How to make the most of employee tuition reimbursement
Key takeaways
- Employee tuition reimbursement allows employers to reimburse employees for completed courses.
- Tuition reimbursement improves workplace development while allowing employees the opportunity to grow their skills.
- Tuition assistance is usually sent directly to the school upfront, while tuition reimbursement is typically paid out to the student after the course is completed.
- You may have to pay back funds should you leave the company during or shortly after completing your courses.
Working while attending school can be a juggling act, but it can also mean that you could save money on tuition. Many employers offer tuition reimbursement up to a certain dollar amount, meaning they will reimburse costs after an employee has completed a course.
This allows employers to invest in workforce development and improved retention while also enjoying a tax benefit — up to $5,250 per employee is tax deductible. Employees can further their education and build credentials, upping their earning potential. Not all companies offer this perk, but exploring this potential benefit may be worthwhile.
How does tuition reimbursement work?
Typically, a company will reimburse a worker for educational expenses after the employee has successfully completed courses. As the student, you must pay for the cost of college upfront, including your tuition and fees. Once your course is complete, your employer sends full or partial payment upon receipt of your invoice.
However, the logistics of this process greatly depend on the company. Speak to your HR department before registering for classes to ensure that you know what to expect in advance.
In addition to reimbursement, some employers may offer a tuition assistance benefit where they build a relationship with partner universities, so billing is handled upfront. Tuition assistance functions differently from tuition reimbursement, but either program can be helpful.
What are the requirements for tuition reimbursement?
Each company has its own rules for tuition reimbursement. For instance, some programs will reimburse you only if you attend certain colleges or universities, while others will only send payment for courses specifically related to your job function. Others might cover your full course load, and some might even cover books and supplies.
Additionally, there may be stipulations around your employment at the company. For one, you may need to have some tenure with your employer to qualify, with some employers only offering tuition reimbursement to full-time employees. If you leave the company shortly after receiving the tuition reimbursement, you may be required to pay back all or a portion of that reimbursement.
Tuition reimbursement vs. tuition assistance
When comparing tuition reimbursement versus tuition assistance, there are some key differences. Both can pay for tuition and other expenses, it all boils down to when and how funds are distributed.
First, it is a matter of timing. Tuition reimbursement pays for school after the courses have been completed. Tuition assistance, on the other hand, is provided upfront. Second, tuition reimbursement is typically paid to the student, while tuition assistance is paid directly to the school.
Terms and restrictions may vary between programs, so it is important to confirm how and when funds will be distributed so you can plan accordingly.
Does tuition reimbursement affect financial aid?
Most employer tuition reimbursement programs don’t cover the full cost of attendance, so you might still want to complete the Free Application for Federal Student Aid (FAFSA). This can provide extra financial aid through scholarships, grants and, in some cases, student loans.
Even though a portion of tuition reimbursement is not considered taxable income, it could count as gift aid on your FAFSA, lessening how much financial aid you can get. If you’re planning to use a combination of financial aid and tuition reimbursement from your employer, talk to your school about how to qualify for both.
How do I request employee tuition reimbursement?
If you’re interested in going back to school, first ask your HR department if a tuition reimbursement program exists. If one doesn’t, you might be the one to help develop and facilitate such a program.
If your job already has tuition reimbursement, talk to HR about enrolling in the program. Some companies might request that employees work at the company for a set number of months or years before taking advantage of this benefit, so you’ll need to make sure that you qualify.
Before enrolling, read your policy thoroughly to ensure that you understand everything the plan entails. For instance, if you’re taking a course that your employer doesn’t cover, you’ll need to prepare to pay for that course out of pocket. You should also find out when you can expect reimbursement for your classes and how that reimbursement will be paid — whether in a lump sum or installments.
If you need to pay out of pocket, be sure to compare options to choose the best student loan. Look into current student loan rates to understand if you’re getting a good deal.
What happens to your tuition reimbursement if you leave the company?
You may have to pay back your company if you leave your job before or shortly after completing courses. Review your tuition reimbursement terms and contract, including the fine details. Some might require you to stay with the company for a set number of months or years upon course completion.
The exception here is if you are laid off from the company. In this case, you likely won’t have to repay your tuition benefit.
Bottom line
Tuition reimbursement is a fantastic benefit to explore if your employer offers it. Though pursuing tuition reimbursement will likely cost you on the front end, you can benefit from continuing education at your employer’s expense.
To get started, check with your employer’s human resources department to inquire about education-related benefits. Ask about whether tuition reimbursement is available, and if so, whether any limitations apply.
