How to Offer Employee Tuition Reimbursement
Estimated Reading Time: 2 minutes
By the NRMC Team
Resource Type: Tools
Topic: HR Risk and Employment Practices
Offering employee tuition reimbursement can demonstrate your nonprofit’s commitment to professional development and help you recruit and retain talented employees. Creating an employee tuition reimbursement program takes some work, but can pay great dividends. Here’s a four-step checklist to help your nonprofit launch a tuition reimbursement program.
Step 1: Set the financial foundation
- Create a budget for the employee tuition program that provides a generous benefit while keeping your organization on sound financial footing.
- Determine how much tuition reimbursement you could afford to pay if all your employees took part in the program. Not all will, but if more people than you expect decide to take advantage of the program, you’ll need to have room in the budget.
Step 2: Determine the program parameters
- Will everyone in your nonprofit have access to this benefit, or will you make it available only to certain employees, such as those who have been with your organization a certain amount of time?
- What types of education programs or courses will your nonprofit cover?
- What percentage of tuition will your organization reimburse?
- What will happen if an employee who’s taking part in a tuition reimbursement program is laid off or resigns?
- Will you require a specific grade level in a course for reimbursement?
- Explain these parameters in an employee meeting and add them to your personnel handbook.
Step 3: Understand the program’s tax implications
- Decide whether you will reimburse employees more than the deductible amount.
Employers can reimburse employees up to $5,250 annually without the employee being taxed on the amount. Your nonprofit could offer more in tuition reimbursement, but any amount above $5,250 per employee annually will be subject to taxes. Employers can also deduct up to $5,250 per employee from their taxes each year. The money must be used toward tuition, fees, and school supplies like books; otherwise, it will be subject to tax. - Work with your accounting and benefits providers to set up the administrative capacity to meet the program’s tax implications.
Step 4: Roll out the program and iterate
- After a year, give your team members a short survey to gauge the effectiveness of the program and how you might make it even better. Use the feedback to continue to improve your tuition reimbursement offerings.
Resources:
- Designing and Managing Educational Assistance Programs, SHRM
- How to Offer Employee Tuition Reimbursement, U.S. Chamber of Commerce
- Tuition Reimbursement: Considerations for Employers, Indeed
“First let me congratulate you on a conference well done. I had a great time at the Nonprofit Employee Benefits Conference and walked away with some valuable tools and questions that we’ll need to be addressing in both the short and long term. Thanks to you and your staff for all you do to provide us with quality resources in support of our missions.”
— Scott Brown, Mohonk Preserve
“BBYO’s engagement of the Center to conduct a risk assessment was one of the most valuable processes undertaken over the past five years. Numerous programmatic and procedural changes were recommended and have since been implemented. Additionally, dozens (literally) of insurance coverage gaps were identified that would never have been without the work of the Center. This assessment led to a broker bidding process that resulted in BBYO’s selection of a new broker that we have been extremely satisfied with. I unconditionally recommend the Center for their consultative services.
— Sidney Abrams, BBYO
“Melanie Herman has provided expert, insightful, timely and well resourced information to our Executive Team and Board of Directors. Our corporation recently experienced massive growth through merger and the Board has been working to better integrate their expanded set of roles and responsibilities. Melanie presented at our Annual Board of Director’s Retreat and captured the interest of our Board members. As a result of her excellent presentation the Board has engaged in focused review which is having immediate effects on governance.”
— Pamela Mattel, Basics Promesa Systems Inc
“The Nonprofit Risk Management Center has been an outstanding partner for us. They are attentive to our needs, and work hard to successfully meet our requests for information. Being an Affiliate member gave us access to so many time- and money-saving resources that it easily paid for itself! Nonprofit Risk Management Center is truly a valued partner of The Community Foundation of Elkhart County and we are continuously able to optimize staff time with the support given by their team.”
— Jodi Spataro, Community Foundation of Elkhart County
“The board and staff of the Prince George’s Child Resource Center are extremely pleased with the results of the risk assessment conducted by the Nonprofit Risk Management Center. A thorough scan revealed that while we are a well run organization, we had risks that we never imagined. We are grateful to know that we have now minimized our organizational risks and we recommend the Center to other nonprofits.”
— Marti Worshtil, Prince George’s Child Resource Center
Great American Insurance Group’s Specialty Human Services is committed to protecting those who improve your communities. The Center team has committed to delivering dynamic risk management solutions tailored to nonprofit organizations. These organizations have many and varied risk issues, hence the need for specialized coverage and expert knowledge for their protection. We’ve had Melanie speak on several occasions to employees and our agents. She is always on point and delivers such great value. Thank you for the terrific partnership and allowing our nonprofits to focus on their mission!