When Training magazine Editor-in- Chief Lorri Freifeld does feedback calls with Training Top 125 applicants, one of the first areas brought up for discussion is tuition reimbursement. Sections 2.7 to 2.11 in the Top 125 application cover tuition reimbursement, which is worth 9 percent of the quantitative score as such programs provide a source of funding for skills and career development. Applicants want to know how they scored in comparison with others in their industries and size range, and they often seek data-fueled leverage they can use to convince their C-suite to change corporate/HR policies on tuition reimbursement.
As a result, Training decided to conduct a research study into the tuition reimbursement practices of the 2013 Training Top 125 winners, plus an additional 26 organizations that were on the cusp of making the Top 125 list last year. A note on the Training Top 125 scoring of the tuition reimbursement section: Organizations that provide conditions favorable to the employee (not the employer) receive higher scores in the tuition conditions section (2.10), and the highest points are awarded for no maximum on tuition reimbursement (2.09) and employee tuition reimbursement participation of 25 percent or more.
Following a brief background on tuition reimbursement is an analysis of Training Top 125 tuition practices in 2012-2013, including who offers the program, participation rates, spending levels, conditions, and payment practices.
TUITION REIMBURSEMENT PRIMER
Tuition reimbursement is an employee benefit offered by organizations that covers the costs associated with taking courses at accredited colleges and universities and similar institutions, including tuition (from which it earns its name) and related fees. Employees choose courses to take; managers approve those courses; and upon meeting certain eligibility criteria, employers reimburse the costs of the course to workers.
Many employers highlight tuition reimbursement benefits to attract highly qualified workers who, in turn, use the program to finance graduate studies and similar endeavors. Such college/university courses not only enhance careers but also develop skills. Many Training managers report that Human Resources departments, rather than Training departments, typically administer tuition reimbursement programs in their organizations.
WHO OFFERS TUITION REIMBURSEMENT?
Nearly all (96 percent) of the Training Top 125 applicants offer tuition reimbursement. The total number of employees in the organization seems to be the deciding factor in whether organizations offer a program. Of the six applicants that do not offer tuition reimbursement, five have 2,500 or fewer employees. And of those, three have fewer than 1,000 employees.
Organizations in nearly all industries offer tuition reimbursement. No consistent pattern emerged in the industries of organizations that do not offer this benefit.
EMPLOYEE PARTICIPATION
Among most Top 125 applicants, only a small percentage of employees participate in tuition reimbursement programs: The mean participation rate is 7.35 percent of employees, and the median is 3.75 percent participation. The lowest rate of participation is .1 percent, and the highest rate of participation is 95 percent.
Slight variations in participation exist across industries. Overall participation is highest in health and medical services, where mean participation is 9.11 percent of employees and median participation is 7 percent. Mean participation of employees in finance and banking applicants is 6.4 percent, while median participation is 3.8 percent. Among applicants in real estate and insurance, mean participation is 9.11 percent and median participation is 7 percent. And in the technology sector, mean participation rates among employees of Top 125 applicants is 5.4 percent; median participation is 2.7 percent.
EMPLOYER EXPENDITURE
The mean overall expenditure per applicant on tuition reimbursement is $2.25 million. The median is $248,470. Although 28 of the Top 125 applicants have 1,000 or fewer employees and another 72 have between 1,001 and 10,000 employees, a few large employers (some with more than 300,000 workers) distort the spending numbers. Putting this into the perspective of per-employee spending, the mean expenditure per eligible employee (that is, just those who requested reimbursement) is $717.22.
As such, tuition reimbursement expenditures represent, on average, 7.14 percent of total training budgets. But as noted earlier, in most organizations, tuition reimbursement is not managed by the Training group and is also not part of the training budget. Tuition reimbursement also represents, on average, .036 percent of organizational revenue for Top 125 applicants.
COURSES COVERED
Courses for which employees request reimbursement typically must meet certain conditions. One is that the program of study relate to the job of the employee, a requirement of most (79.5 percent) Top 125 applicants. Specifically, 42.2 percent of applicants always require this; 37.3 percent of applicants often require this. Only 5.6 percent of applicants seldom require a link between the program of study and the job, and 11.9 percent of applicants never require such a link. (Note that the application does not ask organizations whether “the job” refers only to a current job or to a possible future position.)
