What’s the difference between tuition reimbursement and tuition assistance?
Leading employers know that education is a priority. Half of all spending on education for employees over the age of 25 is offered from a select group of large companies, but many smaller companies provide education benefits as well. In fact, according to MarketWatch, about 90% of midsize or large employers offer tuition reimbursement.
However, the group of employers offering educational assistance is divided between those that offer tuition reimbursement and those that offer tuition assistance.
Tuition assistance and tuition reimbursement, albeit different payment models, have benefits for employers including increased talent acquisition and employee satisfaction. But, there are critical differences between the two that impact employee retention and program adoption from essential frontline populations.
Tuition reimbursement (TR) is the process by which an employer repays employees for tuition fees or other costs of an education program.
Typically, the process for tuition reimbursement is as follows: An employee will pay for their education program initially, and upon completion (the definition of which differs by employer), the employer reimburses the employee for all — or some — of the cost. Employers can attach conditions to tuition reimbursement programs, including a capped funding amount, specific program limitations, and grade requirements.
The major downside of this, in direct contrast to tuition assistance, is that it requires an upfront sum from employees — often making higher education cost-prohibitive, particularly for frontline employees. In fact, 84% of employees have a more negative view of their employer after taking advantage of tuition reimbursement.
TR programs can be dangerously expansive and expensive. It is difficult to align with corporate strategy by way of upskilling, outskilling, and tying programs directly to specific needs. Generally, tuition reimbursement is also more commonly used by an employee population that has the capital to pay upfront and the ability to wait for reimbursement.
Tuition assistance (TA) is the process by which tuition fees for an employees’ education is paid upfront by the employer or deferred by the educational institution.
Also called direct tuition payment, tuition assistance differs from tuition reimbursement in that the employer’s contribution is paid upfront or deferred. This process significantly reduces or eliminates the need for an employee to pay out of pocket. Like tuition reimbursement, employers can attach conditions to tuition assistance programs, like type of program, designated schools, or required grade point average.
According to the Society for Human Resource Management, 56% of employers offer tuition assistance for undergraduate degrees and 44% offered graduate educational assistance in 2019. Beyond that, 8% of employers in 2019 offer student loan repayment assistance, up from 3% in 2015.
From an employer perspective, the benefits of offering either TR or TA include enhancing employer brand, driving talent acquisition, upskilling employees, and designing a workforce to align directly with corporate strategy. However, the major difference between TR and TA guides how and when employees have to pay for their education. For most of America’s frontline workforce, tuition assistance provides the financial stability necessary to take advantage of higher education.