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Thursday, January 10, 2008

Tuition Reimbursement Programs

I'm a new training manager at a small (<120) person healthcare company. I am setting up a tuition reimbursement program and wonder if you have any resourses I can model my program after.

I have personally benefitted from previous employers programs and am using my last company's program as a model, but it was a much larger company and I'm not sure that it makes sense at my new company.

Any info you can share would be much appreciated.


First, I'm impressed that such a small company would have a dedicated training manager. That says good things about your organization to me. I'm a big fan of effective training and a huge hater of waste-your-time training. I assume you do the former.

My experience with tuition reimbursement is limited, but I'll share what I know.

Back when I worked for a retail company, we didn't offer "tuition reimbursement." We offered "scholarships." Same thing, really, but without all the strings attached. You had to have been there for a year (I think) and be a satisfactory employee. The amount of money was not huge (can't remember precisely, but it was under $2000 a year), and there as no repayment provision if you quit. In fact, as long as you worked for us during the summer, we'd renew the scholarship every year.

This was fantastically effective as a recruiting tool for high school/college students. Parents pushed their kids to take jobs with us because of the extra money for college. I don't know what kind of health care company you are, but if you are someplace with high turnover, then this might work for you.

Other companies I've worked for have had a more traditional approach--paying 50-100% of tuition, upon satisfactory course completion. Satisfactory, being a grade of C or higher. The restrictions placed around it include a yearly tuition limit and a requirement that the course be directed towards a degree or certification that is relevant to the company. No tuition reimbursement towards your real estate license (we don't do that) or art history, but engineering, HR, business, etc are all covered.

The key thing with this type of program, where you are targeting a low turnover group, is repayment provisions. Make sure you have them, so people don't take your money for their degree and then disappear on you.

Make sure you treat your newly degreed or certified employees as external candidates when it comes to promotions. Let's say Bob makes $65,000 a year as a finance guy. He's a high quality employee and has been working on his MBA from a reputable school for the past 3 years. He finally graduates. (Yeah Bob!) Bob is now qualified for a manager position that has a salary midpoint of $85,000. If he were an external candidate, you'd hire him at $85,000. However, your company guidelines state that no one be given more than a 10% increase ($71,500). MAKE SURE YOU HAVE AN EXCEPTION THAT ALLOWS YOU TO BRING BOB UP TO MIDPOINT REGARDLESS OF THE JUMP.

Yes, I meant to put that in all caps. Your competitor doesn't have a problem paying a newly minted MBA from that school that much money. You wouldn't have a problem paying someone with Bob's credentials that much money if he were external. Don't hold Bob back. Bob will get resentful and he will leave, even being willing to pay back some of the cost of his tuition.

Non HR Types stop reading right now. The rest of this is secret HR stuff.


And while I do think it is a good idea to require repayment if the employee leaves within a set time (full repayment if less than one year, 2/3 repayment if less than 2 years, 1/3 repayment if less than 3, is my general guideline), keep in mind that it's next to impossible to get that money back if the person doesn't willingly cough up the check. Even if you could deduct what they owe from their last check (some states would allow this and some would not), it's doubtful that everyone's last check would be equal to or greater than the amount of tuition they owe. Do you really want to sue? No, you don't. But don't tell the employees that. Shhhh.

7 comments:

Anonymous said...

As far as reimbursement is concerned, I worked for a company who paid me based on what grade I earned. I think it was 95% for As, 85% for Bs, and zip for Cs or below.

Anonymous said...

MAKE SURE YOU HAVE AN EXCEPTION THAT ALLOWS YOU TO BRING BOB UP TO MIDPOINT REGARDLESS OF THE JUMP.

I cannot agree more. As a senior staff member at a small office of a large company (got all that?), I was often asked to train new hires. When I found out that they were all brought in at a salary higher than mine for the same position, I brought it up to management. Since my most recent performance review was stellar, I'd received the highest raise they were permitted to give. They apologized and said that since I'd already received the max raise they could give, I wasn't eligible for a raise until the following year.

I left three weeks later and became the "high paid new hire" for the competition.

Anonymous said...

I have a question, I was offered tuition reimbursement from my employer as a special case. They do not currently have a program, so my boss told me to write up a proposal. They said they would pay 75-80% of the tuition but wanted to see what I came up with on what I would do in return. They basically want to see how long I am willing to stay with the company for the cost of Grad School. I am uncomfortable signing too long of a contract. Does anyone know what the terms of contracts are generally? Any information would be helpful. Thank you!

Anonymous said...

I totally agree with the comments, but what if the company stops giving raises and starts downsizing? Suddenly I'm supposed to sit around and wait to get laid off because of these golden handcuffs?

This is the situation I'm in. I have an offer that I can't take because of tuition reimbursement policy. Meanwhile, there's a good chance I'll get laid off this year and zero chance that I'll get a raise.

Kelly said...

To anonymous number 2, if the new compnay really likes you, maybe they will be willing to reimburse you for the education money that you have to give back to your current employer if you leave. After all, they are getting the benefit of it. It never hurts to ask, right?

Anonymous said...

The company I work for as an HR Manager actually outsourced their program to Edcor (I believe they are located in Pontiac, MI). We have had great success with Edcor, as they are able to handle all of the administration of our program. I get reports from them pretty regularly, and I use these to show upper management just how high utilization of our program is, and what our return on investment is. I think that if your company grows, this might be the route to go.

Malea said...

Hi EvilHRLady, I am another EvilHRLady and we are looking to revamp our tuition reimbursement program. At this time we feel it is too lax.
I was curious about your repayment method you mentioned. Now what would you do if someone left before the end of their degree. Would that always require full repayment?