The second condition is that the program be degree seeking in nature, a requirement of many (60.3 percent) Top 125 applicants. Specifically, 21.2 percent always require this, and 39.1 percent often require this. Only 11.9 percent of applicants seldom require that tuition go toward a course in a degree program, and 19.2 percent never require it.
The other conditions address the tenure of employment with the organization. Most Top 125 applicants (69.5 percent) require that employees complete a certain term of employment before participating in a tuition reimbursement program. Many (62.9 percent) applicants always require this; another 6.6 percent often require this. Only 6.6 percent of applicants seldom require workers to have completed a certain term of employment, and 21.8 percent never require this.
The fourth condition is that employees must agree to stay with the organization for a certain length of time after finishing courses or risk repaying some or all of the tuition that the organization reimbursed. Top 125 applicants are split on this requirement: Only 49.7 percent require it. Specifically, 41.1 percent of applicants always require it, and another 8.6 percent often require it. In contrast, 11.3 percent of applicants seldom require remaining with the organization, and 33.8 percent never require it.
REIMBURSEMENT COVERAGE
Most Top 125 applicants impose a maximum on tuition reimbursement expenses. Only 23.8 percent do not. Of those imposing a maximum expenditure, the mean cap is $4,051 per employee and the median is $3,500. As the actual mean expenditure of $717.22 per eligible employee, most employees do not come close to exceeding the maximum. Very often, organizations limit the maximum to $5,000 or $5,250 as that is the cut-off before the employee needs to pay tax on the money. That is the case for nearly 30 percent of the Top 125 applicants. The smallest maximum is $500 (only one organization). Two organizations have maximums below $1,000, and 18 organizations limit the maximum to $3,000 or less. In contrast, the highest maximum is $50,000 (only one organization). Twelve (12) organizations have a maximum of $10,000 or more.
In addition to tuition, many (65.6 percent) Top 125 applicants also cover materials and books, expenses that can significantly add to tuition costs. Specifically, 51.7 percent always cover materials and books, and another 13.9 percent often cover them. Only 11.9 percent seldom cover materials and books, and 20.5 percent never cover them.
REIMBURSEMENT TIMING
Many Top 125 applicants (66.2 percent) require employees to incur tuition expenses to have them reimbursed. Most (79.5 percent) only reimburse tuition after employees complete their coursework. Specifically, 61.6 percent of applicants always wait for the completion and 17.9 percent often do so. Only 7.3 percent seldom wait for the completion of coursework and another 7.3 percent never wait.
In some instances such as for work-study programs, however, organizations might prepay tuition. Some 32.4 percent of applicants offer prepayment. Specifically, 11.9 percent always and 20.5 percent often prepay tuition. Some 22.5 percent seldom and 43.7 percent never prepay tuition.
Furthermore, 30.5 percent of Top 125 applicants always or often reimburse tuition on a sliding scale depending upon the grade received. In contrast, the majority—57.6 percent of applicants—never use a sliding scale.
TRAINING TOP 125 TUITION REIMBURSEMENT AT A GLANCE
• The mean participation rate in tuition reimbursement is 7.35 percent of employees, and the median is 3.75 percent.
• Only 23.8 percent do not impose a maximum on tuition reimbursement levels.
• Some 65.6 percent of Top 125 applicants also cover materials and books.
• The mean expenditure per eligible employee (that is, just those who requested reimbursement) is $717.22.
• Tuition reimbursement represents, on average, .036 percent of organizational revenue for Top 125 applicants.
• Nearly 80 percent of applicants only reimburse tuition after an employee completes the coursework.
• Nearly 80 percent of applicants always or often require the program of study to relate to the job of the employee.
• Some 60.3 percent require the program to be degree seeking in nature.
• Nearly 70 percent require that an employee complete a certain term of employment before participating in a tuition reimbursement program.
• Nearly 50 percent of Top 125 applicants demand that an employee stay with the organization for a certain length of time after finishing courses.
Saul Carliner, Ph.D., CTDP, is the Research director of Lakewood Media Group LLC and an associate professor and Provost Fellow for E-Learning at Concordia University in Montreal. He is the author of several books on training, including the best-selling “Overview of Online Learning” and “Training Design Basics.” Contact: saulcarliner@hotmail.com.
Michelle Savard has 20-plus years of experience with managing, designing, and implementing multi-year learning strategies, needs assessment, and evaluation. She recently started her doctoral studies in education at Concordia University.