What is Tuition Reimbursement? The Often-Overlooked Employee Benefit

Scholarships, grants, student loans: Chances are, these options come to mind when you’re considering how to pay for college. But there’s another type you can seek out — and you might not have to look too hard.

An employee benefits survey by the Society for Human Resource Management (SHRM) revealed that 48% of employers offered an undergraduate or graduate tuition program in 2022. That means almost half of all employers offer their workforce financial support to pursue advanced education.

“We know that many of us need to borrow in order to fund our education,” said Andrew Morris, a manager of Partnership Operations and Strategic Execution at Southern New Hampshire University (SNHU). "This is one tool that is available to students to fund most or all of their education.”

Two common types of tuition benefits are tuition reimbursement and tuition assistance. Find out how they can help both you and your employer invest in your education.

What Does Tuition Reimbursement Mean? 

A tuition reimbursement program is one in which your employer pays you back — or reimburses you — for the cost of a course, according to Morris.

The exact process will vary from employer to employer, but you’ll probably need to submit a formal request for reimbursement during or after your course — as well as proof of completion. “These requests (are) often accompanied by a requirement to either complete the course or earn a specific grade in the course in order to be reimbursed,” Morris said.

What is Tuition Assistance, Then?

The other common type of tuition benefit is tuition assistance. If your employer offers a tuition assistance benefit, you will not have to make any tuition payments so long as your chosen school and program fall within the parameters of the benefit.

“The employers work directly with schools to manage billing on the student's behalf,” Morris said about tuition assistance programs.

Tuition Reimbursement vs. Tuition Assistance: Which is Better?

Regardless of which form of tuition benefit your employer offers, it’s just that: a benefit. But both types have their advantages.

“I personally find tuition assistance more attractive," said Daisy Gillam, an employer relations partner at SNHU. Unlike a reimbursement program, you will not have to pay tuition bills. 

That being said, where and what you study may be more limited within a tuition assistance program compared to tuition reimbursement, according to Morris. You'll likely have to choose a college and program from a list provided by your employer.

How Do Tuition Benefits Work?

In short: “It depends on the company,” said Ashlyn Freed, a partnership operations manager at SNHU.

Typically, educational assistance programs are capped at $5,250 annually, Freed noted. Up to that point, the benefit is tax-free, according to the Internal Revenue Service (IRS). If you surpass the $5,250 cap in a calendar year, you may be taxed for your courses.

If you want to avoid any monetary responsibility, you'll need to be strategic, according to Morris. After considering how many courses you need to take and the cost of each, you might decide to be a part-time student and take a term off here and there to keep your tuition expenses below the IRS cap.

You may also find that your organization partners with specific educational institutions to provide tuition benefits. Some organizations work with SNHU, for instance, to arrange credit for prior learning so their employees can get academic credits for their workplace experiences. This type of arrangement can put you closer to earning your degree.

It’s important to review the specific benefits your organization offers and understand what your employer will cover and what you might be responsible for.

Are Tuition Benefits a Good Idea?

Employers that offer tuition reimbursement or assistance programs typically include them in their total rewards packages, alongside their other benefits — such as medical insurance, retirement plans and paid time off.

“When I think about the tuition benefits, I think about it as an addition to your salary,” Morris said.

Beyond taking full advantage of the benefits available to you, here are three more reasons to participate in a tuition reimbursement or assistance program:

Signal Your Commitment to Learning 

By leveling up your education, you can demonstrate an interest in your field of study and a desire to grow. Dana McGrath, an employer relations partner at SNHU, said you can show employers that you’re:

• A life-long learner 
• Interested in upskilling and improving efficiency 
• Invested in the company 
• Passionate about what you do 

This can bode well professionally, she said.

Stay Current

Consider how much the world has changed over the past decade. As new technology emerges, knowledge advances and social trends evolve, so do industries and the workforce at large.

“It's always important to stay on top of what the job market's looking for,” McGrath said. Earning a master’s degree or a certificate, for example, can help you hone the human and technical skills you need to stay up-to-date in your field.

Prepare Yourself for Future Possibilities 

Maybe you don’t need a bachelor’s or master’s degree in your current role, but could it help you in the future?

If you have the tuition benefits now, Morris encourages you to take advantage of them. By the time you finish your degree, you may be interested in changing careers or seeking a promotion. While many factors go into landing a job or a promotion, having the extra credential and all the learning outcomes that come with it could help you make your case.

"Whether you're graduating from high school, or you're in your 30s or 40s pursuing your bachelor's or graduate degree, find an employer that covers some of your (college) tuition,” Morris said. “It's going to set you up for success after you graduate.”

Okay, But Does My Employer Offer Tuition Benefits?

To find out if your employer offers tuition reimbursement or assistance, Freed recommended checking your employee handbook or company website. She suggested asking your manager or reaching out to human resources. Your HR representative may be able to provide the most information and help clarify anything you don't understand.

If your organization does not offer any formal tuition benefits, that doesn’t mean there aren’t any available to you.

“A lot of for-profit places, even nonprofit organizations, they might have some wiggle-room in the budget,” McGrath said. Seventy-eight percent of employers surveyed by SHRM in 2022 reported that they financially cover opportunities to develop new skills.

So, if you already work in marketing, for instance, you could make a case for allocating professional development funding toward a master's degree in the subject, perhaps with a relevant concentration — like marketing research analytics or digital marketing.

Or maybe you work in accounting but are looking to move into a niche area, such as fraud examination or tax compliance. Enrolling in a college certificate program could help you work toward that specialty.

You might approach a conversation with your manager this way: “I see this as a skill that's really important,” McGrath said. “I'm starting to do this in my everyday work... I'm not as expert as I want to be. Is there something I can, you know, do that would help me get to that point?”

How Employers Benefit From Tuition Reimbursement and Assistance Programs

Tuition reimbursement and assistance programs don’t just benefit employees. Gillam called them a “smart economical investment” for employers, too.

Not only do they upskill an employer’s labor force, but she said they can help organizations:

• Become a choice employer
• Increase employee retention
• Save on hiring expenses

“It is more expensive to hire a new employee and onboard them even if they're at a higher degree level versus upskilling someone that you already employ,” Gillam said.

In the tech space, more than half of surveyed organizations in Pluralsight’s 2024 Technical Skills Report spent $5,000 per employee on upskilling. That’s less than a quarter of the typical cost to hire someone, the report said.

In addition to building industry-specific knowledge, degree programs are often designed to help students hone their interpersonal 'human' skills — something McGrath knows is appealing to employers.

“I just talked to employer (who said), 'it's easier for me to teach a business student technical skills than it is for me to take a technical person and teach them soft skills, like communication and teamwork,'” McGrath said.

The Benefit of Learning While Working

There are programs, like the online associate, bachelor’s, master’s and certificate options at SNHU, that make working full-time while going to school possible. While the duel commitment might be out of necessity, it also has benefits.

“If you're actively learning, you're having conversations with people outside of just your workforce,” McGrath said. “You have this whole community of ... think-tank people."

And while balancing school and work can be tricky at times, it’s possible with time management. “If there's a will, there's a way,” McGrath said. “While you're earning your degree, you're also gaining experience when you're working and your employer's paying for it ... These are all good things.”

Rebecca LeBoeuf Blanchette is a writer at Southern New Hampshire University, where she fulfills her love of learning daily through conversations with professionals across a range of fields. She earned her Bachelor of Arts in Communication with a minor in Professional Writing from SNHU’s campus in Manchester, New Hampshire, and followed her love of storytelling into the online Master of Arts in English and Creative Writing at SNHU. Connect with her on LinkedIn.