Question

The importance of tuition reimbursement as an employee benefit can’t be ignored. In a recent State of the American Workplace survey report, Gallup found that 45% of Millennials say they would change their jobs for tuition reimbursement benefits, and 65% of HR decision-makers say that failing to attract and/or retain Millennial or Gen Z employees could have a negative impact on the business.

You are the HR manager for a medium-sized company that wants to implement such a program, and the CEO wants you to make recommendations for this plan. He has asked you to determine what the “ideal” tuition reimbursement program should look like—in other words, what are the key features and stipulations?

Your initial posting should address the following questions:

1. What employees will be eligible under this plan?  Will part-time employees be eligible?  If so, how many hours per week must they work in order to maintain eligibility?  

2. How long must the employee be employed by the company in order to be eligible for this program?  

3. What programs of study will be eligible under the plan?  For example, should an employee be allowed to seek a degree in any discipline or must it be job-related?  How will you determine eligibility of a broad-based program of study like business administration?  

4. What is the level of cost that the company will take on?  Is there an annual cap on the benefit? (Keep in mind that the IRS allows only $5,250 per year to be written off by an employer for an employee’s education costs, so anything above that amount will result in additional tax expenses for the employer.)
5. Will the amount of tuition reimbursement be scaled according to grade requirements?  For example, in some companies, a grade of “A” receives full reimbursement, a grade of “B” is reimbursed at 75%, a grade of “C” is reimbursed at 50%, and lower grades are not reimbursed at all.  What will your plan specify?

6. Will you require an employee to remain on the job for a specific period of time after attaining his or her degree (sometimes known as "golden handcuffs)?  If the employee leaves before the specified period of time, will s/he be responsible for paying back some portion of the tuition?  If so, how much?

Answer 1

The reimbursement scheme will be as following:

1. Eligibility: Only the full-time employee, in the management cadre, who has completed at least 3 years in the company would be eligible for the program. Part-time employees will not be eligible irrespective of their number of years in service.
2. This scheme is not applicable to the supervisory cadre.
3. Course selection: Course needs to be approved by the functional head, business head as well as HR head. A degree only relevant to the job area would be allowed to be considered for this scheme. For any course-related matter, it is the decision of the business head and the HR head would be final.
4. The maximum amount that can be reimbursed for the full-time course would be limited to 50% of the program cost or $20000 whichever is lower. For pat time course the reimbursement would be limited to 50% of the program cost or $10000 whichever is lower. The tax burden will be borne by the company.
5. The amount of reimbursement will not vary according to the grade of the employee and all the employees will be supported uniformly.
6. Any leave required for the purpose of the study would be treated as leave without pay. However, the period of study will be considered for calculating the total employment period in the organization if the employee joins back the organization after completion of the program.
7. After the course completion, in the case of a full-time course, a minimum of 5 years and in case of part-time course a minimum of 3 years need to be served by the employee In case employee leaves the organization before the time period specified, the employee has to pay back the 150% of the amount of fee reimbursed to the employee.