Employer Tuition Assistance Boosts Student Success, Provides Revenue to Community Colleges
While many, if not all, community colleges build relationships with local employers and work to align training programs with local workforce needs, employer tuition assistance supports students in a variety of educational programs and can provide recipients access to a breadth of knowledge and skills that extend beyond their current job responsibilities.
A recent study on the impact of employer tuition assistance, conducted by Henry Tran and Douglas Smith at the University of South Carolina, sparked my interest in the topic. As the authors of the study discuss in their article in the Journal of Student Financial Aid, we often think of federal/state aid, state institutional support, college foundations, and private donors as critical to institutional revenue. However, we should consider thinking more about the ways employer tuition assistance could factor into student success: equipping students with needed resources, infusing institutions with boosted revenue, and providing employers with incentives to attract, support, and retain employees.
Tran and Smith’s work found that community college students who received employer tuition assistance were more likely to be retained at their institution and earn a credential than similar students who didn’t. They theorize, thinking of this topic through a cost-benefit framework, that because employer tuition assistance reduces the cost of higher education, prospective and current students who use this type of aid may be more likely to pursue and achieve their postsecondary education goals. With this evidence supporting the use of tuition benefits for employee-students and employers alike, how would it impact our students and communities if more than five percent of our students, the share receiving aid in Tran and Smith’s study, were able to access employer tuition support?
Some large companies, such as McDonald’s, have cropped up in the news for pledging to pay for some or all of employees’ college tuition. However, some small businesses also include tuition assistance as part of their effort to recruit, support, and retain employees. While the specifics of each business’s tuition assistance program vary, there is a general federal tax provision that allows for employers to offer up to $5,250 of tax-free tuition reimbursement per employee per year, meaning that recipients don’t have to pay taxes on that assistance as income up to the $5,250 threshold. Under current law, this type of employer assistance can cover not only tuition, but books and fees as well. Knowing that nearly 70 percent of community college students work while studying, with one in three working at least 35 hours per week, this additional source of support would be a boost for students.
Tuition support pays off for employers too. Not only can employees use up to $5,250 per year without being taxed on that amount as income, that assistance is tax-exempt for employers too. Companies can also avoid spending on personnel management by investing in their employees’ education. A 2012-14 study of Cigna’s employer tuition assistance program showed that for every dollar Cigna invested in its employees’ higher education, the company got its dollar back and avoided an additional $1.29 of costs to the business.
With the many benefits of employer tuition assistance in mind, here are a few questions for community college leaders to consider:
● How many of your current students are using employer tuition assistance to pay for their education?
● Which local employers already have tuition assistance policies in place?
● Which local businesses might be willing to start offering tuition assistance to employees, and how can your institution cultivate a stronger relationship with these businesses?
● How is your institution currently promoting itself to employees of companies that already offer tuition benefits in your community?
While not every business may be able to offer tuition assistance to employees, many do so and thereby contribute to the growth and success of their employees and communities in the process. Connecting these businesses, prospective students, and community colleges to each other is a win for all.
Are businesses in your community using employee tuition assistance to promote college-going among employees? Let us know! Email Jacob Bray at firstname.lastname@example.org with the story.