Whether you’re currently employed and looking to further your career, or you’re just out of college and seeking your first job, understanding employer tuition assistance programs can help you save money and maximize your potential.
It’s becoming more and more common for employers to offer tuition assistance to their employees. These programs help them recruit and maintain talented people. It can be an enticing part of an offer package, and according to Inc.com, is one of the top ways for companies to keep turnover low.
So what can you expect from an employer with regard to tuition assistance? Let’s cover some of the basics.
Just like every employer is different with their rules, requirements and corporate culture, so are their approaches to developing their workforce. You may find some employers only provide tuition assistance after a certain amount of time on the job (typically 12 months or more), or only cover courses directly related to your responsibilities at work. Other companies may cover any class you take, whether it’s related to your current position or not, or cover certification classes that are offered by professional institutes rather than colleges.
Staying with the company after completion: They helped pay for your education in hopes to decrease turnover and develop their workforce. Some companies require you to stay for a predetermined period of time after you’ve finished your courses or they’ll ask you to pay them back.
Receiving a certain grade: Some companies don’t pay up front, but reimburse you once you’ve completed the course. This form is commonly referred to as tuition reimbursement. Some may even tie the rate of reimbursement to the grade you earned (i.e., 100% reimbursement for an A; 80% reimbursement for a B, etc.).
Requiring preapproval: Many employers will require you to get approval for the tuition assistance they offer before you register for the class. Whether they are paying for the course upfront or offering tuition reimbursement, it’s good to know the policy before you commit to the courses.
Student loan repayment reimbursement: Some employers may offer assistance in repaying your outstanding student loan debt. With this benefit, your employer will reimburse you for payments made toward your student loans. If your employer offers this benefit, ask for details on their specific policy so you know what documentation you’ll need to provide.
You may be required to pay out-of-pocket: Many employers will only reimburse you for the amount you paid out-of-pocket, not the amount you paid with your financial aid funds. Make sure you understand your tuition reimbursement benefit guidelines and have a discussion with Human Resources.
Tuition assistance from your employer could be considered gift-aid, and may affect your need-based financial aid eligibility. It’s always best to reach out to the financial aid office at your school for additional guidance if you plan to utilize both financial aid and tuition assistance from your employer.
There is a limit on how much employer-paid tuition assistance you’re allowed each calendar year before it affects your taxable gross income (regardless of whether or not you changed employers during the year). This amount is regulated by the IRS and subject to change. Contact your financial aid office, tax preparer, or the IRS website for the most up-to-date information.
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