Benjamin Franklin once said, “An investment in knowledge always pays the best interest.”  With employees back from vacation, and a new school year right around the corner, the topic of higher education is on the forefront for employers.  Finding a balance between controlling costs while attracting and retaining talent with benefits such as tuition reimbursement can at times be tricky.

According to the latest edition of the Employment Policy Foundation (EPF) report, The American Workplace 2005: The Changing Nature of Employee Benefits, released on August 24, 2005, “Employers are being forced to make difficult decisions that have a direct impact on the quality of their workers’ lives and on their own ability to survive.”

With the United States’ improving economy and the anticipated job boom in the near future, it is exceedingly important that employers take the necessary steps to ensure that their employees are happy.  “Companies are vying to be the ‘employer of choice’ and it is expected that competition for employees will continue to be fierce. Employees want to work for an employer who will continually upgrade their skills to keep them competitive with their peers from other companies. One might think that enhancing employees' skills means preparing them for jobs elsewhere. This is not necessarily true. Employees are probably more likely to be loyal to an organization that shows a personal interest in them. Today, workers expect and demand more as they change jobs and even careers throughout their lifetimes. Job security and benefits are not as important as feeling a part of the organization that offers upward career mobility and a balanced quality of life,” explained Shelly T. Prochaska, SPHR, in the SHRM White Paper, Designing Organizational Programs for Employee Career Development

Tuition reimbursement, or educational assistance, is a benefit program where an employer pays for or reimburses an employee's educational expenses if certain requirements are satisfied.  Such requirements may include taking classes related to the employee’s job or organization’s business, and / or maintaining specific grades (for example, reimbursement of 100 percent for an A, 90 percent for a B, 80 percent for a C and nothing for grades lower than C. You can view a sample tuition policy, courtesy of Workforce Management, here.)  Typically, employers provide their workers with up to $5,250 a year in tax-free educational benefits, the amount allowed under Section 127 of the U.S. Tax Code.

What are the benefits of educational assistance programs for employers?  In January 2000, the International Foundation of Employee Benefit Plans randomly surveyed 114 employers about their educational benefit programs.  The report, The Many Faces of Educational Benefits - Characteristics of, and Opinions About, Educational Benefit Programs, revealed that 88% agreed that tuition reimbursement was a useful tool for employee retention.

Despite educational assistance’s inherent benefits to an organization, measuring the actual ROI of tuition reimbursement programs is difficult to determine.  According to the Link & Learn article, The Value of Tuition Reimbursement: Myth Versus Reality by Michael E. Echols, Ph. D., since some employers perceive that ROI in human capital can’t truly be measured, tuition reimbursement should be viewed as a current period cost rather than an investment. “The reality is that the HR profession must build a credible case for objective measurement of ROI to fulfill the senior executive demands for strategic investment in human capital,” said Echols.     

The Workforce Management article, “Dear Workforce: How Do We Measure the ROI of Tuition-Reimbursement Programs?” suggests that employers keep the following points in mind in order to achieve maximum results from their educational assistance programs: 

·        Investigate if internal training courses can be applied toward degree credit.

·        Pay for CLEP exams, whereby students earn course credits toward their degree by demonstrating proficiency on an exam.

·        Encourage students to enroll in accelerated degree programs, which offer the same content as traditional courses in far less time. This way, the learning comes back to the company almost immediately.

·        Consider outsourcing the management of your educational assistance program to a qualified provider. Such providers can often save the employer money while providing sound advice to both employers and students/employees.

·        Consider allowing a local college or university to utilize some of your office/plant space for an evening program in exchange for free tuition for your employees.

Employers who offer educational assistance will most likely find that they are not only ensuring their place as an “employer of choice,” but also establishing loyalty while extending their organization’s knowledge base.  Benjamin Franklin would agree that educational assistance adds up to being a very smart investment.