As many as 44.7 million Americans are dealing with student loan debt. If you add up all of the money owed, you’d reach an alarming total of $1.56 trillion dollars.
Even in the face of this unfortunate reality, employees still prioritize continued education and professional development opportunities. Employers value employee education, too: To succeed in a rapidly shifting business landscape, organizations need to upskill their workers for the future.
But regardless of the importance of education, increasingly more employees need financial assistance to stay on top of student loan payments — or even have the opportunities to pursue further education in the first place. As a result, many employees are starting to ask employers for help in the form of tuition reimbursement programs and similar benefits. Believe it or not, major employers like Procter & Gamble, UPS, and Chipotle are saying yes.
There are a variety of different options when it comes to developing tuition reimbursement programs. For example, Starbucks requires employees to attend Arizona State University in order to obtain full tuition coverage, while other reimbursement programs offer to pay for all continuing education classes or help employees pay back existing student loan debt.
Whatever forms their tuition assistance programs take, the companies offering this perk recognize employees aren’t the only ones who benefit from it. Businesses do as well. From more effective recruiting to boosted productivity and financial breaks, here are the top three reasons tuition reimbursement is quickly gaining popularity in the business landscape:
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1. Easier Talent Acquisition
Employers should take note of any opportunity to set themselves apart in today’s highly competitive hiring landscape, and tuition reimbursement is a very enticing benefit to modern-day candidates.
The unemployment rate is historically low, and by some estimates, there are more open jobs than there are people to fill them. In this talent market, the ball is in the job seeker’s court. Candidates can be pickier, and many are taking the chance to demand more from companies in terms of salary and benefits.
Tuition reimbursement is not yet a standard benefit, so simply offering it can attract more attention from top candidates. Moreover, tuition reimbursement improves your company’s reputation as an organization focused on supporting its employees both now and in the future. Employees like to work for organizations that make them feel valued, and a tuition reimbursement benefit certainly suggests your company is that kind of organization.
2. Better Employee Productivity — for the Long Haul
Offering a tuition reimbursement program that pays for continued education is a key way to upskill your current workforce. When your employees refine their existing skills and gain new skills, they can become more productive in the workplace. It’s a win-win situation.
Not only does upskilling increase productivity, but it can also improve employee engagement. According to a recent survey, 87 percent of millennials say professional development is important to them. When you meet that need, you foster greater engagement among your employees — and engaged employees are more productive and more likely to stay with the organization for the long term.
It’s also important to remember that, with new technologies disrupting all industries, many employees may struggle to adapt and keep producing value within their current positions. By offering to pay for continued education related to these new technologies, you can position your employees to stay relevant — and productive — in your workforce for years to come. Your organization can keep up with the latest tech without having to hire brand new teams.
According to the Brookings Institute, approximately 25 percent of US workers are at high risk of losing their jobs to automation. Your tuition reimbursement program can keep these employees in the workforce by granting them access to upskilling and reskilling opportunities. In turn, your company saves money on recruiting and training.
3. Tax Breaks
As a final bonus, employers that offer tuition reimbursement programs may be eligible for significant tax deductions. Section 127 of the US tax code allows employers to deduct up to $5,250 per employee per year in tuition reimbursement. Plus, that money counts as a non-taxable benefit for your employees. Everyone gets something out of the deal.
Tuition reimbursement is becoming increasingly popular precisely because it offers valuable benefits to both employees and employers. If you want to improve your recruiting, increase employee productivity and engagement, and even save a little money, consider implementing a tuition assistance program for your employees.
Andrea Meyer is director of benefits at WorkSmart Systems.