Employers are rethinking tuition reimbursement

We’re all familiar with the old offer, “work for us for two years and we’ll help pay for you to earn a college degree”. Employers have been offering these programs for quite some time, but increasingly, the value of such programs are being called into question. The common challenges that employers cite when assessing the effectiveness of their tuition reimbursement programs are:

  1. Employees skill up, then ship out. Too often, the company pays for a degree that the employee chooses to use to land a new job somewhere else.
  2. Participation is low. The average tuition reimbursement program sees participation from just five percent of employees who each receive about $4,500.
  3. There’s lots of administrative friction. In addition to paying a third party to administer the program, employers often spend handsomely on legal costs of (securing and) enforcing clawback provisions.


Employers seeking to overcome these issues while maintaining a commitment to education are turning to Student Loan Assistance.

Through Student Loan Assistance programs, where employers typically choose to contribute $50 per participant per month, companies are able to engage talent by paying down the loans employees took out for the education that qualified them for their current role, and for student loans that employees may take out to finance education that qualifies them for their next role with the company.

For employers seeking to optimize the return on their benefit spend, there are numerous advantages that Student Loan Assistance offers over Tuition Reimbursement:

  1. It’s more capital efficient. Employees seeking additional training can secure college loans on their own, then receive employer contributions over time rather than the company paying a large sum up-front.
  2. It provides a consistent, positive reminder. While a one-time payment is easily forgotten, a monthly contribution is reminder of the employer’s assistance that reinforces the company’s employment brand and promotes loyalty.
  3. It can engage a larger portion of employees at the same cost. Student loans affect 37 percent of employees in tech, healthcare, professional services and financial services. The same employee who would receive $4,500 up-front for a two year commitment with tuition reimbursement would have incentive to stay 7.5 years if the company offered $50 per month in Student Loan Assistance. And for the same budgeted cost the company could engage 7.5 times more employees.
  4. There are no handcuffs or extra legal expenses required. If an employee leaves after six months of service, the company would be “out” $300 in Student Loan Assistance. This low amount of risk means it’s not worth having the employee sign a clawback letter or taking non-compliant ex-employees to court to ensure the funds are repaid. Productive employees who stay longer will repay the company in productivity through the course of their service.


Of course, in addition to these advantages, employers offering Student Loan Assistance are able to:

  • Hire 13 percent faster
  • Retain talent 36 percent longer
  • Improve gender and cultural diversity


Our Client Solutions team can support your company in designing a Student Loan Assistance program to accomplish your company’s business and talent goals. Click below to get started.