Use Tuition Assistance to Aid Development
by Lila McCain
As tuition costs continue to rise and personal student debt follows more employees into the workforce, providing staff with tuition assistance options can increase employee engagement and foster career development.
The Educational Testing Service has decreased its 2009 projection for number of applications for the GRE, which is required for most graduate school programs, from 675,000 to 621,000, indicating today's economy is impacting enrollment. Tuition assistance programs allow talent managers to provide a timely and attractive benefit to individuals and also invest in employees.
In addition to tuition reimbursement benefits, some companies take their assistance programs a step further by offering student loan repayment options. These options can help employees pay down existing debt and encourage enrollment in additional education opportunities.
The Workforce Challenge
While the economic downturn has altered the employment environment, by offering tuition assistance and other tools such as student loan repayment, employers have the potential to retain talent interested in higher education, career development and cross-departmental growth within their organizations.
The average tuition and fees at both public and private institutions rose almost 6 percent in 2008. Given these economic hikes, deciding to pursue further education after entering the workforce can be heavily influenced by company benefits that can reduce the costs. Recent grads are entering the workforce with a greater debt burden: Loans made through the Federal Family Education LoanProgram increased 8 percent during 2007-2008.
Further, entry-level employees are facing a stringent salary environment. According to management consulting firm Hewitt Associates, companies are reducing salary increases in 2009 due to economic concerns, making the decision to go back to school more financially difficult while pursuing a career.
"Due to the current state of the economy, companies now have to make cuts to a number of budgets," said Lauren Rolfe, vice president of human resources at American Student Assistance (ASA). "In 2009 we made it a priority to keep our tuition reimbursement and loan repayment programs fully intact and will continue to offer the same level of assistance as in year's past, and will offer even greater flexibility to how the program can be leveraged by employees."
Tuition Reimbursement Benefit Strategy
There are various levels and approaches to tuition reimbursement. ASA, which has helped finance higher education for the past 50 years, offers the IRS maximum amount of $5,250 per calendar year as a nontaxable benefit, with no limit on the number of courses an employee can take. While nonprofit companies such as ASA do not qualify, for-profit companies may receive a tax benefit for offering tuition reimbursement.
More progressive programs provide compensation for actual degree or certificatecourses, but also for books and other tools students require once enrolled.
At ASA, test-preparation courses and fees also qualify for reimbursement. Most graduate programs require standardized testing, such as the GMAT or GRE, prior to application. Allowing employees the opportunity to apply their tuition assistance to the preparation process provides a broader spectrum of ways for a company to enable higher education in the workplace.
Companies also have the option to offer a nonrestrictive reimbursement programthat allows employees to pursue any type of degree within approved organizational parameters. Especially in organizations that have various divisions and career tracks, not limiting degree selection can encourage employees to grow their career interests and pursue lateral or upward career choices in-house.
Along these same lines, companies also can opt not to restrict tuition reimbursement, either by the letter grade received in the degree or certificateprogram, or if an individual is pursuing an unfamiliar discipline.
"Our philosophy is that a learning mind is a productive mind," Rolfe said. "Our employees are enrolled in programs such as culinary arts and paralegal courses that fall outside their career descriptions. However, what this does is cultivate a motivated, engaged employee base that is able to pursue whole-life interests, which in the end leads to a productive workforce."
Student Loan Repayment Strategy
Since 2000, ASA has provided funds to help employees repay federal education loans currently in repayment status - up to $2,400 per calendar year.
Employees are eligible after six months of service. Part-time employees are eligible on a prorated basis. However, because this benefit does not qualify under IRS regulations the same as tuition reimbursement benefits do, the employee still is required to pay taxes on their student loan repayment benefits.
According to a 2008 internal analysis conducted by ASA, offering tuition reimbursement promotes participation in higher education while serving as a full-time employee in the workforce. Between 2003 and 2007, enrollment in ASA's tuition reimbursement program grew at the same rate as the total population of the company.
ASA HR managers also determined that allowing employees to self-select degreeprograms of their choice promoted interdepartmental movement, empowered and satisfied employees.
