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The Fundamentals of Tuition Assistance

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In an effort to retain good employees, many organizations are offering a wider variety of employee benefits in addition to wage increases. Employers also see value in investing in their employees’ efforts to improve their job-related skills and knowledge, and to acquire the education necessary to enhance their management skills or prepare for career-related promotional opportunities.

For these reasons, organizations may offer financial assistance to employees who wish to further their education through Tuition Assistance Programs (TAPs).

Who qualifies?
Some employers require that the employee’s field of study relate to a current or future position in the company. For example, it may make sense to sponsor an employee in purchasing who wishes to get a degree in finance. However, it may be impractical for a company to sponsor an employee who operates a printing press and wishes to get a degree in philosophy.

What are the restrictions?
The employer may establish eligibility criteria for such programs. That criteria may include that the employee:

  • Have a certain level of seniority;
  • Be employed for a minimum period of time before applying;
  • Finishes the course of study within a certain a period of time;
  • Stay with the company for a specified period of time after making use of the program; and
  • Only enroll at a specified school, in a specified course of study, or in a certain major.

How is assistance paid?
Organizations may also require that the student/employee maintain a certain grade point average (GPA) to continue receiving the program benefits. The employer may decide to make the amount of tuition that is to be reimbursed dependent upon the GPA; for example, a company will pay 100 percent of tuition for a 4.0 GPA, but a reduced percentage for a lower grade point average.

Employees/students may also be responsible for the initial payment for courses upon enrollment, with the employer reimbursing the employee later, perhaps quarterly, by the semester, or after a final grade has been awarded.

The TAP may also require that the employee/student remain with the organization for a determined length of time after completion of a program. If not, tuition benefits may need to be repaid.

Who administers the program?
Tuition assistance programs are usually administered through an organization’s Human Resources department or are part of an employee’s benefits package. Employees who received tuition assistance from employers also receive a federal tax exemption up to $5,250 a year. Employers often provide for reimbursement up to that amount.

For more information about TAPs, contact the Association’s HR Services Division at 814/833-3200 or 800/815-2660.