What is tuition reimbursement?
Tuition reimbursement is a benefit that is becoming more popular for companies across the country. These programs allow you to be reimbursed for the cost of tuition by your employer. Tuition reimbursement, also referred to as educational assistance, may be offered by a company as a competitive benefit to attract and retain employees and improve employees’ skill sets.
How does it work?
Tuition reimbursement programs can vary, depending on the company. Some programs allow you to take classes from any academic field, while others have more defined areas of study, such as business, world languages or technology programs. The amount of reimbursement will also vary, and could be a percentage or a certain amount per year. Additionally, some companies may have partnerships with a particular university or college where you can only be reimbursed if enrolled with those partners.
If you are interested in a tuition reimbursement program, you will likely work with your manager or human resources department to start. They will approve the classes you plan to take and go over any grade requirements that may need to be met. Your tuition may not be reimbursed until the end of the semester through your paycheck. If so, this means you will need to use savings, financial aid, scholarships, grants, or student loans to pay upfront.
It is also important to note any tax implications involved with tuition reimbursement benefits. Educational assistance is only tax deductible up to $5,250 per calendar year; any amount over this is considered taxable income according to the IRS. This means if your employer gives $10,000 in tuition reimbursement in a single year, you will be taxed on $4,750 as if it were wages earned.
Is it worth it?
The answer to this question is going to vary from person to person. Tuition reimbursement is a great option for obtaining your first degree, finishing a degree, or starting a master’s program. You will want to analyze your personal financial situation and evaluate if starting classes will add to your debt and if you can afford that debt. You will also want to consider if any educational costs are not covered in your company’s benefits, such as books, supplies or a computer.
Ultimately, the decision may come down to your career goals. Earning more education may set you up for new positions, promotions or pay increases. It can’t hurt to look into what programs your employer has to help you reach your goals!