If you’ve always wanted to go back to college but aren’t sure how you’d pay for it, or if you're afraid of accumulating student loan debt, your employer may be able to help. It’s called "tuition reimbursement," and many companies offer it to employees as an added perk.
Tuition reimbursement, or tuition assistance, means that your employer will help foot the bill for your continuing education courses or degree as long as you meet their guidelines.
Tuition reimbursement is usually offered on top of your regular salary. It's a great employee benefit and typically offered in addition to benefits like health insurance, a 401(k) plan, vacation days, or a subsidized childcare center.
Before you enroll in the competitive master’s degree program of your dreams, be sure to learn all the requirements and qualifications of your employer’s tuition reimbursement program. After all, you don’t want to be left footing the bill and busting your budget in the process.
How Tuition Reimbursement Works
With tuition reimbursement, you have to pay for your classes upfront. Once you’ve completed them, met the requirements, and submitted all the information to your employer, it will reimburse some or all of the funds.
It's worth noting that some companies will only pay for courses or degrees in a certain field. Others are more flexible and will pay for any continuing education that supports an employee’s professional growth.
You may wonder why your employer offers a perk like tuition assistance. After all, it can be a costly expense, but as it turns out, it’s one that your employer can deduct with the IRS—up to $5,250 annually per employee.
Employers can offer more than $5,250 per year in assistance, but they may have to pay payroll taxes on anything over $5,250.
Tuition Reimbursement Requirements
Requirements for tuition assistance vary by company. Generally speaking, you’ll have to maintain a certain GPA, though some companies reimburse on a sliding scale based on the grade you receive. For example, if you get an "A," you might get 100% reimbursement, but if you get a "B," you might be reimbursed 80%.
You may also be required to take courses or obtain a degree that relates to your field. Many companies also have a cap on the amount of tuition reimbursement they will dole out.
You may also be required to stay at your company for a set number of years after tuition assistance is provided. If you leave your company before the set period of time, you may be required to repay the funds, which can be expensive. Talk to your HR representative about your company’s reimbursement program before you enroll to be sure you know all the relevant details.
If your employer doesn’t offer tuition reimbursement but you’d like to try to convince them to change their mind, you may be required to submit a proposal outlining why continuing education will benefit both you and your company.
Budgeting for Classes
Keep in mind that tuition reimbursement will likely only cover part of the cost of returning to school. That’s why it’s important to save your own funds for tuition, books, and other related expenses.
Save funds by setting up a monthly budget and sticking to it. Look for places where you can cut costs, like cutting out cable. You may also consider getting a temporary side gig or renting out a room in your home to help raise funds. Cooking instead of eating out is another huge money saver.
Is Tuition Reimbursement Worth It?
Still on the fence about pursuing your employer’s tuition reimbursement program? Consider the facts: the employment rate for 25- to 34-year-olds with a bachelor’s degree or higher was 87% in 2019, while those with only a high school education had an employment rate of 74%, according to the National Center for Education Statistics. In addition, college educated people generally earn significantly more than those without a degree. That can really add up over the course of a professional career.
When you consider the rising costs of college education, it’s a wise financial move to take advantage of your company’s tuition reimbursement program. After all, continuing your education is one investment that’s well worth it.
Frequently Asked Questions (FAQs)
Is tuition assistance considered financial aid?
Tuition assistance may be considered part of your total financial aid package in the same way that scholarships are. If you are receiving federal financial aid, tuition assistance could reduce the amount of your aid.
Is tuition assistance taxable?
Tuition assistance of up to $5,250 per year is not taxable, however, anything over that amount should be reported as part of your wages.
Is it common for companies to offer tuition reimbursement?
U.S. companies spend $28 billion per year on tuition reimbursement. Even if you think your company doesn't offer it, you should ask.