Employee Benefit Spotlight: Tuition Assistance

Wednesday, July 13, 2022 13:05 Posted by Admin

With many companies fighting for talent, some organizations are looking for ways to attract workers and retain their loyalty to the business. Major employers are looking for ways to inspire longer-term dedication in industries with high turnover and low barriers to movement, like hospitality, food service, transportation, and warehousing. Some have found an answer in tuition reimbursement.

In the past, paying for a college or graduate degree program was much more likely to be available for professional, so-called “white-collar” workers. That is changing rapidly. Chipotle has reported that eighty-five percent of its degree reimbursement program participants are employees working in their restaurants. The goal of increasing employee loyalty seems to be achieving success. Chipotle has noted that these team members are 3.5 times more likely to stay with the organization and a whopping seven times more likely to move up into management than employees not enrolled in the education benefits program.

Starbucks started a trend in 2014.

Starbucks started its college plan in 2014 in partnership with the online program at Arizona State University, which is available to all U.S.-based Starbucks employees at no cost. Almost 7,000 employees have earned degrees to date, and 20,000 more are currently enrolled. In 2021, Target, Amazon, and Walmart announced similar offerings for their associates. While the benefit is more likely to be offered by larger employers, the development of online learning platforms has increased accessibility to more companies. At the same time, it has enhanced the number of colleges participating in degree programs.

Companies like Guild Education have simplified how corporations offer access to higher education (and some also include programs to finish high school.) Guild connects employees at participating employers like Walmart, Disney, and Chipotle can offer online education that fits their goals and handles the administration for the corporate client. As a result, Time Magazine included Guild in its list of 100 most influential companies of 2022. Guild has enjoyed sixty percent growth over the last year and reports that many of the over 300,000 students who used their services last year are first-generation college students and people of color.

Upfront payment versus reimbursement.

One advantage of the Guild approach is that the employee does not have to front the cost. In many more traditional tuition reimbursement plans, an employee would pay for the course and then seek reimbursement following the successful completion of the semester. The company might require a certain level of achievement (such as a grade of B or better) to approve the request. In that scenario, the employee is at risk of not receiving the reimbursement, and even if granted, the payment comes at some future point. In contrast, by enrolling in a specific institution designated by the employer’s program, the employee may be able to avoid the initial outlay and uncertainty of reimbursement timing. However, they may have a limited selection of places to study in exchange.

Benefit levels can vary.

Some organizations like UPS offer college expense reimbursement of up to $5,250 annually for even part-time workers in their package handling department (with other programs available for those in different work areas.) This union-negotiated perk can total $25,000 per eligible employee and is available when a new hire has benefit access.

Houston-based WM, with over 48,000 workers, also offers tuition support to their employees’ spouses and dependents, with 100 percent coverage for over 130 selected learning programs.

At other firms, waiting periods are more extended and may cover partial tuition or only tuition but no additional costs such as books and fees. Some companies will allow reimbursement for any field of study, while others require a degree program, and others reserve the right of approval.

Whether you are looking for help with standard employee benefits or added options like tuition plans, our knowledgeable benefits consultants at Taylor Benefits Insurance want to help you decide on the right approach for your company and your workforce.

Written by Todd Taylor

Todd Taylor

Todd Taylor oversees most of the marketing and client administration for the agency with help of an incredible team. Todd is a seasoned benefits insurance broker with over 35 years of industry experience. As the Founder and CEO of Taylor Benefits Insurance Agency, Inc., he provides strategic consultations and high-quality support to ensure his clients’ competitive position in the market.

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