Much media attention has recently focused on a hot new benefit: helping employees pay back college loans.
But employers shouldn’t overlook the value of a more traditional employee education benefit: upfront tuition assistance.
Contributing to the cost of postsecondary education, whether college or technical training, helps companies attract and retain top talent, and that improves the bottom line, a new study shows. An analysis of health insurer Cigna’s education reimbursement program found that each $1 the company put into the program saved $1.29 in talent management costs.
The nonprofit Lumina Foundation, which promotes student access to postsecondary education and training, partnered with Cigna to design the study, which was conducted by Accenture, a professional services firm.
The researchers found that program participants were 10 percent more likely to be promoted, 7.5 percent more likely to be transferred to a different job within Cigna, and 8 percent more likely to stay at the company, reducing across-the-board talent management and recruiting costs.
“Attracting and retaining talent is essential to our success as a company, and to advance those goals, we’ve made tuition reimbursement a priority,” said Hartford, Conn.-based Karen Kocher, Cigna’s chief learning officer. “Knowing that tuition assistance also reaps a financial return—and quantifying that return on investment—has affirmed our belief in the program and prompted us to make changes that will make it even more impactful.”
In response to these positive results, Cigna’s leadership increased the maximum amount of tuition assistance the company offers workers in high-demand fields, from $5,250 for undergraduate courses or certificates and $8,000 for graduate courses each year, to maximum offerings of $10,000 and $12,000, respectively. The company also added advisory services to help employees better navigate their higher education options and career paths, as well as mentoring to help ensure students complete their studies.
To help employees avoid significant out-of-pocket costs, Cigna intercedes with education providers so that they will accept payment after each semester ends, when the company, like most employers, reimburses its workers for their courses.
For the U.S. to remain a leader in the knowledge economy, “employers must help ensure more Americans earn postsecondary credentials” by providing tuition support, said John Engler, president of the New York City-based Business Roundtable, an association made up of CEOs from large company. “Additionally, as our workers learn and acquire skills on the job, we must be better able to document those competencies so individuals are both encouraged to be lifelong learners and are able to increase their value and their take-home pay.”
According to the Society for Human Resource Management’s (SHRM’s) 2015 Employee Benefits survey report, last year:
- 56 percent of organizations offered undergraduate education assistance.
- 52 percent offered post-graduate education assistance.
- Just 3 percent offered company-provided student loan repayments.
SHRM's survey also revealed that 11 percent of organizations offered 529 plans, which are tax-advantaged savings plans designed to encourage saving for future college costs—often used on behalf of employees’ children but also available for employees to save for their own eligible college expenses.
Other SHRM research indicates that the maximum employee reimbursement allowed for tuition/education expenses annually is, on average, $4,591.11.
SHRM’s comprehensive 2016 Employee Benefits report, which will delve into changes employers are making with their benefit mix, will be released in June at the SHRM 2016 Annual Conference & Exposition in Washington, D.C.
Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow me on Twitter.
Related SHRM Articles:
- Employees’ Financial Issues Affect Their Job Performance, SHRM Online Benefits, April 2016
- Wellness’ Programs Embrace Financial, Emotional Well-Being, SHRM Online Benefits, April 2016
- A Student Loan Repayment Benefit with a Twist, SHRM Online Benefits, April 2016
- Student Loan Aid Helps Employers Attract Millennials, SHRM Online Staffing Management, April 2016
- Easing the Student Loan Debt Burden? Points to Consider, SHRM Online Benefits, January 2016
- Educational Assistance Programs Lead to Career Success, SHRM Online Benefits, November 2015
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