Tuition Reimbursement: 6 Considerations for Employers

Offering tuition reimbursement to your employees shows them that you value their education and willingness to improve their skill sets. There are certain elements to tuition reimbursement that must be considered before granting this perk to employees. Learn more about what tuition reimbursement is, the pros and cons to offering it to employees and things to consider when setting up this program. 


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What is tuition reimbursement?

Tuition reimbursement is a perk companies offer their employees that involves paying for them to take college courses during their employment. The employee will typically pay for their own courses and the employer will then cover these costs once the courses are finished. How much the employer decides to pay is up to the company’s budget and policy. Some employers may pay for tuition, plus additional expenses, like books, pens, pencils and paper or a school laptop. 

Some employers choose to provide tuition reimbursement on certain conditions. Common conditions employees may have to meet include: 

  • Pursuing a specific program of study: Some employers will only reimburse tuition if the employee studies or majors in subjects related to their field. For instance, if a marketing coordinator went back to school, their employer would only fund marketing courses.
  • Pricing for the courses: To maintain a steady budget, employers may only pay for courses that add up to a reasonable price. If the course prices go over a certain cap, the company set in their policy, the employee is reasonable for paying it.
  • Earning specific grades: An employer may only pay for tuition for courses that the employee earns certain grades on. Some require students to earn a C or higher before they pay for certain courses. Grade point rules vary among all employers and must be clearly listed in the employee handbook.

Related: How to Hire Employees: A Step-by-Step Guide for SMB Businesses


Pros and cons of offering tuition reimbursements to employees 

Common advantages and disadvantages of offering tuition reimbursements to your employees include: 



Here are the pros to providing tuition reimbursement to your employees:  

  • Attract more quality candidates: Many highly qualified candidates will choose a certain company over its competitors if it offers valuable perks, like tuition reimbursement, to help them grow and advance in their career. 
  • Enhance employees’ skill sets: Funding an employee’s college courses boosts their education level, making them a more qualified candidate to eventually work in senior-level positions at your company. They also develop a stronger skill set that they’ll apply to their role and even teach to other employees, essentially improving performance rates throughout your entire organization.
  • Earn a tax break: Covering your employee’s tuition is tax-deductible to up to $5,250 annual per employee.



Here are the cons of providing tuition reimbursement to your employees:  

  • Experience burn out in some employees: Balancing work and courses can be challenging for some employees to successfully manage. Make sure you’re checking on employees to ensure their college courses aren’t affecting their productivity or focus. Ask if you can provide any assistance or guidance during this time. 
  • Invest a significant amount of your budget into it: Depending on how much of your employees’ tuition you decide to fund, you could be investing a significant amount of your budget that could eventually cause financial difficulties. Run your reimbursement policy by your accounting and financial team beforehand to ensure you can afford it. 
  • Handle a large amount of paperwork: As your employee proves that they followed all of your policy regulations to receive reimbursement for their courses, they’ll typically have to submit documents, receipts and forms notifying you of this. It can be challenging and time-consuming to keep track of all this information. 


Things to consider when setting up a tuition reimbursement program

The following elements you must consider as you set up a tuition reimbursement program for your employees include: 


Budget limitations 

Before you’re able to launch and implement a tuition reimbursement plan, first decide if it fits within your budget to help you determine what you’re able to cover. Meet with your financial and accounting teams to set a reasonable budget for the program that benefits the employee and still keeps you financially stable. Work with the finance teams to develop a set amount that you can afford for each employee. 


Tax breaks

Research the details regarding the tax breaks you’ll receive for paying your employees’ tuition. Your tax breaks will cover up to $5,250 each year. Any amount greater than that no longer earns you a tax break. Work with your accounting teams again to determine how much you can afford beyond that amount. 

If your company is projected to receive more than enough to cover more than that, consider funding your employees for more than that amount to show your encouragement and appreciation for them returning to school and improving their career.


Expenses you’ll reimburse 

If you’d like to contribute more to your employees’ education, consider reimbursing additional materials they’ll need for courses. This includes expenses like books, pencils, calculators, pens, internet connection and computer equipment. It’s best to consider this option if you’re unable to afford to pay a significant amount for classes. Paying for these smaller items helps employees save more for their courses. 


Number of courses employees can take 

Some companies only fund a certain number of courses for employees each semester, either because only a certain amount fits in their budget or because they don’t want employees to overwhelm themselves with too much work. 

Though educational courses are a great way for employees to build their skill set and enhance their knowledge, taking too many courses can negatively impact their motivation and interfere with their work performance. Funding a smaller number of courses each semester helps employees avoid the feeling of being stressed and burnt out. 


Which courses employees can take 

Companies may decide to fund employees to take certain courses as long as they follow certain rules and restrictions. Some employees can only take courses related to their career field, as the driving reason the company is funding the employee is to encourage them to learn more about their field and eventually move up within the company. 


If employees should attend virtual or in-person classes

Other employers don’t want employees attending courses in-person to be too time-consuming or to interfere with any events or meetings the employee may have to regularly attend. This is why many employers will reimburse employees’ courses only if they take a certain amount of online classes to ensure they’re conveniently working virtually and don’t risk missing any important client meetings, industry conferences or company events. 

Reimbursing your employees’ tuition is a great way to support their drive to go back to school and enhance their skill set. As you implement this program, make sure you create a policy for it within your employee handbook. This policy should clearly state the price you’ll cover for courses, how many courses you’re reimbursing, which courses they’re allowed to take and any other important information that affects their tuition reimbursement. Communicate this in a meeting and answer any questions employees have about the program.

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