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Education benefits you should be offering

Written by: Chase Charaba
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Published on May 18, 2022.

With an increasingly tight job market, employers are looking for new ways to attract and retain employees. While more traditional benefits like group health insurance and retirement plans are still great options for your employee benefits package, priorities for job candidates have changed.

In recent years education benefits have become one of the most in-demand employee benefits options alongside wellness programs.

According to Statista, 56% of employers offer an undergraduate or graduate tuition assistance program, while 8% provide student loan repayment assistance. An additional 13% of employers offer a 529 plan—a tax-advantaged account used to save for higher education.

With education benefits in high demand, there are many different options for offering education benefits, each with its pros and cons.

This article will explore which education benefits you should be offering to your employees and how to ensure that your education program is successful.

What are education benefits?

Education benefits are employee benefits or perks that help your workers enrich or learn new skills. They can also help employees go back to school to earn their degrees, earn their GEDs, or assist employees with paying back their student loans.

The goal of any education benefits program is to improve your organization’s overall skill set, which improves productivity and autonomy, and to attract top talent.

Why should you offer education benefits to your employees?

There are many benefits of education for employers and employees.

Employees who receive higher education or learn new skills due to workplace benefits tend to have better overall health, an improved sense of self-worth, and more opportunities to grow in their career, including at your organization.

Providing training and education resources to employees improves employee retention, mainly when those new skills help them move up in your organization. According to LinkedIn's Workplace Learning Report, companies that excel at internal mobility keep their employees for nearly twice as long as organizations that don't.

When employees are cross-trained and upskilled in areas that support your business goals, your organization gains knowledge. According to the Lumina Foundation, education reimbursement programs result in a 129% return on investment.

Educated employees also reduce acquisition costs for specialized roles because you can hire from within to fill these roles.

When it comes time to hire, offering education benefits helps your organization attract top talent. This is especially important if you want to hire younger workers looking to finish their degrees or learn additional skills to support their future in the workforce.

What organizations offer educational benefits to their employees?

Education benefits aren't uncommon, especially for larger organizations. And the number of organizations offering education benefits is growing.

Companies with educational programs and benefits include:

  • Apple
    • Apple provides classes and tools to strengthen employee skills. Apple also reimburses employees for tuition
  • Best Buy
    • Best Buy provides $3,500 for undergraduate-level coursework and $5,250 for graduate-level coursework to full-time employees who've been with the company for at least six months
  • Chick-fil-A
    • The fast-food restaurant provides some employees who applied with scholarships for college tuition. They also offer tuition discounts at more than 100 colleges and universities
  • Chipotle
    • Chipotle provides certificates and 100% tuition coverage for certain programs. They also offer up to $5,250 for tuition assistance per year
  • Kaiser Permanente
    • Kaiser offers up to $3,000 for tuition reimbursement to all employees
  • Starbucks
    • The coffeehouse giant offers 100% tuition coverage for first-time bachelor's degrees through online Arizona State University programs
  • Walmart
    • Walmart announced in 2021 that it would invest nearly $1 billion in employee training and development through its Live Better U program

What types of education benefits are available?

Your organization can offer many different types of education benefits and programs.

According to the International Foundation of Employee Benefit Plans, more than 92% of the organizations that responded to their survey offered an educational benefit.

These are the most common employee education benefits:

  • Tuition assistance or reimbursement programs
  • In-house training
  • Education conferences
  • Continuing education courses
  • Assistance or reimbursement for licensing and exams
  • Personal development courses
  • 529 college savings plans
  • Student loan repayment plans

We've expanded on a few of the options in the following sections.

On-the-job training benefits

While not a formal education benefit, providing employees with on-the-job and in-house training is a great way to teach them new skills or improve their current skills.

You can also provide group skills training for leadership, communication, and other topics to ensure that your entire organization is successful.

On-the-job training programs are the most cost-effective approach to education benefits, though they may not be enough to improve recruitment and retainment on their own.

Personal development

In addition to or instead of college education benefits, many employers offer continuing education and personal development perks. This is an excellent way to enable your employees to learn new skills while still rewarding them for their efforts.

