Article
April 19th, 2024 · 3 min read
A simple guide to employee education benefits
Employee education is no longer just a nice-to-have perk that organizations offer as part of a benefit package. As the labor market grows more unpredictable and workforce skills gaps continue to emerge, employee education has become recognized as a powerful strategic tool for driving business outcomes.
In this guide, we break down the different types of education benefits you can offer to your employees, what the business benefits are and how to modernize your approach to education benefits for maximum impact.
What are education benefits for employees?
Education benefits for employees typically refer to learning programs that are provided and funded by an employer. Whether the programs are created internally or sourced externally, they allow employees to pursue learning at little or no cost.
Types of education benefits
Here are some common examples of employer-provided education benefit programs:
- Loan repayment assistance
Loan repayment programs help employees pay off outstanding student debt. Employers may provide direct payments toward employees' student loans, offer matching contributions or implement other forms of assistance. This type of education benefit is aimed at attracting and retaining talent, rather than promoting skills development. - Tuition reimbursement
Tuition reimbursement is a type of benefit where employees get reimbursed for tuition so that they can pursue education while working. This is a popular choice among employers as it helps to attract and retain talent while also encouraging employees to develop their skills while on the job.
Despite its popularity, the impact of tuition reimbursement is often limited due to lack of accessibility. Requiring employees to pay for tuition upfront presents a financial barrier that can deter them from participating. - Scholarship programs
Scholarship programs provide financial assistance for employees to pursue career-relevant continuing education and develop their skills. A company might award scholarships based on employee performance, financial need or other criteria. This benefit can help attract and retain talent and support upskilling and reskilling. However, since scholarships are awarded to select individuals, the impact of this type of program may be limited compared to other benefits that are offered to a larger pool of employees. - Career-aligned workforce education
A growing number of leading organizations are transitioning to workforce education, which is a more accessible and strategic approach to employee education benefits. Managed through a third-party provider, workforce education solutions provide employees with access to debt-free education, without the limitations of traditional education benefit programs.
The tax implications of employee education benefits
Employer-provided education is a tremendous benefit. At the same time, it’s important to understand the tax implications of this offering.
Education funding for tuition reimbursement and loan repayment is tax-exempt, but only up to $5,250. Any amount over $5,250 is taxable.
Employers can also receive scholarships from their employers to further their education, but whether these funds are subject to taxes depends on certain conditions that the employee would have to meet.
The business impact of employee education benefits
Here are four ways that employers benefit by offering education assistance to their employees:
Attract growth-minded talent
Education assistance is one of the most competitive benefits that employers can offer, especially in the current job market.
A versatile and up-to-date skill set is of paramount importance to job seekers and employees who want to remain competitive and find opportunities to advance their careers:
- Six out of ten workers at all levels say that the COVID-19 pandemic and its impact on the economy accelerated their need to acquire new skills.
- 46% of employees say that they are likely to leave their current jobs for another opportunity if their employers don’t invest in upskilling and reskilling opportunities.
Offering education benefits boosts your employer value proposition and helps you stand out against competitors vying for the same talent.
Boost employee engagement and retention
Education benefits demonstrate a serious investment in your employees. Even limited forms of loan repayment assistance can reflect a commitment to the financial well-being of your people. This can boost career satisfaction and overall employee experience.
Access to education also can incentivize employees to stay with the company. One survey shows that 94% of employees said that they would stay in their current role longer if the company invested in their professional development.
Additionally, when employees feel that their employer cares about their growth, they are more likely to feel engaged and stay with the company for longer.
Encourage continuous skills development
Widening skills gaps present a pressing challenge for organizations, as many workers lack the necessary skills for their roles. Education benefits provide a solution by offering access to learning resources that can help employees maintain their skills and develop new ones.
Advance workplace diversity, equity and inclusion
Educational benefits can significantly bolster a company's DEI initiatives by breaking down barriers to higher education for individuals from historically marginalized groups. By offering access to degree and certification programs that previously might have been out of reach, organizations empower individuals to enhance their skills and advance their careers, paving the way for greater diversity and representation within the company.
Related resource: Learn how investing in employee education can support your diversity, equity and inclusion goals.
Optimizing your employee education benefits
Whether you’re just considering offering education benefits or already have a program in place, here are some best practices to help you optimize your benefits.
- Curate education offerings that are career-oriented
Simply providing access to education isn’t always enough to reap the business benefits. That’s why it’s important to carefully assess the courses and programs available through your employee education program and ensure that they are relevant to the skills needed within your organization. This way, employees can develop their skills in a way that helps them move up or laterally within your organization. - Implement direct billing
Direct billing is a payment model that allows academic institutions to bill companies directly for tuition. This is in contrast to the reimbursement model, which requires employees to pay for tuition upfront and wait for reimbursement from their employer. Direct billing provides a more accessible option that takes the financial burden off employees and encourages greater participation. - Get rid of clawbacks
Clawbacks require employees to stay with the organization for a certain period of time, or risk having to pay back money that's been awarded towards their education. This can discourage employee participation in education programs. Consider removing clawback rules to foster a more positive employee learning experience. - Prioritize employee accessibility
Education might help you attract talent, but long-term business outcomes like retention won’t materialize unless employees take advantage of the benefit. When strategizing your education benefits, consider eliminating common barriers to participation and learning.
This includes things like simplifying the application process for education benefits, implementing direct billing to ease financial stressors or making sure you offer online learning options so employees can have more flexibility to participate. - Measure, measure, measure
Many employee education benefits lack sufficient performance-tracking capabilities. Now more than ever, HR teams face increasing pressure to demonstrate the value of their investments. Consider how you can leverage technology in your favor to help track KPIs such as employee participation, completion rates and impact on retention.
Beyond a benefit: Career-aligned workforce education
Leveraged correctly, employee education benefits can have a tremendous impact on your people and your business. At InStride, we help leading organizations deliver high-quality, career-aligned education to their employees to build a resilient workforce for the future and support their talent goals.
Curious to learn more about how you can optimize your education offerings? Book a discovery call now.
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