Free Money: Go Back to School on Your Employer’s Dime
While going back to school can be expensive, there are many programs out there that help students get funding and scholarships. But there’s one resource that’s commonly forgotten: employer tuition assistance.
What is Employer Tuition Assistance?
Employer tuition assistance is when an employee receives money from their employer to take classes. According to the IRS, If an employee receives money from their employer to go back to school, the employee is not required to pay tax on up to $5,250 of that money.
To qualify for this tax break, the money must go towards tuition, fees, books, supplies, or equipment. The education doesn’t have to be towards a degree program or work-related. Any training that improves an employee’s capabilities can receive this benefit.
Why Would Employers Want to Pay for My Education?
It seems too good to be true: Your employer providing you with free money? Really? Why? Well, let’s break it down:
New Skills and Knowledge
As you learn in school, you can immediately apply your new skills and knowledge on the job. If these are in high demand, they can greatly increase your value to the company.
Employees tend to be more loyal to a company that has a tuition assistance program. If you receive funding from your employer to go back to school, you’ll probably want to stick with that company for some time. At the very least, you’re likely to stay long enough for them to finish paying for your degree.
Reduction in Recruitment Cost
It’s expensive for a company to recruit and train new employees, which is why it’s beneficial for them to retain the employees they already have. It’s more cost-effective for your employer to send you back to school to learn a new skill than it is for them to recruit, hire, and train a new employee.
The higher the turnover at a company, the higher the recruiting and training cost. By offering a tuition assistance program a company is more likely to retain their employees and keep recruitment costs low.
When your employer pays for you to go back to school, up to $5,250 of that cost is deductible, which means they have a lower tax bill. In this way, the government gives your employer an incentive to fund your education! You gain valuable skills and training, and your employer gets a loyal, better skilled employee and a tax break. It’s a win-win!
What’s the Catch?
Some, but not all employers will ask you to sign a contract that lays out conditions you must follow to receive tuition assistance. Usually, these conditions are pretty reasonable, but some could be deal-breakers for you.
Make sure to read through the contract carefully and ask yourself these questions:
1. How will my tuition be paid?
Some employers will pay your tuition directly to the school, while others will ask you to pay your tuition upfront and reimburse you at a later date. If that’s the case, you might need to prepare your finances for that..
2. Are there any academic standards that I have to meet?
Some employers will have a GPA requirement as a condition for assistance. Make sure you understand the requirement and the consequences of failing to meet it.
3. How long am I required to stay with the company?
The company may require you to continue working there for a certain period of time after completing your classes. You could also try asking for the time to be reduced if the period they propose seems unreasonably long.
4. If I stop attending class or can’t complete the program, what happens?
Different employers may require you to complete whatever program you start. If you develop health or family issues while enrolled, this may be a problem. No matter the reason for falling short of completion, you should find out of there are penalties for doing so. In doing so, you can identify any unreasonable requirements included in the contract.
As with any contract, make sure you are comfortable with the conditions. If not, ask the HR department for more information or seek a second opinion. If any of the terms seem unreasonable, don’t sign the contract.
Companies with Tuition Assistance Programs
There are many companies that offer tuition assistance programs for their employees, way more than we could list here. The only way to know if your employer does offer assistance with tuition is to ask.
The companies below are just some of the many offering such programs:
Both employees and their dependent children are eligible for benefits. Employees can be reimbursed up to $5000 a year, and dependent children can apply for awards worth $1000-$3000.
Bank of America
If the degree you are earning relates to your job with Bank of America, you can be reimbursed up to $5,250 per year as part of their “Life Management Benefits”.
Full-time employees at AT&T are eligible for tuition assistance of up to $5,250 annually. Qualified employees receive reimbursement of up to $20,000 towards a bachelor’s degree and up to $25,000 for a graduate degree.
Chevron reimburses up to 75 percent of Chevron employees’ tuition costs. They also offer internal training and mentorship programs in business and leadership.
Both you and your employer benefit when you advance your education. There’s no reason not to ask if there’s a tuition assistance program and to find an agreement that works for both of you.
If you find out that your employer doesn’t already have a tuition assistance program, look at that as an opportunity to help them create one! We’ve got some tips for how to convince your boss coming to you next week.
More About Abound: We’re here to help. Abound: Grad School narrows down your options and gets you in touch with schools that we can confirm are Accessible, Affordable, Accelerated, and Advanced. Take a look at the schools we trust and find the program that works for you.