Tuition reimbursement isn’t simply an in-demand benefit. It can also help you grow your business. Through a tuition assistance program, you can improve your worker retention, recruitment, and employee development. Whether you’re hoping to promote from within or attract top-notch talent, tuition reimbursement can help.

Do You Offer Reimbursement for Tuition or Training Expenses?

At Asure, we recently completed our 2024 HR Benchmark Report. In the report, we looked at answers from 1,065 small businesses about how they’re handling their employee development, onboarding, and other HR topics. Then, we looked at whether fast-growth and zero-growth companies had similar answers.

As a part of our section on employee development, we asked if companies offered tuition reimbursement to their workers or not.

57% of zero-growth firms reimburse employees for their tuition. 

80% of fast-growth firms reimburse employees for their tuition. 

This 33-point spread was one of the largest spreads in our entire survey. However, the spread still increased when we narrowed down our search to just companies that had under 25 employees. For the following groups, the spread between zero-growth and fast-growth businesses was 36%.

40% of zero-growth firms reimburse employees for their tuition. 

76% of fast-growth firms reimburse employees for their tuition. 

How Does Tuition Reimbursement Work? 

At its heart, tuition reimbursement is when your company reimburses an employee for the amount they spend on going to school. However, there are a lot of different ways you can handle tuition reimbursements. 

• Partial Reimbursements: Rather than pay for the entirety of a worker’s tuition, you can reimburse them for a percentage of their studies or for a certain amount of credits each quarter.
• Specific Programs: Alternatively, you can choose to reimburse employees if they take specific degree tracks. For example, you may want to encourage workers to obtain business degrees or certificates. 
• Certificates Only: If you’re struggling to find technicians or drivers, you can offer free training for those specific certifications. This helps you fill important skill gaps and makes recruitment easier.
• Limited Course Pricing: Instead of paying a percentage of the cost or only covering specific programs, you can keep costs down by setting a maximum reimbursement amount.
• Community College: Another way to fund the worker’s program without overspending is by offering to reimburse workers for community college courses or technical schools. These tend to be less expensive, so you won’t have to spend as much. 

The Benefits of Tuition Reimbursement for Employers 

There are many potential advantages to offering tuition reimbursement. Often, the main reason workplaces don’t use these programs is the cost and time they require. However, a convenient tax deduction can help lower the amount you have to spend.

Become More Successful 

As our survey shows, fast-growth companies are far more likely to offer tuition reimbursement. While part of this result is likely because successful companies are in a better position to afford these programs, it’s also true that tuition reimbursement can make you more profitable. 

During a recent Mission to Grow interview on, “Development & Training,” Asure’s VP of HR compliance, learning, and development, Mary Simmons, discussed the advantages of tuition reimbursement. “Having better-trained employees and managers makes your company more successful and productive.”

Attract Key Talent

Employees want to work at a firm that has tuition reimbursement. Currently, less than 10% of workers are employed somewhere that offers tuition reimbursement. In one study, 84% of workers said tuition reimbursement was an important factor in deciding to work at a specific company.

Boost Employee Engagement 

When employees feel valued and supported in reaching their development goals, they are more engaged. Due to this engagement, they are more productive.

Lower Turnover Rates 

When they are a part of tuition reimbursement programs, workers are less likely to quit. Instead of having a revolving door, you get to keep your highly trained workers for longer.

Improve Your Employee Development

Employee development is important for workers, and it doesn’t have to solely involve college classes. Management seminars, conferences, and on-demand coursework also count. 

What matters is that workers can access the development opportunities they care about. In one recent survey, almost 60% of workers said that they’d pick a job with strong development opportunities over one that pays better.

Save Money on Recruitment Costs 

In one study, employers saved $1.29 on recruitment for every $1 of tuition reimbursement. For many workers, development opportunities and tuition reimbursement are incredibly attractive benefits. If you add these benefits to your job description, you’ll get more applicants and won’t have to work as hard to find qualified recruits.

The Advantages of Tuition Reimbursement for Workers

While companies offer tuition reimbursement because it makes business sense, it’s also worth thinking about the impact these programs have on workers. Through these programs, your employees can enjoy receiving the following benefits.

Opens Up Promotion Opportunities for Workers

Employee development programs are important because they open up promotion opportunities for every employee. These programs help workers reach their goals without having to leave your organization. As long as they are going to school, they’ll have a strong incentive to remain with your company. Plus, most employees choose to remain with the same organization after they receive their degree. 

