Companies Pay College – College education is a valuable asset for many workers, as it can help them acquire new skills, advance their careers, and increase their earnings. However, college education is also expensive, and many students struggle to afford tuition, fees, books, and other expenses.
The average cost of tuition and fees for the 2020-2021 academic year was $10,560 for public four-year institutions (in-state), $27,020 for public four-year institutions (out-of-state), and $37,650 for private four-year institutions.
To help their employees pursue higher education, some companies offer tuition assistance programs that cover part or all of the costs of college courses, degrees, or certificates. These programs vary in terms of eligibility criteria, amount of funding, type of education supported, and repayment conditions.
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In this article, we will explore why and how companies pay for college, and what are some of the benefits and challenges of these programs.
Why Companies Pay for College
There are several reasons why companies pay for college for their employees. Some of the main ones are:
To attract and retain talent
Offering tuition assistance can make a company more appealing to potential and current employees, especially those who value learning and development opportunities. Tuition assistance can also increase employee loyalty and retention, as workers may feel grateful and committed to the company that invests in their education.
To improve employee performance and satisfaction
Tuition assistance can help employees enhance their knowledge, skills, and abilities, which can lead to better performance and productivity. Tuition assistance can also boost employee morale and motivation, as workers may feel more confident and valued by a company that supports their personal and professional growth.
To foster innovation and competitiveness
Tuition assistance can help employees keep up with the latest trends and technologies in their fields, which can foster innovation and creativity. Tuition assistance can also help companies gain a competitive edge in the market, as they can leverage the expertise and qualifications of their educated workforce.
How Companies Pay for College
There are different ways that companies pay for college for their employees. Some of the common ones are:
This is when a company pays back an employee for the costs of college courses or programs after they complete them successfully. Typically, the employee has to pay upfront for the tuition and fees, submit proof of enrollment and grades, and meet certain academic standards to qualify for reimbursement. Some companies may have annual or lifetime caps on the amount of reimbursement they offer.
This is when a company pays for the costs of college courses or programs before or during the enrollment period. Typically, the employee has to apply for prepayment approval, enroll in an eligible institution or program, and meet certain academic standards to qualify for prepayment. Some companies may have annual or lifetime caps on the amount of prepayment they offer.
This is when a company pays directly to the college or university for the costs of courses or programs that an employee enrolls in. Typically, the employee has to enroll in an eligible institution or program, meet certain academic standards, and submit proof of enrollment to qualify for direct billing. Some companies may have annual or lifetime caps on the amount of direct billing they offer.
This is when a company awards a grant or gift to an employee to cover part or all of the costs of college courses or programs. Typically, the employee has to apply for a scholarship, meet certain eligibility criteria (such as academic merit, financial need, or diversity), and maintain certain academic standards to qualify for a scholarship. Some companies may have annual or lifetime caps on the amount of scholarship they offer.
Benefits and Challenges of Tuition Assistance Programs
Tuition assistance programs can have various benefits and challenges for both employers and employees. Some of the benefits are:
- For employers:
- Increased employee attraction and retention
- Improved employee performance and satisfaction
- Enhanced innovation and competitiveness
- Reduced turnover and recruitment costs
- Increased tax deductions (up to $5,250 per employee per year)
- For employees:
- Reduced financial burden of college education
- Increased access to learning and development opportunities
- Improved career prospects and earnings
- Enhanced personal and professional growth
- Increased job satisfaction and loyalty
Some of the challenges are:
- For employers:
- High upfront costs of tuition assistance
- Risk of losing employees to other companies after they complete their education
- Difficulty in measuring the return on investment (ROI) of tuition assistance
- Complexity in managing different types of tuition assistance programs
- Compliance with federal and state laws and regulations regarding tuition assistance
- For employees:
- Limited choice of institutions or programs that are eligible for tuition assistance
- High workload and stress from balancing work and school
- Potential tax liability for tuition assistance that exceeds $5,250 per year
- Possible repayment obligations if they leave the company before a certain period of time
- Uncertainty about the future of tuition assistance programs
Examples of Companies That Pay for College
According to a 2019 survey by the International Foundation of Employee Benefit Plans, 83% of U.S. employers offer some form of educational assistance to their employees. Here are some examples of companies that pay for college, and the details of their tuition assistance programs:
The e-commerce giant offers its Career Choice program, which pays up to 95% of tuition and fees (up to $12,000 over four years) for eligible employees to pursue certificates or degrees in high-demand fields, such as computer science, health care, and engineering. The program is available to employees who have worked at Amazon for at least one year and covers courses at partner institutions or online.
The coffee chain offers its College Achievement Plan, which covers 100% of tuition and fees for eligible employees to earn a bachelor’s degree online from Arizona State University. The program is available to employees who work at least 20 hours per week and covers more than 80 undergraduate majors.
‘The retail giant offers its Live Better U program, which pays $1 per day for eligible employees to pursue associate’s or bachelor’s degrees, or certificates in business, technology, health care, or trades. The program is available to employees who have worked at Walmart for at least 90 days and covers courses at partner institutions or online.
The delivery company offers its Earn and Learn program, which pays up to $5,250 per year (up to $ 25,000-lifetime maximum) for eligible employees to pursue any level of education or any field of study. The program is available to employees who work at least 15 hours per week and covers courses at any accredited institution.
The tech giant offers its Tuition Reimbursement program, which pays up to $12,000 per year for eligible employees to pursue any level of education or any field of study. The program is available to full-time employees who have worked at Google for at least three months and covers courses at any accredited institution.
In conclusion, Companies pay for college for their employees for various reasons, such as attracting and retaining talent, improving employee performance and satisfaction, and fostering innovation and competitiveness. Companies pay for college in different ways, such as tuition reimbursement, tuition prepayment, direct billing, or scholarships. Tuition assistance programs can have various benefits and challenges for both employers and employees. Some examples of companies that pay for college are Amazon, Starbucks, Walmart, UPS, and Google.
Companies Pay College: Frequently Asked Questions (F&Qs)
What is it called when companies pay for college?
When companies pay for their employees’ college education, it’s often referred to as tuition assistance, tuition reimbursement, or employer-sponsored scholarships. These programs can cover full or partial tuition costs and sometimes include books and academic fees.
The specifics of these programs, such as eligibility and the amount of assistance provided, can vary by company. Some companies even partner with educational organizations to manage these programs. These benefits are offered by companies to attract and retain employees and develop their workforce’s skill set, and sometimes because the tuition reimbursement is tax deductible.