Maximizing Your Benefits: Utilizing Tuition Reimbursement for Professional Development and Furthering Education

When it comes to employee benefits, it’s easy to focus on PTO, health insurance, and 401(k)s. But if you want to grow professionally and further your education, checking out your company’s tuition reimbursement program is one of the smartest ways you can invest in yourself.

What is a tuition reimbursement program?

The details will vary from company to company, but at its most basic level, a tuition reimbursement program is just what it sounds like: an opportunity to be reimbursed by your employer for the costs of an education program. Depending on your company, this could be reimbursement for everything from graduate courses to completing a GED program.

Why do employers offer tuition reimbursement as a benefit?

According to the 2022 SHRM Employee Benefits Survey, 48 percent of employers offer undergraduate or graduate tuition assistance as a benefit. Tuition reimbursement is a winning proposition for an employer: Not only is the end result a better-educated employee, but the employer also enjoys a tax deduction of up to $5,250 per employee.

How are tuition reimbursement programs typically structured?

In a standard tuition reimbursement program, the employer reimburses the employee after the course is completed. Reimbursement is only available up to a certain dollar amount, and the employer has a say in what course you take or certification you pursue. (You probably won’t be able to stray too far afield from your day job.) You will have to pay any tuition and fees upfront. Your employer will require certain documentation, such as a tuition receipt and possibly a transcript, to issue you reimbursement.

Some companies offer a “tuition assistance” program in which they pay a partner university upfront for a course. For instance, Amazon partners with more than 400 approved schools in 14 countries through its Career Choice program, which covers everything from English as a Second Language courses to skill-based programs in growing industries, such as healthcare and technology. Starbucks has partnered with Arizona State University’s online program to fully cover the cost of first-time bachelor’s degrees for full- and part-time employees.

No matter how your company approaches tuition reimbursement and assistance, it is critical to understand all requirements before you enroll in a program. Important questions to ask include:

• What types of educational experiences are eligible? If you already have a bachelor’s degree, will your company reimburse the cost of a professional certification program?
• What is the process for securing approval to participate in this benefit?
• How much employee tenure is required before you are eligible for the program?
• Is a certain GPA required, and does the amount of reimbursement available depend on GPA?
• If you leave the company soon after being reimbursed, will you be expected to pay any of your reimbursement back?

Employee financial considerations related to tuition reimbursement

The IRS also allows employees to receive the same $5,250 in tuition reimbursement tax-free, so long as it is received through a documented program that meets all IRS guidelines. Any reimbursement or assistance beyond $5,250 will be reported as taxable income.

Receiving tuition reimbursement might affect the amount of financial aid for which you are eligible, so it’s a good idea to seek advice from a financial aid counselor. Tuition reimbursement may count as “gift aid” on your Free Application for Federal Student Aid (FAFSA) form.

Can tuition reimbursement cover student loans?

The answer is yes—but only for student loan payments made within a certain window (March 27, 2020, to Dec. 31, 2025). Tuition reimbursement can cover both principal and interest on qualified education loans, and an employer can make payment either to the qualified employee or directly to the lender. These programs can now also be used to pay principal and interest on an employee's qualified education loans.

No matter where you are in your career, a tuition reimbursement program is an attractive benefit that can help you in both the short term and long term professionally and financially.