As young working class American adults struggle to find balance between work, life and academics; the threat of increasing student debt towers above the current issues of inflation and rise in cost of living. What most working class adults in schools do not know, is their employers could help relieve the burden of graduating college with a huge student loan debt. Your employer tuition reimbursement program could smash your student debts.
Now, why would a company offer a tuition reimbursement to us?
Most companies want employee loyalty in order to have a work culture. Without a work culture, companies barely build a solid brand. Besides this reason, employers want to retain us in order to continue meeting its annual goals. As you can see a lot of our parents and grandparents job to work till they drop dead, do not work for us in today’s world.
I do not know about you, but my title and my job do not define me as a man. If I ever had to choose between my happiness and a job, I would always drop that job faster than a hot frying skillet. Employers know some job positions are not enough to make some employees overlook the damaging toxicity at work. Hence, why companies offer generous tuition reimbursements to their employees.
Tuition reimbursements from work is one of the legal ways to get out of paying back your student debts. Do you know that?
Not all companies do this in the United States, but a majority do it for the above sakes. Also, they get a tax break from the federal government for offering tuition reimbursement to their employees. As a working class adult, I highly recommend you take advantage of it. This is especially, when you are thinking about acquiring new skills that will increase your wage rate.
Let me elaborate.
What Does Tuition Reimbursement Mean In A Job?
Tuition reimbursement in a job means your employer is willing to pay some of your tuition, so you can go to college and not worry about graduating with a huge debt. As previously mentioned, not all employers will offer this to you. However, tuition reimbursement is an example of an employee benefit.
This is why I always advocate for young working adults asking whether an employer offers tuition assistance during job interviews. In as much as how scary it may sound, it is within your right to know.
Do you know that, my good reader?
Yes, it is within your right to inquire whether a potential employer could help your lower your student loan debts. You can either ask them about their tuition reimbursement program or a loan repayment plan.
The Difference Between Employer Tuition Reimbursement and Loan Repayment Plan
With some employers, you can get both or either one of the two. Below is the difference I want you to know about the two.
| Tuition Reimbursement Program | Loan Repayment Plan |
|---|---|
| You get this every semester or year. | Your employer contributes this to your student loan debt monthly. |
| It comes with a contract. An example is a two year work contract with the company, if it pays 30% of your tuition per year. | It may or may not come with one. Usually, employers with loan repayment plan will contribute certain percentage to your student debt annually as long as you are a current employer. |
| You have to get either A, B or C grade to qualify. | Grades do not matter. This sort of student debt repayment occurs after graduation anyways. |
Your employee may have one of the above programs to have you stay out of student debt as a working student. Loan repayment plan is often offered by public service. I elaborated more on the guide, who qualifies for student loan forgiveness after college. I think I mentioned some job sectors and career which could get your student debts forgiven after a few years of service.
The Pros & Cons Of Employer Tuition Reimbursement
The pro of employer college assistance is it helps you graduate college with little or no debt. Employer repayment of your tuition sounds good to be true, but it is a fact. Most employers you will work for, will plan to help your college tuition.But, there is a catch to it.
What Are the Cons Of Tuition Reimbursement?
The con is you may have to work a few more years for the company paying some of your tuition. Personally, I do not like it because I always want to have a choice. I want a choice to purse attractive wage rates, without a contract preventing me from doing so.
This is why I do not take tuition reimbursement offered by an employer is because it comes with a contract. I mentioned this on How I Graduated Nursing School Debt-Free article. I thought my previous employer tuition reimbursement contract was pure cow dung.
Pardon my French, but that is gospel truth.
The employer tried to offer $2000 a year for two years of additional service. Meanwhile, my tuition per year was more than $8000. I did not want to take the assistance, because I was afraid I would end up taking whatever wage rate they give to work for them as a nurse.
You- my dear reader, may not mind at all. There is nothing wrong with it. It is just that I prefer having a choice to choose from a plethora of income choices. Are you like that too?
If yes, then you may find tuition reimbursement by employers such as mine unattractive. Besides, this is not all there is to tuition assistance. Companies may actually make you pay back tuition reimbursement, when you renege on the contract attached to it.
Remember this is not free money, although it is considered an employee benefit. It comes with a contract or condition. If the rules for reimbursement demands you staying for a few years and you break it, you will pay back the money. Hence, why I recommend reading your company’s policy on tuition assistance before engagement.
How Much Do Most Companies Pay For Tuition Reimbursement?
The IRS limit for tuition reimbursement is $5250 for each employee. As a result, most companies can pay up to this amount per year as tuition assistance to their employees. This is especially, when what you are studying correlates to the services your company offers.
Chipotle tuition assistance is known for doing this. Through the Guild platform, it can either pay your tuition 100% for majors the company needs. Or, it gives you up to $5250 a year in reimbursement for other majors.
Here is another example.
I am currently a certified surgical technologist who assists surgeons during surgeries in seven surgical specialties. My hospital will only reimburse my tuition for classes pertaining to health field, if I decided to go back to school. Non-health related classes are not reimbursed. As a nursing student, my HR department offered to reimburse me $2500 for RN classes and $4500 for BSN classes.
That is if I chose to ask for it. But, I paid of pocket because this reimbursement comes with additional two years work contract. It is important to inquire about employer tuition reimbursement program.
Most employers will provide tuition assistance to you. Surprisingly, it is not for free sometimes. It may come with some sort of employer tuition reimbursement contract.
Are Employer Tuition Assistance Programs Tax Deductible?
Tuition fees paid by an employer on your behalf, is taxable only when it exceeds the IRS limit for tuition reimbursement. The tax free tuition reimbursement limit is $5,250 annually. Any amount above this federal limit for tuition reimbursement is taxable.
Why is it important you know about this, my good reader?
Although tuition reimbursement helps a student pay for education, it can impact his or her taxes. When you file your taxes at the end of the year, the tax credit you can claim is affected. This is especially, when your employer reimbursement for tuition exceeds $5,250 IRS limit for tuition assistance.
But, you will rarely find employers giving more than $5,250 in tuition assistance. I am not saying they are not some. Most ones I know keep it under the maximum amount, which I think is brilliant. This is since employees do not have to pay back a dime to the IRS.
If you would like more information on the IRS limit on employer education assistance, read my guide: Are Tuition Assistance Taxable?. I walked you through how US government tax department go about it.
Is Employer Tuition Reimbursement Worth It?
Employer tuition reimbursement saves you money. When you are a working class adult like me, who uses community college to acquire skills to improve my annual income, you will save a lot annually. You will get up to 30% of your annual tuition paid with this program.
Personally, I advocate for college students using it. If you could do a year or two years contract which comes it, take the offer. Employers who offer the full $5,250 a year will help cut your college debt by a lot.
As a working adult, I encourage you work for employers who are willing to offer tuition assistance to you. It is an employer benefit which will make life easy for you, when you decide to receive an education and advance in career or salary. Employer tuition reimbursement is worth it!
On the whole, tuition assistance programs are becoming more common. It can either squash your student debt or drastically reduce it before graduation. You just have to consider whether it is great for you. This is because every employer offers it with different policies attached. You have to do is go to your Human Resources department and ask about it.
If you are looking for a company to work for part-time which can help you take care of college tuition, I recommend FedEx to you. FedEx college assistance program can give you up to $5,250 a year while you just work at least 16 hours a week. It is a good job for anyone trying to work, while in college. You might as well take advantage of the tuition reimbursement.
Can I Send Money From Cash App To Chime Instantly?