It’s been nearly 40 years since employers first were able to offer tax-free education assistance for undergraduate, graduate or certificate level work to their employees. The benefit was semi-permanent, with Congress reauthorizing it (sometimes retroactively) numerous times until it was finally made a permanent part of the law in early 2013.
The maximum amount employers can provide tax-free toward education assistance is $5,250 and has not been increased since 1978! Efforts to raise that amount in order to keep up with the current cost of education are now taking place in Congress. House and Senate lawmakers are looking to nearly double the allowable amount to $11,500 and index it for inflation.
For HR professionals, this means another tool in their benefits toolbox to attract and retain top talent. HR knows all too well the challenges organizations face with skills shortages in the workplace. Recruiting difficulty has continued to increase over the last five years, and competition for talent is high. To attract and retain top talent, HR must leverage the benefits package they offer to their employees.
Additionally, HR has been noticing more financial strain among employees. Research by SHRM and Elevate in 2014 found that 61 percent of HR professionals described their employees’ financial health as no better than fair. Fifty percent of HR professionals indicate that people in the 25-34 age range experience the most financial stress. Offering benefits like tuition assistance helps to alleviate some of that financial pressure.
Having an education benefit not only benefits employees, but can directly be correlated to a company’s bottom line. Companies are finding that the ROI of an education assistance program can pay for the program itself. Cigna, for example, found that for every dollar it spent on its educational reimbursement program, it got back $1 and saved another $1.29 through reduced employee turnover and lower recruiting costs.
When reevaluating current benefits and looking for new and exciting ways to engage prospective employees, take a second look at some benefits that may already be in place and enhance them. Increasing the amount offered towards tuition assistance, or expanding that benefit to include student loan repayment, may dust off an old benefit and make it new again.