Tiffany Rowe, Marketing Administrator at Seek Visibility explores how most employers can go about designing and managing education benefits plans
Employees benefit from education by improving their credentials and preparing for upper-level positions. Employers benefit from education by maintaining a more talented workforce. It seems like a no-brainer that employers and employees should work together to reach greater education.
That’s precisely the goal of employer-sponsored education programs: employers assisting employees with tuition with the understanding that employees will contribute their enhanced knowledge and skill to the betterment of the business. In recent years, all sorts of unconventional perks have become more popular, and employer-sponsored education benefits are a prime example. To serve businesses well, HR professionals must understand what different education benefits programs look like and why they matter.
How Most Education Benefits Work
Employees dream of programs that allow them to send their tuition and supplies bills directly to their employer – but that is rarely how education benefits work. Rather, the vast majority of employers develop reimbursement programs, which help employees cover up to $5,250 of their education-related costs. The reason for this specific cap is the same reason behind many financial decision-making in business: taxes. The IRS allows businesses to deduct from their income up to $5,250 for employer-sponsored educational assistance programsOpens a new window . Thus, employers are typically eager and willing to make expenditures – but not more than they can deduct come tax time.
Admittedly, not all employers adhere to this trend. Some employers will cover an employee’s total tuition regardless of expense caps from the IRS; others develop their own education programs and permit employees to engage at will. The goal is for employers to develop a program that benefits the business with better-qualified employees, and different employees will have different requirements for completing that objective.
Almost all employers make requirements concerning employees’ performance in the program. For example, employees typically must maintain a minimum grade-point average, take a maximum number of credits, or attend a certain number of seminars, conferences, or events for the company. Further, nearly all employers demand employees have a minimum employment history with the company and promise a term of service after obtaining their credentials, which prevents those interested only in education from scamming the business.
Education is expensive for both employees and employers. Even if employers take advantage of education program tax benefits, they potentially lose a valuable employee while they focus on coursework. Meanwhile, employees must cover any gaps between employer tuition assistance and other expenses. As a result, many employers and employees prefer convenient and low-cost education options, like AACSB online MBA programsOpens a new window . Online education typically allows students to maintain full-time employment while they complete their studies, so employers do not lose a valuable employee while they are improving their education. Then, employees maintain employment – and their existing wages – while they work toward better career prospects.
How to Design and Manage Education Benefits
**When an employer decides that it is the right time for employer-sponsored education options, HR must be able to deliver a program that suits everyone’s needs**. To develop an education benefits programOpens a new window , HR must be willing and able to answer dozens of questions, including the following:
Who will receive the benefit? HR should determine what restrictions should be placed on the program’s use, such as tenure at the company, level within the company, relationship with the company, etc.
Will employees who do not use the benefit gain value another way? For example, some businesses offer cash to employees who do not take advantage of the education benefit.
What tax structure is necessary? Several IRS tax codes address the issue of employer-sponsored education and third-party tuition payers. Businesses should review their options before deciding.
Will there be parameters on the education? It is possible to restrict education benefits to programs with certain accreditation and programs of certain education level. Moreover, businesses should set expectations for employees, such as course subject and minimum grade-point average.
Will employers white- and blacklist different educational institutions? Some employers develop partnerships with colleges and universities, so they receive lower tuition for employees. Meanwhile, some employers prohibit sponsored education from some less-than-reputable institutions.
Finally, HR should be prepared to react appropriately to unexpected circumstances. For example, if the economy turns and an employee utilizing education benefits is laid off, the program should have an established response. No one can predict the future – tax benefits may change, companies may merge, employees may be terminated for cause – but the employer-sponsored education should be adaptable to any circumstance.