Don’t Overlook Tuition Reimbursement

Paying for college is one of the biggest obstacles for many students, but many programs exist to help with the cost. You probably already know about scholarships and loans, but if you’re pursuing a degree while also working a full-time job, you may have another avenue open to you – employer tuition reimbursement.

Students are often unaware of this valuable benefit, but according to a 2018 survey, more than 90% of U.S. employers offer some type of tuition assistance. Tuition reimbursement and tuition assistance programs benefit both employees and employers. Employees get help with earning a degree while employers benefit from better-educated employees, plus they may even receive a tax break for providing the tuition assistance.

Tuition reimbursement programs differ from employer to employer, but there are some common questions you may have about tuition reimbursement.

  1. What are the conditions?

Most employers set conditions on their tuition reimbursement. Those conditions generally include:

  • The amount the employer will reimburse in a year.
  • The grade point average you’re required to maintain to be eligible for reimbursement.
  • Whether the reimbursement includes books and fees or just tuition.
  • The program of study allowed. Some employers limit tuition assistance to only job-related programs.
  • The length of time you have to work for the company before you’re eligible for reimbursement. Some companies also stipulate that you have to work for them for a certain period of time after you complete your coursework.
  1. Will my company pay the university directly?

This depends on your company. Many companies provide only reimbursement. After you take the class(es), you turn in the necessary paperwork, and the company reimburses you. This allows employers to require certain grades for reimbursement. Some companies will pay up front, directly to the institution. Be sure you know your employer’s payment/reimbursement process before taking courses.

  1. Is tuition reimbursement considered taxable income?

Many employers only offer tuition reimbursement up to the IRS cap of $5,250. That amount does not count as taxable income for employees. Except in rare cases, any amount of tuition reimbursement over that amount will be taxable.

  1. Are there any other tax implications?

Yes. You can’t take the education tax credit on the portion of your tuition for which your employer reimbursed you. For more information on tax issues surrounding tuition reimbursement, check out the IRS website.

  1. Do I have to report tuition reimbursement when applying for financial aid?

Yes. If you plan to use your employer’s tuition reimbursement program, you must report that on your financial aid forms. You can combine other forms of financial aid like scholarships and loans with your tuition reimbursement. Click here for more information on Grantham’s financial aid options.

Now that you know tuition reimbursement may be an option, how do you go about exploring that avenue?

  1. Check with your human resources department and ask if your company offers tuition reimbursement or tuition assistance of any kind.
  2. Carefully review the conditions for tuition assistance to make sure you can meet them. You don’t want to end up footing the bill yourself because you didn’t understand the conditions.
  3. Choose a program that meets your company’s conditions. Your company may require a certain field of study or may only pay for tuition at certain institutions.
  4. Make a plan. Many employers cap how much tuition assistance they offer in a given year, so plan your course load to get the maximum benefit.
  5. Get started! Apply to the institution of your choosing and choose your courses. Be sure to consider programs designed for working adults. Grantham University offers more than 50 degree and certificate programs that allow you to complete a degree in a convenient online environment.
  6. If your company reimburses you after you take classes, be sure to fill out the paperwork, turn in your grade report, and receive your reimbursement.

Tuition reimbursement is an often-overlooked benefit that can cut the cost of earning a degree without adding to your debt. If you work full-time, be sure to check with your employer to find out about any tuition assistance they can offer to help you reach your goals.

About The Author

Shauna Lawrence is a project manager on Grantham University’s marketing team. As the university’s former social media strategist, Shauna has a passion for connecting with others and building a sense of community among all Grantham stakeholders. She holds a bachelor’s degree in agricultural economics and marketing from Kansas State University and is currently working on her MBA at Grantham University.