Providing Educational Benefits
One of HRI’s sponsors -- Goodyear Tire & Rubber Company -- recently sent out a survey to other member firms via our online Sponsor Network, asking specifics about how colleagues provide educational assistance. There were 26 full responses, interesting for both their similarities and their differences.
Over half of the respondents view such assistance as an employee benefit rather than a program. And there isn’t much of a waiting period before employees can use tuition reimbursement schemes in most firms; in 13 companies there was no waiting period and in another 6 the period was between 1 and 6 months. One respondent reported that the waiting period depended on when employees have their first check-point meeting or full performance review.
Overall, responding firms -- most of them large U.S. organizations -- tend to be pretty generous, as long as employees earn good grades. Several organizations report that they have no tuition-reimbursement caps at all. Others pay 100% of costs but only up to a certain limit, with $5,250 being the most commonly mentioned limit for undergraduate expenses. (This limit is probably due to Section 127 of the tax code.) Still others pay a large percentage (80% to 90%) of tuition. There’s more variation among respondents in terms of other cost coverage. Some cover books as well as a range of fees (registration fees, computer lab fees, etc.), while others pretty much limit payments to tuition.
In terms of the type of degrees for which they’ll reimburse employees, virtually every company attaches a few strings. At one firm, for example, all degrees are acceptable but employees receive full reimbursement only for a “B” or better. Others set the bar a bit lower. A number of firms limit reimbursement to “B” or higher for graduate courses and “C” or higher for undergrad courses. Timken has a system wherein it provides various levels of undergraduate reimbursement depending on course grades.
Quite a few respondents stipulate that the degree must somehow add value to the firm, but several seem to believe that any education for its own sake is worth supporting. By far the most common requirement is that employees take courses only from accredited institutions. In some cases, organizations limit reimbursement to colleges and universities, but no respondents mandate that courses be taken at a specific institution.
So what happens if someone earns a degree and then takes off for another job? For the most part, nothing. Several companies, however, require employees to pay the company back if they leave within a year or two (depending on the agreement) after they’ve taken courses. Of course, if they leave the company in the middle of taking a course, then workers usually wind up paying their own tuition.
Engineers and scientists who want to pursue an MBA may have to jump through a few hoops to get their tuition paid, but they can get it done in most companies. In fact, quite a few firms make no distinction between engineers/scientists and anyone else. For example, Prudential simply reports, “All MBAs are considered job- related,” and Newport News Shipbuilding states that “…it improves their ability to conceptualize ‘the big picture’ and better understand engineering’s role in the mission of the firm.” In some cases, a supervisor must give permission or the engineer/scientist must be on a management track.
Most responding organizations handle Executive MBAs (EMBAs) differently from the way they handle regular MBAs. In many cases, top management must approve tuition reimbursement for an EMBA. Approval sometimes hinges on executive and/or leadership development councils. In a couple of cases, tuition comes from the employee’s division or line of business rather than from the general tuition-reimbursement fund.
How many employees choose to use reimbursement plans? Although not asked in this survey, another and much broader survey, this one from the International Foundation of Employee Benefit Plans (IFEBP), found that the utilization rate is under 10% for most employers. Nonetheless, two thirds of employers felt employees would be upset if the benefit were eliminated. The IFEBP survey is based on responses from 114 organizations, 89% of which had an educational benefit program. Fully 86% reported having educational reimbursement programs, 26% had Section 127 educational assistance programs and 8% had scholarship programs.
If, as expected, the Internet makes it easier for employees to attend classes online, companies could find a growing proportion of their workforces taking classes. Even though tuition reimbursement is probably a good investment for corporations, companies will need to keep an eye on costs. After all, despite some recent slowing, the cost of higher education in the U.S. continues to rise faster than inflation.
And in any reimbursement system, there are bound to be some problems. For example, reports Workforce magazine, employees may automatically select the highest-cost college in their area, falsely believing that higher costs always result in higher quality. Another problem is that, if tuition is the only thing reimbursed, employees may choose higher-tuition private schools simply because they charge a single rate (meaning less fee money out of their own pocket). These are the types of nuts-and-bolts details that should be regularly revisited as the world of higher education evolves in coming years.
