Sixty-six percent of graduates from public colleges finished with some form of student loan debt. This is an unfortunate reality for most employees, but yet many still desire continued education, especially with the amount of upskilling needed to keep up with the modern workforce. These factors have led tuition reimbursement to quickly become a desired benefit from modern day job candidates, and some companies are responding to the demand. There are several benefits tuition reimbursement offers to not only the employee, but the business itself. Here are the top three reasons that tuition reimbursement is becoming the next hot employee benefit.
Easier talent acquisition
Tuition reimbursement programs can work in a variety of ways. Some may reimburse for all educational classes, others may require that specific schools are utilized, and some may cover tuition costs while helping employees pay back loans. Regardless of the specific program offered, this is often an especially attractive benefit to job seekers. The current hiring landscape is incredibly competitive for employers, especially when you consider that the unemployment rate is at an all time low, meaning that there are more job openings than there are workers. Keeping this in mind, employers need any advantage they can get and offering tuition reimbursement could help a company stand apart.
More productive employees
Another reason that businesses may consider implementing a tuition reimbursement program is because continued education leads to upskilling, often improving productivity. Eighty-seven percent of millennials say professional development is important in a job and keeps them engaged. When employees are engaged and feel a sense of accomplishment, productivity often increases which helps to foster a healthy bottom line. Upskilling is also a reason to consider tuition reimbursement. Digital transformation is sweeping every industry and according to the McKinsey Global Institute, approximately 14 percent of the workforce will have to change careers because of automation by 2030. However, this can be avoided if employees are provided opportunities to continue their education and learn new skills around technology. In turn, turnover costs for businesses will reduce and employees will keep their jobs.
Tax deduction
The final benefit that is a contributing factor for businesses when considering a tuition reimbursement policy is the tax deduction. Under section 127 of the IRS tax code, employers can offer up to $5,250 per year in tuition reimbursement for college courses. This expense can be claimed as a deduction by an employer and is a benefit not taxable to an employee. This deduction makes tuition reimbursement plans a win-win for everyone involved. Businesses get some more money back and employees get to continue their education and gain new skills.
Tuition reimbursement programs offer various benefits for businesses and employees alike. From effortless talent acquisition to improved productivity and tax deductions, these programs will be vital to continued business success in the future.
To learn more about how to improve your workforce through employee benefits, check out our blog 6 ways to reward employees without a pay raise!
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