Reduces College Costs 

For the worker, tuition reimbursement is an excellent way to lower the cost of going to school. The average in-state public school costs $10,662 per year, so any amount of tuition assistance is useful for prospective students.

Potentially Lowers Loan Repayment Costs

By getting tuition reimbursement, the employee can take out fewer loans. As a result, they won’t be stressed out by high loan payments and spiraling interest rates. 

Tuition Reimbursements Offers Tax Exemptions 

Under Section 127 of the IRS Code, employees don’t have to pay taxes on educational assistance benefits that are less than $5,250. Since payroll taxes alone are 7.65% of the worker’s paycheck, this is a significant benefit.

Ways to Make Tuition Reimbursement More Affordable 

Many workplaces know that employee development and tuition assistance can help them grow. They’re just held back by the cost and time commitment. These programs require effort to implement and administrate, which can be prohibitive for a small company. 

Through the following tips, you can make education and development more affordable for your employees and your business.

SECURE 2.0 Offers Tax Credits for Employer Contributions

A recent government program is making it easier to attract talented workers and support their financial well-being. Under SECURE 2.0, organizations can make 401(k) matching contributions for the employee’s student loan payments as well as for their normal retirement contributions. Plus, you can get a tax credit for as much as 100% of your contributions, up to a certain dollar amount per employee. 

Receive a $5,250 Tax Deduction for Small Businesses 

Through Internal Revenue Code Section 127, you can deduct up to $5,250 from your business taxes for each employee’s tuition reimbursements. To qualify, your reimbursements must be made through qualified education assistance programs (EAPs). 

Provide Alternative Development Opportunities

If tuition reimbursement is too far out of your reach, shoot for a less lofty goal. There are many alternative training programs available online or through apps. For example, Asure offers a library of affordable, on-demand training tools about compliance and related topics. 

Depending on what you’re looking for, you can also find options on Coursera, YouTube, and LinkedIn Learning. Often, your company’s vendors are happy to provide free training sessions as well.

Small Scholarships 

You don’t have to pay for someone’s entire tuition cost. Instead, you can always offer small scholarships to employees. These scholarships could cover a certification, textbooks, or transportation to the employee’s educational program. 

Time Off for Learning Activities 

If you absolutely can’t afford to do any scholarships or digital learning options, you can always offer workers unpaid or paid time off to attend school. By making it easier to get a degree, you can increase the odds that employees will pursue advanced skills.

Reimbursement for Certifications and Conferences

Rather than pay for degree programs, you can set smaller goals. You give out reimbursements for workers to go to conferences about work-related topics. If there’s a certification that would help your company, your company can pay for employees to complete it. 

Trends in Tuition Reimbursement 

Amazon, Target, and Starbucks have all adopted tuition reimbursement programs in the last few years. While nearly 60% of employees would prefer a company that has tuition reimbursement benefits over a business that pays better, around the same number of workers were unaware of their workplace’s tuition reimbursement benefits. For the workers who do take advantage of these programs, the personal and professional benefits can be significant. 

Let’s take a deeper look at some trends and statistics involving tuition reimbursement.

• Employees are using tuition assistance to get ahead and go for their dreams. 76% of people use tuition reimbursement for advancement at their company.
• Workplaces appreciate their employees’ newfound skills, and they show it through career growth possibilities. Within two years of finishing their program, almost 6 out of 10 said workers were given a promotion, new opportunities, or similar professional benefits.
• Over 8 of 10 employees report that tuition reimbursement contributes significantly to their job satisfaction and desire to stay with their employer.
• Thanks to its many benefits, a high percentage of businesses are adopting tuition assistance programs. Employers in the United States report spending $177 billion per year on formal training programs. They also pay an additional $413 billion every year for informal, on-the-job training.
• Tuition assistance is used in a variety of organizations and industries. 48% of American employers have tuition assistance options for undergraduate and graduate programs.
• In terms of day-to-day program operations, the biggest trend is toward repaying workers after they have finished their studies. 87% of organizations reimburse students after they reach the end of their studies. These reimbursements are generally for $5,000 to $5,999.

Discover How Fast-Growth Companies Provide Tuition Assistance

Fast-growth companies are far more likely to offer tuition assistance. By offering these programs, they can attract a better quality worker at a lower cost. Additionally, these programs can support employee retention and satisfaction. 

To learn more about offering tuition assistance or on-demand training sessions, reach out to our small business HR team today.