====================================================
For an in-depth look at educational benefit programs, see "The Many Faces of Educational Benefits" from the International Foundation of Employee Benefit Plans at
http://www.ifebp.org/reedubn1.html
A guide to virtual degree programs at 350 accredited colleges and universities (100 offering MBAs) is available for purchase at
www.accrediteddldegrees.com
Over half of the respondents view such assistance as an employee benefit rather than a program. And there isn’t much of a waiting period before employees can use tuition reimbursement schemes in most firms; in 13 companies there was no waiting period and in another 6 the period was between 1 and 6 months. One respondent reported that the waiting period depended on when employees have their first check-point meeting or full performance review.
Overall, responding firms -- most of them large U.S. organizations -- tend to be pretty generous, as long as employees earn good grades. Several organizations report that they have no tuition-reimbursement caps at all. Others pay 100% of costs but only up to a certain limit, with $5,250 being the most commonly mentioned limit for undergraduate expenses. (This limit is probably due to Section 127 of the tax code.) Still others pay a large percentage (80% to 90%) of tuition. There’s more variation among respondents in terms of other cost coverage. Some cover books as well as a range of fees (registration fees, computer lab fees, etc.), while others pretty much limit payments to tuition.
In terms of the type of degrees for which they’ll reimburse employees, virtually every company attaches a few strings. At one firm, for example, all degrees are acceptable but employees receive full reimbursement only for a “B” or better. Others set the bar a bit lower. A number of firms limit reimbursement to “B” or higher for graduate courses and “C” or higher for undergrad courses. Timken has a system wherein it provides various levels of undergraduate reimbursement depending on course grades.
Quite a few respondents stipulate that the degree must somehow add value to the firm, but several seem to believe that any education for its own sake is worth supporting. By far the most common requirement is that employees take courses only from accredited institutions. In some cases, organizations limit reimbursement to colleges and universities, but no respondents mandate that courses be taken at a specific institution.
So what happens if someone earns a degree and then takes off for another job? For the most part, nothing. Several companies, however, require employees to pay the company back if they leave within a year or two (depending on the agreement) after they’ve taken courses. Of course, if they leave the company in the middle of taking a course, then workers usually wind up paying their own tuition.
Engineers and scientists who want to pursue an MBA may have to jump through a few hoops to get their tuition paid, but they can get it done in most companies. In fact, quite a few firms make no distinction between engineers/scientists and anyone else. For example, Prudential simply reports, “All MBAs are considered job- related,” and Newport News Shipbuilding states that “…it improves their ability to conceptualize ‘the big picture’ and better understand engineering’s role in the mission of the firm.” In some cases, a supervisor must give permission or the engineer/scientist must be on a management track.
Most responding organizations handle Executive MBAs (EMBAs) differently from the way they handle regular MBAs. In many cases, top management must approve tuition reimbursement for an EMBA. Approval sometimes hinges on executive and/or leadership development councils. In a couple of cases, tuition comes from the employee’s division or line of business rather than from the general tuition-reimbursement fund.
How many employees choose to use reimbursement plans? Although not asked in this survey, another and much broader survey, this one from the International Foundation of Employee Benefit Plans (IFEBP), found that the utilization rate is under 10% for most employers. Nonetheless, two thirds of employers felt employees would be upset if the benefit were eliminated. The IFEBP survey is based on responses from 114 organizations, 89% of which had an educational benefit program. Fully 86% reported having educational reimbursement programs, 26% had Section 127 educational assistance programs and 8% had scholarship programs.
If, as expected, the Internet makes it easier for employees to attend classes online, companies could find a growing proportion of their workforces taking classes. Even though tuition reimbursement is probably a good investment for corporations, companies will need to keep an eye on costs. After all, despite some recent slowing, the cost of higher education in the U.S. continues to rise faster than inflation.
And in any reimbursement system, there are bound to be some problems. For example, reports Workforce magazine, employees may automatically select the highest-cost college in their area, falsely believing that higher costs always result in higher quality. Another problem is that, if tuition is the only thing reimbursed, employees may choose higher-tuition private schools simply because they charge a single rate (meaning less fee money out of their own pocket). These are the types of nuts-and-bolts details that should be regularly revisited as the world of higher education evolves in coming years.
====================================================
For an in-depth look at educational benefit programs, see "The Many Faces of Educational Benefits" from the International Foundation of Employee Benefit Plans at
http://www.ifebp.org/reedubn1.html
A guide to virtual degree programs at 350 accredited colleges and universities (100 offering MBAs) is available for purchase at
www.accrediteddldegrees.com