2 Tuition Reimbursement Programs

There are generally 2 overall types of tuition reimbursement programs that employers will provide. One pays the entire amount and treats this payment as a loan to be paid back, with certain employment, grade, and performance stipulations (described first). The second is based on a certain capped amount, which may or may not come with similar requirements and pay-back clauses.

Type One – payment in advance:

• The program is set up like a loan. The company issues an initial loan of $30-45k. This amount may or may not have to be adjusted depending on the state or city that the company is operating in. Obviously, the costs of education may differ per metropolitan area depending on the availability of lesser-cost government subsidized schools (such as UCLA, Miami College, or CUNY). Due to this, the cap amount may need to be adjusted higher/lower to account for regional price differences.
• This loan is an agreement between the employer and the employee that she/he will work at the firm for the next three years.
• Each year for three years, provided that the employee is still working at the company, one third of the loan is forgiven. This includes forgiveness of the loan and the 8% interest on the loan. In a simplified program, the interest does not compound.
• If the employee quits before his three year “contract” is over, he is responsible for the portion of the contract that he has not “worked off,” including the associated non-compounded interest of 8%.
• Included in the tuition reimbursement were other auxiliary expenses, such as books, technology fees, registration fees, parking fees, etc.
• Frequently, the owners or senior managers will write a letter of recommendation, helping to secure admission to local schools.
• Grades had to be maintained at a B minus level or higher.

Type Two – payment after completion:

• Tuition is covered at a cap of $12,000 per year. Excluded are books, registration fees, interest, technology fees, etc. Only the class tuition amount is covered.
• Each class has to have prior approval by the manager. This was done on an online portal. The direct supervisor as well as her/his direct supervisor had to check off on approval. The classes had to be deemed relevant to my employment.
• Only classes with grades B- and above were eligible for reimbursement. Reimbursement takes place after the course is completed and the grade report is available.
• In order to receive the funds, employee needs to submit a reimbursement request after each semester is over showing proof of completion, proof of score, and payment receipt.
• All of this was administered by a 3^rd party tuition reimbursement portal, which may be a bit cumbersome to use. Some common systems take a several hours out of the employee’s workday to get all the documents uploaded each semester and the online interface may be a bit unintuitive, forcing staff to re-learn the process each semester. The system at Type One companies is typically better because it is frequently used by smaller companies that don’t have the bureaucracy and paperwork to overcomplicate the process.
• No three-year contract is in place – the employee is not liable for past reimbursed expenses if she/he were to find another job after several semesters. This may cause employees to get their education and run. However, option one may do the same. Generally speaking, workforce talent that is interested in their personal growth will look for ways to grow regardless.

Having an employee tuition reimbursement program in place at your company can lead to employee satisfaction and employee engagement in the process. It also does cause staff to learn skills that they simply will not learn in the workplace. Here is an example: a staff member is an analyst at an engineering company. She has the technical background in data analysis and IT systems, but does not understand financial reporting, as financial reporting is an accounting-related topic while her background was an undergrad in Management Information Systems. She takes advantage of the tuition reimbursement program to take some accounting courses at UCLA and leans how an income statement reconciles the beginning and ending retained earnings balance in a set of balance sheets. She is better at her job, and it only cost the employer $3400 per semester. Having to hire someone with both data analysis skills as well as accounting skills may have cost the employer over $120k per year.