Driven by Data

Broaden Your Employee Benefit Offering Through Tuition Assistance Programs

The benefits offered by your school can directly affect employee retention. In an earlier post, we covered flexibility benefit options, which account for four of the top valued benefits according research from Harvard Business Review. Today, we are moving down the list to student loan assistance and tuition assistance.

The graph below highlights the most desirable benefits from a survey published by Harvard Business Review.


Student Loan Assistance

Research has shown that many younger employees don’t fully appreciate the money contributed to their retirement accounts (and may not even value all the money you pump into health insurance). Often, those benefits don’t feel very real to them – but what does feel real is their monthly student loan payment. As we see above, 45% of people strongly value student loan assistance. The CEO of Penguin House Books, which recently implemented a student loan assistance benefit, said to NPR, “I feel like it has really kind of outsized emotional or psychological benefits for employees. . . if they were ranking it this would be up there at the top, and I don’t think it’s the most expensive.”

When thinking about implementing this benefit, you should consider the logistics of administering a student loan assistance program and its potential cost. Many companies help to manage the student loan assistance process, and hiring one of these third-party vendors may be the easiest way to implement student loan assistance. 

When it comes to controlling costs, you have a lot of flexibility. For example, you can cap the benefit at a certain amount per year per employee or a certain percentage of the monthly payment that employees are making. If the median monthly student loan payment is $222, contributing 10% would only cost $22 per participant per month – but would feel far more tangible than a 3% retirement match. As you think about your total spending on benefits, consider whether changing the allocation to invest in student loan assistance would be worthwhile for your school. The ROI on staff satisfaction is high.


Tuition Assistance Policy

A significant 44% of people report that tuition assistance is a benefit that they would consider when deciding on a new job. Fortunately, the IRS already has a tuition assistance policy that all employers can offer to their employees. An employee can elect to have up to $5,250 of her/his salary set aside each year to pay for tuition or tuition-related costs. The amount the employee opts to have set aside does not get taxed and is issued as a reimbursement payment back to the employee during the year when she/he provides invoices or receipts for tuition. Therefore, your employees can save paying taxes on $5,250 (and improve their skills) without cost to the school as an employer. A win-win. The school can also consider actually subsidizing the tuition payments, but that is a pricier proposition.


Adding educational loan and tuition benefits to your offering can differentiate you from other schools. This option is more flexible than adding to base pay, improves employee morale, and could even improve your employees’ skill level.

 

[This post contributed by Geoff Pecover, Human Resources Manager and Vera Krimnus, Charter School Consultant.]