Employee tuition reimbursement is a much-coveted benefit, especially among younger workers who may expect their employer to pay for continuing education. You shouldn’t shy away from offering to reimburse your employees any tuition money they pay to take continuing education classes, grad school classes, or college classes. It might sound like an unnecessary expense, but reimbursing tuition expenses can have several benefits for you as an employer.
To start with, you can get tax breaks for each employee that uses the benefit. Employees will stick around longer – and you can even ask them to commit to staying for a certain period of time if they take advantage of the benefit. Highly qualified candidates will compete for jobs at your organization so they can take advantage of the opportunity to save money on further education. Existing employees will use tuition reimbursement benefits to acquire new skills, and they’ll put what they learn to use at their jobs right away, so you won’t need to spend as much money recruiting new people who already have those skills.
You Can Get Tax Breaks
Once you figure in the tax breaks you’ll get for each employee that uses tuition reimbursement, you’ll find that the program costs you less than you might expect. Under Internal Revenue Code Section 127, employers can deduct up to $5,250 in tuition reimbursements per year per employee. If you give more than $5,250 a year, you will have to include the excess amount as part of the employee’s wages on their form W-2.
If cost is a concern, keep in mind that not all of your employees will even want to take advantage of the tuition reimbursement program. With tax breaks, if you limit your reimbursements to $5,250 a year, you could get all that money back at tax time.
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You’ll Reduce Turnover
A tuition reimbursement program can be a great tool to keep employees around longer, especially in industries with notoriously high turnover, like food service. You can put together a program that requires employees to commit to staying with the company for a period of time in order to qualify for the tuition reimbursement. In any case, if an employee is using your company’s tuition reimbursement policy to study for, say, a bachelor’s degree in psychology online, you know he or she is motivated to stay with your company, perhaps even to finish the whole degree.
Of course, not all of your employees will be interested in furthering their careers through education. But those who are may leave your company for one that offers tuition reimbursement, especially with the high cost of an education. Encourage them to stick around longer.
You’ll Attract Better Candidates
Tuition reimbursement is a very desirable benefit that will help you appeal to the kinds of candidates who are serious about their own professional growth. These programs benefit all kinds of companies, even those that hire unskilled workers. Companies like Starbucks have generated lots of positive press via their tuition reimbursement programs – your company’s reputation could benefit, too.
It can be tough to compete for the best employees when bigger employers are offering more benefits, including tuition reimbursement programs of their own. A few strategic benefits can make your company more competitive and allow you to spend less time and money attracting desirable candidates. Due to the tax breaks you’ll get for offering tuition reimbursement, it’s a benefit you can offer at a reasonable cost to yourself, that will add a lot of value for many employees – especially those most interested in working hard to improve themselves.
You’ll Pay Less for More Skilled Employees
Recruitment is a huge cost for most companies. Placing job ads, reviewing applications, performing interviews, negotiating benefits and a salary – all of it costs money. Typically, a new hire is going to want to negotiate for as much as he or she can get to start.
When you encourage your workforce to learn new skills, you end up with a more educated workforce at a lower cost to your organization. You can make the tax breaks work for you to save money on tuition reimbursement costs while encouraging your employees to better their minds. If you want to foster a specific set of skills among your staff, you can even give access to just those classes or degree programs that will teach the desirable skills. Earning a degree might take years, but your employees will be able to put the knowledge they’re learning in classes into use right away, so you don’t even have to wait that long to start reaping the benefits of a more educated workforce.
If your company isn’t offering tuition reimbursement, you should start. It’s a lot more affordable than you might think, and it can make your company a much more desirable place to work – especially in the eyes of the kind of go-getters you want to hire.
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