Employer-paid college, a new educational assistance plan, provides enormous benefits, including an increase of 129% in ROI, 34% retention rates, and 10% promotions from providing college funds for employees.
There has been educational assistance for employees, but this new plan presents more benefits both for the employee and the employer.
In the United States, over 60% of the companies have signed into this Employer-paid college plan for staff to further their education.
Educational assistance for employees had a lockdown during the financial crisis of 2008-09, but the last five years have experienced explosive participation of companies.
Aside from the apparent benefits of Employer-paid college plans to both staff and company, there is favorable treatment under IRS section 127.
The law entitles employers to withdraw tuition payments as a business expense. It also allows employees to exclude an amount up to $5,250 annually from taxable income as eligible education reimbursement.
Outstanding benefits of Employer-paid college plan
The participation of over 60% of the US companies highlights the value of Employers paid college plans to employers and their staff. See some benefits of the program to both staff and employers.
Contented employees
Starbucks is a typical example of how happy employees are from the college assistance plan. Before now, tuition reimbursement plans have only been utilized by 10% of employees.
The past five years have recorded about 3000 Starbucks beneficiaries of the Employer paid college plan. The employees are now bachelor degree holders from the Arizona State University’s (ASU) online program.
After evaluating the benefits to employees, 12,000 more staff of Starbucks are currently enrolled in ASU classes. Starbucks has set of goal of having 25,000 graduates by 2025.
Increased Return On Investment (ROI)
Lumina Foundation and Accenture achieved a 129% ROI from providing Employer-paid college to 2,200 of its employees.
Health insurer Cigna analyzed the tuition reimbursement plan provided by the company; the findings showed recovery of funds spent on staff and a subsequent reserve of $1.29 in “talent management costs.”
The reserve came from savings made from employee promotions, retention, and internal transfers as expenses for recruiting qualified senior talent are circumvented. The company also had a turnover decline of 8%.
Also, the employees had Promotions increased by 10% for participating employees, while turnover from the company declined 8%, a benefit for employees and the company.
The study by Health insurer Cigna also revealed that Entry-level and mid-management workers who took college classes had a 43% wage increment compared to employees who didn’t participate.
Taco Bell’s partnership with Guild Education pays up to $5,250 per year upfront toward education costs with Bellevue University, Brandman University, University of Denver, University of Florida, and Wilmington University.
This benevolence of the company secured a 34% increase in retention for employees in 2017. Taco Bell further involved all 210,000 corporate and franchise employees in its 7,000 U.S. restaurants in 2018.
Easy partnership with Universities
Colleges see this Employer-paid college plan as a strategy to increase their student enrollments and manage financial pressures. Accordingly, they are willing to enter into a partnership with companies, removing the difficulties associated with making negotiations.
Disney has already partnered with the University of Central Florida, with 6,000 employers currently enrolled.
The employer-paid college offers a new product line to universities.
Companies are increasingly making it less complicated for employees to enroll for university degrees.
Previously, education assistance was available to only full-time employees or those who have worked for some years. Now more companies are making it easier for new hourly workers and part-timers to sign on.
Taco Bell allows new employees to sign up for education plans on the first day of employment.
Papa John and McDonald require only 90 days of employment before staff can benefit from plans.
Another way companies have reduced difficulties for staff is by removing restrictions on courses offered. For example, Chipotle covers all up-front tuition costs for 75 select degree programs.
Walmart also expanded its $1-a-day Live Better U to include degrees in technology and health care in addition to business.
This education plans of companies are ways of financing higher education for the public, especially with the dwindling funds available for college enrollment.
