Tuition Reimbursement: What Employers Have to Gain

Tuition reimbursement is one of the most-requested benefits among today’s workforce. From an employee perspective, the reasons behind this popularity — the astronomical cost of college, the ongoing student debt crisis, and an increased interest in upskilling driven by the rise of automation, to name a few — are a no-brainer. 

But what do employers have to gain by offering tuition reimbursement benefits? Much more than you might think: 

Generous tax incentives

Section 127 of the IRS tax code permits employers to provide employees with up to $5,250 in tax-free educational assistance each year. 

Any full- or part-time worker can qualify, but the provision allows employers to limit eligibility to specific cohorts, thus allowing employers to tailor their Section 127 Plan to their specific needs and budget. The CARES Act of 2020 opened the door for even more configurability and impact: until the end of 2025, student loan repayment support can also be included in the $5,250 annual tax-free contribution total for each employee.

A major recruitment and retention boost

Tuition reimbursement benefits consistently rank among the most in-demand employee perks — and meeting that demand can lead to a major boost to recruitment and retention efforts. 

Among employees of organizations that offer tuition reimbursement, three-quarters said they’re more likely to stay with their employer because of the benefit, and 84 percent said that the offering was a major factor in their decision to accept their job offer. 

And because the design of tuition reimbursement programs is flexible, employers can take the return on their investment even further by tailoring their offering to fuel their organization’s specific talent goals. For example:

Greater workplace inclusivity

Tuition reimbursement benefits make education more affordable — and therefore, more accessible – for employees. This is especially true for women and people of color, who face disproportionate barriers to an affordable education — and the career opportunities, skill longevity, and financial wellness that come with it. 

• By 2031, 72 percent of jobs will require at least some education beyond a high school degree, with 42 percent requiring a bachelor’s degree — and with white adults far outpacing people of color in degree attainment, this projection also predicts an even greater racial divide in access to career opportunity.
• Jobs that require lower levels of education are at highest risk of being replaced with automation — and are currently disproportionately held by women and people of color. 
• Women and people of color are more likely to take on student debt to pay for school, more likely to struggle to pay it off, and more likely to face long-term impacts to financial security — especially when it comes to retirement and emergency savings — because of it.

Tuition reimbursement benefits are a critical opportunity for employers to help narrow these racial and gender gaps — and in doing so, cultivate a more inclusive workplace. 

How Candidly can help

Around half of all employers — including 80 percent of large organizations — now provide educational assistance benefits.  So with tuition reimbursement quickly becoming the new standard for employee benefits, how can employers differentiate their offering?

Our best-in-class Tuition Reimbursement solution enables employers to maximize tax benefits while delivering a robust, configurable offering from within the all-in-one Candidly platform. Our solution offers:

• Support for flexible, Section 127-optimized program designs
• A centralized, digital workflow to review and approve requests and supporting documentation
• Utilization and balance tracking tools
• Employee activation and engagement support

Contact our team to learn more.