Popular Employee Education Benefit in Danger of Ending

Nov 9, 2010
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SHRM urges Congress to make employer-provided education assistance a permanent part of tax code

With a workplace education benefit used by almost one million people a year scheduled to end on Dec. 31, the Society for Human Resource Management (SHRM) is encouraging Congress to make the benefit permanently available to workers.

Section 127 of the U.S. tax code allows an employee to exclude from income up to $5,250 a year in employer-provided tuition assistance for undergraduate and graduate-level courses. The provision will expire with Bush-era tax cuts at the end of the year unless Congress takes action.

As a co-chair of the Coalition to Preserve Employer Provided Education Assistance, SHRM has joined other groups in the education, employer and labor communities to urge lawmakers to make Section 127 permanent.

What’s at stake?

  • The availability of a valued workplace benefit. A 2009 SHRM poll showed that 76 percent of organizations offered education assistance for undergraduate or graduate study or both.
  • A critical tool that helps train workers for a competitive global marketplace. In 2007, almost half of beneficiaries majored in business, science, technology, engineering and math.

Who benefits:

  • Employees who want to expand their skills and career potential. According to a study by SHRM and the National Association of Independent Colleges and Universities, the number of people receiving the benefit more than doubled between 1992 and 2007, from 431,500 to 913,100.
  • Employers who improve their competitiveness by using tuition assistance as a tool to recruit and retain talented workers. Employers receive tax exclusion on up to $5,250 a year per beneficiary for education assistance.

Background:The education-assistance provision was established in 1978 with the understanding it would be evaluated in five years. Since 1983, Section 127 has been extended by Congress eight times, most recently in 2001. SHRM endorses efforts by U.S. Rep. Earl Pomeroy, D-N.D., and Rep. Sam Johnson, R-Texas, who have introduced the Employee Educational Assistance Act of 2010 (H.R. 5600) to make the provision permanent, and U.S. Sen. Chuck Grassley, R-Iowa, who introduced a tax bill that would preserve important educational tax provisions (S. 2851).

Quotable: “I’ve seen firsthand how this modest tax exemption opens doors to opportunity, expands careers, and lifts people from disappointment, despair and disillusionment. And Section 127 makes good business sense for employers. With better educated people in critical fields such as science, technology, engineering and math, we maintain our competitiveness in a global marketplace.” — Hank Jackson, interim president and CEO of the Society for Human Resource Management

For more information on Section 127, visit the Coalition to Preserve Employer Provided Education Assistance.

For details on the impact of the provision, visit “Who Benefits from Section 127?,” a study by SHRM and the National Association of Independent Colleges and Universities, and SHRM’s Poll: Education Assistance Benefits.

Twitter hashtag: #edbenefit

MEDIA: For more information about employer-provided education assistance, contact Kate Kennedy at kate.kennedy@shrm.org and 1-703-535-6260 or Julie Malveaux at julie.malveaux@shrm.org and 1-703-535-6273.

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