Tuition Reimbursement

Tuition Reimbursement 101

The cost of attending college or university has skyrocketed over recent years. If you attended four years of public college in 2000-01, the cost during that school year might have been around $3,501. If you attended public college in 2019-20, the cost during that school year would have been closer to around $9,349, as reported by the Education Data Initiative.

Suffice to say, it has become a struggle for students to afford higher education. With many students struggling to pay back their loans or unable to afford continuing education, employers are starting to offer tuition reimbursement programs. Whether you are reading this post as a student, a graduate, or an employer, this article will teach you the basics of tuition reimbursement and how it works.

What is Tuition Reimbursement?

Tuition reimbursement is a program an employer offers to existing employees or prospective employees. As its name suggests, the employer agrees to reimburse the costs of tuition.

There are a few different forms tuition reimbursement programs can take:

  • A large company may offer tuition reimbursement broadly, regardless of what an employee is studying or has studied.
  • A small company may offer to reimburse tuition specifically for courses that are relevant to the company’s needs and the employee’s role.

How Does Tuition Reimbursement Work?

Exactly how tuition reimbursement works depends on the specific policies of the company and the scenario of the individual employee or prospective employee. Here are a few examples.

Example 1:

Jane is studying computer science, and speaks with a recruitment officer at Company X. Company X is in need of cybersecurity specialists.

Jane has just one year left in school, and the option to take a concentration in cybersecurity. Company X agrees to pay her way if she signs a contract to work for Company X upon graduation for at least three years.

Example 2:

Matt is a computer programmer working for Company Y. He wants to learn a new programming language, and explains to his boss how him doing so would help the company with future projects.

His boss agrees, and offers to reimburse Matt’s tuition for continuing education coursework studying that programming language.


Example 3:

Kathy works at Company Z, a major foodservice business. This large company has a program that offers tuition reimbursement to any employee who wants to go back to school.

Kathy can study anything she wants, so long as she maintains a minimum GPA the company specifies. Company Z will reimburse her costs up to a certain dollar amount each semester. She does not need to use what she learned in her job role; the program exists simply to enhance quality of life for employees.

Those are just a few examples. You may find other companies that offer tuition reimbursement programs that work differently.

What are the Benefits of Tuition Reimbursement Programs?

Tuition reimbursement programs have become increasingly widespread because they are advantageous to both employers and employees.

Large companies may pour millions of dollars into tuition reimbursement and related programs for employees. Despite how hefty that investment is, they say it pays off. Let’s take a look at how.

Benefits for employers:

  • Attract top talent. One of the main reasons employers offer tuition reimbursement programs is to attract talented professionals. There is no overstating just how much student loan debt can weigh a person down. Many workers are desperate to pay off their existing student loan debt and avoid future debt. So, offering to help offset college tuition costs can be a huge incentive for promising job candidates to choose one company over another.
  • Increase employee retention. Intuitively, you might think that agreeing to cover an employee’s tuition might simply encourage them to learn the skills they need to move on to a different employer. But the opposite tends to be true. When you support your employees with tuition reimbursement, they know their value to the company and are more likely to stick around for years to come.
  • Improve existing talent. When you reimburse tuition for employees to receive education related to their existing or future job roles in your company, that is less training you need to take care of internally. As your employees increase their knowledge and skills, they will be able to contribute more value.
  • Promote from within. Imagine you know you will have a vacancy in around six months. Some of your existing employees might fit into that vacancy if they just had a little additional education. By offering them tuition reimbursement, you can incentivize them to learn the skills they would need to potentially fill that role in time. If you promote from within, you will have a loyal long-term employee taking over that important vacancy who already knows the ropes. That person will likely perform better than an outsider.
  • Discover new solutions. By offering tuition reimbursement, you give your employees an opportunity to bring new skills and knowledge to your company. They may discover novel solutions that you never would have considered otherwise.
  • Build loyalty and boost morale. Last but not least, employee satisfaction tends to increase significantly when you are willing to spend on education. By providing tuition reimbursement, you send a message to your staff that you value them and are willing to invest in their growth. Happy employees not only are easier to retain, but tend to be more productive.

Benefits for students:

  • Spend less on your education. The most obvious benefit of tuition reimbursement is that you can avoid some of the high costs of education. The less money you need to spend on earning a degree or certificate, the easier it will be for you to build wealth.
  • Rise in the ranks of your company. If you continue to educate yourself and build skills related to the work you perform, you will make yourself more promotable.
  • Make yourself more hireable. If you do ever decide to leave your current company, the education you can afford with tuition reimbursement will have made you a more competitive job candidate.
  • Learn new skills. Some of the benefits of tuition reimbursement are intrinsic rather than instrumental. If you enjoy developing new skills simply for the sake of learning something new, you will appreciate the opportunity to do so without draining your bank account.
  • Have fun. Finally, for a lot of people, taking a course is simply enjoyable for its own sake. It is nice to have an employer cover that cost so you can make the most of it without stressing about it financially.

Reimbursement vs. Tuition Assistance

Now that you understand what tuition reimbursement is and why it is so beneficial, let’s differentiate between tuition reimbursement and a couple of related programs, the first of which is tuition assistance.

Tuition reimbursement specifically reimburses the cost of education. That means these student foots the initial bill, and then the employer reimburses them for it later.

With tuition assistance, the employer pays the costs right from the start, rather than the student having to cover them.

Most employers are going to want to offer reimbursement rather than assistance since students may work harder at their studies if they initially have to pay the bill.

Plus, as an employer, you can set a rule which says you are only going to reimburse the tuition costs if the employee completes the course. That way, if they drop out in the middle, you are not stuck paying for it.

On the other hand, some students might not be able to afford their education at all without help, and may only attend school and become productive, loyal employees if they are offered upfront assistance.

If an employer decides to offer tuition assistance upfront instead of tuition reimbursement, they can always have the student sign a contract that states that the student will have to pay the money back to the employer if they drop out of the course before they complete it or if they fail.

Does Tuition Reimbursement Cover Student Loans?

You might be wondering, “Is tuition reimbursement the same as loan repayment?”

The answer is “no,” tuition reimbursement is not the same thing as loan repayment. But they are closely related, and some employers do offer programs for student loan repayment.

Employer Student Loan Repayment Programs

Let’s say you have existing student loan debt. You are less concerned with continuing education than you are with simply paying off the debt you already owe.

You might find an employer that offers student loan repayment assistance. Typically, how this will work is the company will agree to match the repayments you make on your student loans up to a certain cap annually.

In effect, this is not so different from tuition reimbursement. But if you are not making payments towards your student loan debt yourself, your employer will not be paying off anything either.

Can You Qualify for Tuition Reimbursement and Student Aid?

Another question a lot of employees ask is whether they can still apply for student aid through FAFSA if they will be receiving tuition reimbursement from their employer.

The good news is that you can apply for student aid even if your employer will be reimbursing some of your tuition.

Just fill out the Free Application for Federal Student Aid (FAFSA) as you normally would, providing as much information as you can.

Is it possible that you may not qualify for as much aid as you would without reimbursement? Yes. That is something you will need to be prepared for.

But many students do qualify for both FAFSA aid and tuition reimbursement from an employer.

This makes sense, as students may not be able to afford the upfront cost of tuition without aid, even if an employer will pay off some of the costs later.

Tuition Reimbursement Programs Offer Numerous Benefits to Companies and Employees

Now you have an idea of how tuition reimbursement programs work, as well as how they relate to tuition assistance programs and student aid.

At a time when education has become very expensive, tuition reimbursement programs can go a long way toward attracting and retaining talented professionals. Their advantages to employees and employers alike are numerous.