These programs have helped position ASA's culture as that of a learning organization, evidenced by employee satisfaction surveys categorizing them as an employer of choice. Also attributed to employee satisfaction surveys is ASA's 2008 recognition as the Boston Globe's Top Places to Work in Massachusetts.
A tuition assistance program can be an integral piece to an organization's well-rounded internal talent strategy. At ASA, it has been integrated into talent management to develop what the organization calls "whole leaders" at all levels of the workforce. To maintain this people strategy in a rapidly growing organization, ASA management promotes training and development that will position employees to manage and lead the organization into the future.
Companies can measure program success by tracking employee enrollment and demographic data that can help to establish career tracks within the organization. Specifically, employee's current careers, part-time education decisions and learned expertise can allow talent managers to better match individuals to appropriate projects, promoting overall efficiency across company divisions and the employee base.
"By administering internal surveys to track participation in our tuition reimbursement program over the past five years, we have created the opportunity to leverage employee skill sets in the future," Rolfe said. "Particularly within a project-based work environment, we hope to build out an infrastructure for managers to track individual career paths, and also best pair employees with work they are interested in and for which they are most qualified."
Jason Burke, a client manager at ASA, was hired in 2004. The company's tuition reimbursement allowed him to pursue a master's degree program at Emerson College, even though it did not directly relate to his position. In December 2008, Burke completed his final class and received a master's in media arts.
"While my program wasn't directly related to my job, I find myself using the skills I've learned from grad school - skills like project management, teamwork and data analysis - at ASA on a daily basis," Burke said. "Grad school has been one of the most challenging and rewarding experiences of my professional life."
Tuition and loan assistance programs can be a powerful addition to workforce development and benefits. They provide employees with compensation for tuition. They can allow flexibility in the number of classes in which employees can enroll, the types of classes employees can enroll in, and can reduce existing higher education debt.
Ultimately, tuition assistance allows companies to cultivate an improved employee base. These types of benefit programs, promote better career pathing, particularly in project-based work environments.
Putting forth the effort to preserve tuition assistance programs helps keep employee morale intact and supports employees interested in growth within their current workplaces. This creates a situation in which both the employee and the organization win.
[About the Author: Lila McCain is director of HR for American Student Assistance.]
by Lila McCain
As tuition costs continue to rise and personal student debt follows more employees into the workforce, providing staff with tuition assistance options can increase employee engagement and foster career development.
The Educational Testing Service has decreased its 2009 projection for number of applications for the GRE, which is required for most graduate school programs, from 675,000 to 621,000, indicating today's economy is impacting enrollment. Tuition assistance programs allow talent managers to provide a timely and attractive benefit to individuals and also invest in employees.
In addition to tuition reimbursement benefits, some companies take their assistance programs a step further by offering student loan repayment options. These options can help employees pay down existing debt and encourage enrollment in additional education opportunities.
The Workforce Challenge
While the economic downturn has altered the employment environment, by offering tuition assistance and other tools such as student loan repayment, employers have the potential to retain talent interested in higher education, career development and cross-departmental growth within their organizations.
The average tuition and fees at both public and private institutions rose almost 6 percent in 2008. Given these economic hikes, deciding to pursue further education after entering the workforce can be heavily influenced by company benefits that can reduce the costs. Recent grads are entering the workforce with a greater debt burden: Loans made through the Federal Family Education LoanProgram increased 8 percent during 2007-2008.
Further, entry-level employees are facing a stringent salary environment. According to management consulting firm Hewitt Associates, companies are reducing salary increases in 2009 due to economic concerns, making the decision to go back to school more financially difficult while pursuing a career.
"Due to the current state of the economy, companies now have to make cuts to a number of budgets," said Lauren Rolfe, vice president of human resources at American Student Assistance (ASA). "In 2009 we made it a priority to keep our tuition reimbursement and loan repayment programs fully intact and will continue to offer the same level of assistance as in year's past, and will offer even greater flexibility to how the program can be leveraged by employees."
Tuition Reimbursement Benefit Strategy
There are various levels and approaches to tuition reimbursement. ASA, which has helped finance higher education for the past 50 years, offers the IRS maximum amount of $5,250 per calendar year as a nontaxable benefit, with no limit on the number of courses an employee can take. While nonprofit companies such as ASA do not qualify, for-profit companies may receive a tax benefit for offering tuition reimbursement.
