to recuperate some or all of the cost of pursuing formal education while employed. Generally, an employee who qualifies for tuition reimbursement will enroll in a course and pay all associated expenses up front. The employer will then reimburse the employee, either entirely or partially, after he or she satisfactorily completes the course.
Qualifying for reimbursement benefits often requires employees to achieve a minimum grade as specified by the employer.
How Are Tuition Assistance and Tuition Reimbursement Alike?
Tuition assistance and reimbursement both allow employers to upskill their current staff members, compete for new hires, and boost employee engagement and retention. In addition, employers who offer either benefit type may use their sole discretion when determining how much financial assistance to offer.
While this value can vary from one company to the next, a common practice is to offer up to $5,250 per year to each qualifying employee. Funds that exceed $5,250 are considered part of an employee’s annual income and are taxed accordingly.
Furthermore, these education benefits allow employers to designate which university (or universities) their employees must attend to qualify. In turn, universities like American Public University work with employers to offer special tuition grants and other tailored benefits packages to upskill and reskill their personnel.
In certain cases, employers may even choose to restrict the use of education benefits to specific degree or certificate programs. For example, many states have continuing education (CE) requirements for nurses. As a result, healthcare organizations may provide education benefits specifically designed to cover programs aligned with compliance requirements.
What Are the Key Differences Between Tuition Assistance and Tuition Reimbursement?
Ultimately, each benefit type determines who receives payment and when.
Tuition reimbursement payments are issued to employees only after they complete each course – if their grades meet the minimum requirements set forth by the employer. In the event that a student enrolled in tuition reimbursement receives a poor grade, his or her employer may simply refuse to issue a reimbursement payment.
Alternatively, because direct billing usually involves the employer paying tuition at the start of each academic program, the employer carries the risk of funding unsatisfactory academic performance. Still, there is a major, time-saving advantage to direct billing tuition assistance: group invoicing.
“With reimbursement, employers are processing individual students and sending them checks or putting the funds in their paychecks,” shares Eric Morris, Assistant Vice President of Client Services at American Public University. “When you do direct billing through tuition assistance, most institutions are going to send you a single invoice for the given time period. So if you have 100 students at a time, you’re going to get one invoice, be able to take care of all that at once, and do your auditing on the other end.”
Direct billing tuition assistance is easier for employers to manage. It also makes higher education more accessible to low-earning or part-time employees who may not otherwise have been able to afford the cost of attending a university.
Still, it is not uncommon for organizations to incorporate both direct billing tuition assistance and tuition reimbursement benefits. In some cases, employers set different criteria for each benefit type. For example, minimum wage employees may qualify for direct billing tuition assistance, whereas salaried employees who are able to front the cost of courses have the option to instead apply for tuition reimbursement benefits.
The process through which workers may apply for education benefits varies from one organization to the next. Working professionals pursuing higher education are therefore encouraged to contact their employers’ HR representatives prior to enrolling in a degree or certificate program.
Discover How Education Benefits Align with Your Business Goals
Whether your organization’s goal is to increase productivity, reskill staff members, or reduce turnover, supporting workers’ academic endeavors is a practical strategy. Learn more about education benefits and tuition grants for American Public University partners.
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