How Much Money Do Companies Waste on Tuition Reimbursement?
Study Finds Most Firms Provide Tuition Assistance But Don't Track the ROI
SEATTLE, WA (August 6, 2008) - Going back to school is cool in most companies, but, despite the large sums spent by corporations to fund tuition reimbursement, the whopping majority have no idea if it's worth it. And while employees view tuition reimbursement as almost an entitlement in large organizations, they shouldn't expect much advice about the process, nor should they count on a graduation bash upon completion.
According to a recent study by the Institute for Corporate Productivity (i4cp), 81% of organizations provide tuition assistance programs for employees with a bent for bettering themselves. However - quite surprising in today's economy - only 5% of organizations actually track program effectiveness. And most (79%) have no plans to change their programs in the near term.
"A lot of companies seem to feel that tuition assistance programs are a staple of employee benefits, one that is likely to influence future productivity, engagement and retention," says Jay Jamrog, i4cp SVP of Research. "Which is what makes the total lack of measuring the return on these programs such a shock. While companies look at layoffs and other cost-cutting measures, they better focus their attention on measuring the effectiveness of programs where large sums of money are dedicated, like tuition reimbursement."
When it comes to tuition reimbursement, it seems that an out-of-sight, out-of-mind approach is the norm. Just 26% of companies track retention rates as part of their assistance programs, followed by graduation rates (23%) and professional advancement (15%). While a mere 5% measure return on investment (ROI) as part of their tuition assistance programs, of those companies that do measure their programs, the majority (63%) do so in very rudimentary ways, such as through Excel spreadsheets.
For students in programs, this hands-off attitude is also quite common. Nearly two-thirds of polled companies said they do not provide advice about career, program selection or school choices prior to an employee embarking on an educational voyage. Less than four in 10 offer recognition or reward once a degree is obtained, and just 20% of respondents said they offer cash advances to offset up-front costs of continuing education.
"Many of the best and brightest like it when their organization or boss pays attention to them and shows a willingness to invest in their skills, knowledge and abilities," adds Jamrog. "It's interesting that only a minority of firms recognize achievement. This feels like a lost opportunity."
Who owns these programs may be to blame. Administration of tuition assistance programs is split evenly between the benefits function in organizations (34%) and training and development, at 33%. The general HR function is also heavily relied on for program administration. Very few organizations - less than 2% - have opted to outsource administration of their tuition assistance programs.
Eligibility requirements are also split among companies. A third (33%) of polled companies requires the employee to wait for a year. Twenty percent require only a six-month waiting period. Another 30% of companies make the option available to employees immediately after they are hired.
The regulations around programs vary by company as well. More than 43% of companies do not require an employee to reimburse the cost of school if they leave the company, while 30% of respondents said the employee must repay if he or she leaves the company within a year of completing the course. In addition to tuition fees, other items most likely to be covered under tuition assistance programs include the cost of coursework books, with 53% of companies saying they cover the cost, followed by lab fees (43%), administrative fees (39%) and tests (30%).The Taking the Pulse: Tuition Assistance survey was conducted by i4cp, in conjunction with HR.com, in July 2008. There were a total of 493 respondents. The full results of the survey are available exclusively for all i4cp corporate members.
About i4cp, inc.
i4cp is the world's largest private network of corporations focused on improving workforce productivity. Our vendor-free community facilitates innovation by giving our members - among the largest and most respected organizations in the world - access to:
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With more than 40 years of experience and the industry's largest team of human capital analysts, i4cp is the definitive destination for organizations seeking innovative ways to improve workforce productivity. For more information, visit https://www.i4cp.com/