It also allows you to fill positions quicker by hiring capable talent who need some additional skills or resources to become your ideal employee. This is often cheaper than waiting to fill a vacant position for a few months in extremely tight markets.

Some common ways to promote personal development are through:

  • Certificate programs
  • Specialized training
  • Purchasing online courses for employees

This is a great option for organizations that aren’t ready to offer tuition reimbursement or student loan repayment but still want to provide valuable training and educational opportunities to their employees.

Tuition assistance programs

Tuition assistance programs are the most common employee educational benefit offered. This benefit promotes continuing college education for employees by providing an allowance or reimbursement for tuition costs undertaken while the employee works for your organization. It doesn't cover prior student loans or tuition expenses for employees.

A tuition assistance benefit generally reimburses employees for some or all of their tuition costs, provided the employee passes their courses or completes their degree.

Helping employees pay for their tuition is a significant investment. So, what happens if an employee leaves after completing their courses? Many organizations require employees who leave within a year of obtaining their education to pay back some or all of the reimbursed education.

If you’re interested in offering an education benefit, there's no better time to offer tuition reimbursement. Through the 2025 tax year, you can contribute up to $5,250 per employee toward tuition tax-free.

529 plans

A 529 plan is a tuition program run by your state that allows employees to save money for tuition or use a prepaid plan. This is done by investing in mutual funds or other investments similar to a Roth 401(k).

Qualified withdrawals from the fund are tax-free, such as to pay for tuition, textbooks, materials, or room and board. The IRS has imposed an annual limit of $10,000 for qualified K-12 education withdrawals and a $10,000 lifetime limit for student loan repayments.

There are no federal 529 plan contribution limits, but some states have aggregate contribution limits.

A 529 plan can put funds away for your education or help pay education costs for your family.

You might be eligible for state income tax deductions depending on your state.

Most 529 plans are contributed to by the employee only, but employers can contribute to an employee’s 529 plan by making matching contributions similar to a health savings account (HSA).

While these are popular benefits, with around 10% of organizations offering a 529 plan for employees, they are often difficult to manage. If your organization and employees can navigate the plan administration, it can be a rewarding benefit.

Student loan repayment

With the average student loan debt in the United States at $37,113, according to Education Data, offering a student loan repayment benefit to your employees can help you attract college-educated talent.

Despite the rising tuition costs at many colleges and universities across the country, student loan repayment remains a relatively uncommon employee perk. However, more employers are beginning to introduce student loan repayment programs. According to the Society for Human Resource Management (SHRM), 8% of employers offered the benefit in 2020, up from previous years.

A major reason for the growth in student loan repayment is to attract younger workers, namely Millennials and Gen Zers, who have current student loan debt. Many of these younger workers don’t contribute to a 401(k) plan because of their student loan debt, making this benefit enticing to these workers.

However, student loan assistance can be challenging to administer. Any payments toward student loans above $5,250 are taxable for both the employer and the employee, and you must report them as a bonus on employees’ W-2s.

Consider your workforce's diverse needs

When choosing which education benefits to offer, you’ll need to consider your workforce’s diverse needs. A one-size-fits-all method won’t work for most of your employees. Instead, you’ll want to offer something flexible that works for everyone.

You can combine the above benefits ideas into a single program, for example, where you provide student loan repayment up to a set amount, tuition reimbursement up to a set allowance, and free in-office skills training.

You can also offer an education employee stipend that provides a monthly allowance for reimbursement toward tuition, textbooks, and more. That way, you don’t need to establish a tuition agreement with a particular college or program. Your employees will have the freedom to choose what classes and programs they want to participate in.

Conclusion

Education benefits are an essential piece of any compensation package. Without a robust benefits package, you’ll have a more challenging time attracting and retaining your employees in a tight labor market. Education benefits are one of the best ways to ensure your workforce is equipped for the future.

Many educational benefits are available for employers, such as on-the-job training, personal development courses and certificates, tuition assistance, 529 plans, and student loan repayment plans.

No matter which benefits option is best for you, education benefits are an excellent way to invest in the future of your organization.

Originally published on May 18, 2022. Last updated May 18, 2022.
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