Tuition Reimbursement: What It Is and How It Works
Last updated on September 20th, 2023 at 03:48 am
Tuition reimbursement can help you dramatically reduce the student loans you need to pay after you graduate. This helps you achieve other money goals you have in mind like buying a house, starting a family, or traveling the world.
If you’re in a financial pinch and stressed about increasing your student loan debt, it’s understandable. 44.7 million Americans now owe over $1.7 trillion in student loan debt.
If you’re in college or graduate school with a part-time job or are thinking about getting one, you might as well work for a company that offers tuition reimbursement.
Furthermore, getting a job while pursuing your degree can drastically improve your chances of landing a better job after you graduate because of your industry experience and connections.
By the end of this article, you’ll know what tuition reimbursement is, if it is right for you, and how to use it to maximize your education and graduate with reduced to no student loan debt.
What is tuition reimbursement?
Tuition reimbursement is a benefit that employers offer to employees which gives them money back for pursuing an Associates, Bachelors, Masters, and even certificate degrees.
Some employers like Verizon, Qualcomn, Geico, Johnson and Johnson only reimburse coursework that directly benefits your job or future job within the company, while others such as Citibank, Staples, FedEx reimburse any course.
How does tuition reimbursement work?
Getting tuition reimbursement is usually a two-step process.
Step 1: You need to submit an application stating your interest in your company’s benefit, which your manager or HR department needs to approve.
Different companies have slightly different application processes, so it’s important to ask for your unique situation. For example, some companies require you to submit an application before your course begins, while others allow you to do it within 30 days of classes beginning.
On the application, they will typically ask for the following information:
- Your contact information
- Your course semester
- Your school’s name and state
- The type of degree you are seeking
- How many courses you are taking
- Course name, credits, start and end date
Step 2: After you’ve gained approval and finish your course, you need to submit proof of course completion and various other documents, which will be reviewed before granting you the reimbursement.
Typically, these are the documents you need to provide within a specified time of completing approved courses:
- A copy of the approved application
- A copy of your official transcript showing the grades you received
- Tuition bill showing tuition and fees charged per class
What costs are covered through tuition reimbursement?
Typically, most companies cover tuition costs, but others may cover more. However, because most companies have annual limits of reimbursement per student, you have a finite amount of reimbursement for eligible costs.
This is fantastic for people who already have financial aid for tuition and could use tuition reimbursement to cover other costs. Those may include: tuition, books, required materials (by course syllabus).
Common costs that are not covered: meals, parking, club activities, sports, games, transportation, test prep, computer usage fees
Are the payments made to the school or to you directly?
While it varies from company to company, in some situations, the payment is made to you, or the check is made out to the school which you are expected to deliver, or, the money is sent directly to the school.
How can I ensure I’m eligible for tuition reimbursement?
While policies differ, most employers have the following standards for a student to be eligible for their benefit.
- Check if the employer allows employees to attend any accredited university or if they specify specific universities or online programs.
- Check the DAPIP database to ensure you attend a federally or regionally accredited university.
- Ensure your company reimburses the major you are studying.
- Be sure to ask if your company reimburses the kind of student you are (associates, undergrad, grad, etc.)
- Ask if they allow part-time employees to access tuition reimbursement.
- Have you worked for the employer for long enough to be eligible?
- Are you in good standing in the workplace? (obvious, but still needs to be said)
Who can benefit the most from tuition reimbursement?
Students pursuing undergraduate and or graduate students will primarily benefit the most. Ph.D. candidates may see less opportunity with tuition reimbursement, but make sure to do some research because any saving opportunity will help.
This benefit also is highly applicable to existing employees out of school who want to learn a new major or update their professional skills.
Does tuition reimbursement count as taxable income?
Tuition reimbursement can count as taxable income of the employee if the annual amount reimbursed exceeds the $5,250 limit established by the IRA.
This is why most employers set their limit to this amount in the first place. Otherwise, the reimbursement is not taxed.
Do you have to pay back tuition reimbursement?
This is a common question we get, and the answer is: in some cases, yes.
Many companies are content with you leaving after you complete your courses with no strings attached.
However, a few companies require you to stay with them for a certain amount of time after receiving the reimbursement (1-3 years is common). If you leave your job before that time, then you could be obligated to pay back the reimbursement. Otherwise, you are free to keep the benefits.
Our comprehensive database includes this information for many employers. If our database doesn’t have this information, then you should confirm with your employer.
How do I know tuition reimbursement works?
I lost my mother on my undergrad graduation day. Suddenly, I was faced with the financial burden of paying for the rest of my education. I was determined to find and only work for a company that offered tuition reimbursement to avoid taking on extra student loan debt.
Fortunately, I found a job with a company that provided $5,250 annually to cover tuition while working during the day as I took classes at night.
I graduated with $26,000 in student loan debt and my master’s degree in Accounting in 2014.
Three years later, I paid off my student loans. This was possible for me because the company I worked for offered tuition reimbursement which helped me graduate with way less student loans and pay them off much faster.
Check out our directory to find a list of companies that provide tuition reimbursement for their employees.
