Tuition reimbursement is a contractual agreement between an employer and employee in which a company agrees to help pay for an employee to further his or her education. Companies offer these programs to encourage employee loyalty, and to help their employees receive the training needed to better perform their jobs.
Why Do Companies Offer Tuition Reimbursement?
There are two primary reasons why companies will offer tuition reimbursement. The first objective is to ensure that their employees are as well-trained as possible. Giving employees the opportunity to go to college to acquire new skills or sharpen existing knowledge can be a huge benefit to a company. The company can promote talent from within instead of having to embark on an extensive search and hire mission.
The second key benefit to companies of a tuition reimbursement program is that it acts as an incentive to attract new talent, as well as keeping existing employees happy. It’s a nice addition to standard employee benefit packages that typically feature only vacation days and health insurance.
How Does Tuition Reimbursement Work?
While each company will have their own tuition reimbursement system, there are some common features.
Most smaller companies will only offer to pay for classes that are related to an employee’s current occupation. For example, a finance company may pay for an employee to earn their CFA certification, but not to get a Masters in Art History.
The common exception to this standard is when big, national chains offer tuition reimbursement. They’ll frequently use tuition reimbursement as an incentive to help hard-working employees advance to better positions.
When will I get my tuition money?
For the most part, companies will only reimburse your tuition upon completion of the course. You will either need to pay your tuition out of pocket, or take out a loan.
Some companies will also require that you achieve a certain grade in the course before reimbursing you for your tuition costs.
In rarer cases, some companies will pay your tuition bill on your behalf, with the agreement that you are to reimburse them if you fail to pass your course.
How much can I receive?
There is no fixed limit on how much you can receive from your employer to pay for your educational expenses, although some will cap tuition reimbursement at $5,250. You will have to pay taxes on anything you receive beyond that amount.
Tuition Reimbursement and the FAFSA®
Receiving tuition reimbursement from your employer does not prohibit you from filing your FAFSA® for additional federal aid. You may still qualify for federal loans, grants and other scholarships to further help you pa