More progressive programs provide compensation for actual degree or certificatecourses, but also for books and other tools students require once enrolled.
At ASA, test-preparation courses and fees also qualify for reimbursement. Most graduate programs require standardized testing, such as the GMAT or GRE, prior to application. Allowing employees the opportunity to apply their tuition assistance to the preparation process provides a broader spectrum of ways for a company to enable higher education in the workplace.
Companies also have the option to offer a nonrestrictive reimbursement programthat allows employees to pursue any type of degree within approved organizational parameters. Especially in organizations that have various divisions and career tracks, not limiting degree selection can encourage employees to grow their career interests and pursue lateral or upward career choices in-house.
Along these same lines, companies also can opt not to restrict tuition reimbursement, either by the letter grade received in the degree or certificateprogram, or if an individual is pursuing an unfamiliar discipline.
"Our philosophy is that a learning mind is a productive mind," Rolfe said. "Our employees are enrolled in programs such as culinary arts and paralegal courses that fall outside their career descriptions. However, what this does is cultivate a motivated, engaged employee base that is able to pursue whole-life interests, which in the end leads to a productive workforce."
Student Loan Repayment Strategy
Since 2000, ASA has provided funds to help employees repay federal education loans currently in repayment status - up to $2,400 per calendar year.
Employees are eligible after six months of service. Part-time employees are eligible on a prorated basis. However, because this benefit does not qualify under IRS regulations the same as tuition reimbursement benefits do, the employee still is required to pay taxes on their student loan repayment benefits.
According to a 2008 internal analysis conducted by ASA, offering tuition reimbursement promotes participation in higher education while serving as a full-time employee in the workforce. Between 2003 and 2007, enrollment in ASA's tuition reimbursement program grew at the same rate as the total population of the company.
ASA HR managers also determined that allowing employees to self-select degreeprograms of their choice promoted interdepartmental movement, empowered and satisfied employees.
These programs have helped position ASA's culture as that of a learning organization, evidenced by employee satisfaction surveys categorizing them as an employer of choice. Also attributed to employee satisfaction surveys is ASA's 2008 recognition as the Boston Globe's Top Places to Work in Massachusetts.
A tuition assistance program can be an integral piece to an organization's well-rounded internal talent strategy. At ASA, it has been integrated into talent management to develop what the organization calls "whole leaders" at all levels of the workforce. To maintain this people strategy in a rapidly growing organization, ASA management promotes training and development that will position employees to manage and lead the organization into the future.
Companies can measure program success by tracking employee enrollment and demographic data that can help to establish career tracks within the organization. Specifically, employee's current careers, part-time education decisions and learned expertise can allow talent managers to better match individuals to appropriate projects, promoting overall efficiency across company divisions and the employee base.
"By administering internal surveys to track participation in our tuition reimbursement program over the past five years, we have created the opportunity to leverage employee skill sets in the future," Rolfe said. "Particularly within a project-based work environment, we hope to build out an infrastructure for managers to track individual career paths, and also best pair employees with work they are interested in and for which they are most qualified."
Jason Burke, a client manager at ASA, was hired in 2004. The company's tuition reimbursement allowed him to pursue a master's degree program at Emerson College, even though it did not directly relate to his position. In December 2008, Burke completed his final class and received a master's in media arts.
"While my program wasn't directly related to my job, I find myself using the skills I've learned from grad school - skills like project management, teamwork and data analysis - at ASA on a daily basis," Burke said. "Grad school has been one of the most challenging and rewarding experiences of my professional life."
Tuition and loan assistance programs can be a powerful addition to workforce development and benefits. They provide employees with compensation for tuition. They can allow flexibility in the number of classes in which employees can enroll, the types of classes employees can enroll in, and can reduce existing higher education debt.
Ultimately, tuition assistance allows companies to cultivate an improved employee base. These types of benefit programs, promote better career pathing, particularly in project-based work environments.
Putting forth the effort to preserve tuition assistance programs helps keep employee morale intact and supports employees interested in growth within their current workplaces. This creates a situation in which both the employee and the organization win.
[About the Author: Lila McCain is director of HR for American Student Assistance.]
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