Increasingly, to recruit new employees and retain their employees, employers are offering a potentially valuable benefit – free college tuition. Walmart, Amazon, Disney, Starbucks, Target, and many other big-name employers all offer some form of free college.
So far, these college degrees have proven to be very popular.
Nearly 30,000 Walmart employees were enrolled in that company’s college program, known as Live Better U, according to a report by the Lumina Foundation and Accenture. In three years, more than 300 employees of the program have earned a bachelor’s degree. Program participants were more likely to be promoted internally – leading to upward mobility and income.
A Target company spokesman said that just a week after announcing its 2021 college education program, more than 10,000 team members have expressed interest in the benefit.
Tom Nathaniel Tessin drives for Uber, a job he’s said to have because of college perks. “I do Uber part-time just for the free tuition. I’m only four grades away from graduating and it’s been a thousand percent worth it,” he said. “I couldn’t be happier with the result.”
This is a win-win situation. Companies get better trained, happier employees who they can retain and promote. And the companies can sell the popular benefits to job offers.
The employees receive a university education.
But is employer-provided free college education worth it for the employee?
The answer, experts say, is yes — receiving free tuition for your work can be a standout benefit.
But they also say it depends. There are some important things to understand and a few key questions to ask yourself before you apply for a job or keep the job that free college promise has you on.
To begin with, yes. A free college can be a huge bonus for employees as it eliminates an expense today and returns lifetime rewards like better pay and more career opportunities. In other words, a degree can be a big deal, especially when it’s free.
“That could be a great idea,” said Denise Thomas, college coach on Get Ahead of the Class. “You’d have to live on another planet not to have heard about the rising cost of college tuition, so the thought of having someone else pay for it should prick your ears.”
“Yes, from an overall perspective, it’s a good deal,” said Wesley Exon, founder of Best Value Schools, which helps students find schools and programs. “In most cases, it’s an excellent opportunity to complete an education and pursue better career opportunities in the future.”
Still, the experts say, while the value is there, there are some things you should know about your employer’s free college programs. “Companies that offer to pay tuition don’t do it out of the goodness of their hearts,” Thomas said.
“Companies might only be interested in paying for courses that benefit their own needs. Let’s say you work in human resources,” Exon said. “In that case, the employer may only pay your tuition based on how many communication and marketing courses are included in your curriculum.”
Thomas agreed. “A retail department store probably won’t pay for an engineering or history degree. You need employees with business degrees. Study opportunities will be limited to what the company can use,” she said.
Target’s program, for example, says its tuition program is “the most comprehensive debt-free educational assistance program available in the retail industry.” But it also states that the program only offers access to “business-focused” degrees and certifications.
While tuition doesn’t get an employee to study anything, work-supported education programs typically don’t cover tuition anywhere either.
The experts say that the degrees and certificates in a benefit plan are most often only offered by a select list of colleges, usually those with large online offerings. So it’s important to ask which schools are included in the program and make sure you’re comfortable with at least one of them, since the degree you earn is yours.
In addition, the experts recommend that you inquire whether – if you are unable to complete your studies for any reason – the credits you have acquired can be credited to another school.
As some employers use tuition programs to retain employees, Imani Francies, a college advisor at USInsuranceAgents, says, “People should ask how long they would have to stay with the company if they took tuition.” Adding, “Maybe don’t you want to stay with this company long-term.”
Claiming student aid, Thomas said, “usually means a commitment to work for the company for a certain number of years or you have to pay back the costs you incurred for your education. This is not uncommon. In many sectors there are employment contracts after graduation that stipulate a minimum period of employment, otherwise you have to reimburse the company for the training.”
Another consideration when weighing coursework is the time it may take to complete a degree or certification. While there are no requirements to remain in a job after graduation, completing a part-time degree online can take years. If the bachelor’s degree takes six or seven years or longer, employees should consider whether they want to stay at the company for at least that long.
taxes and subsidies
Tuition fees can affect an employee’s taxes.
“Each year, the federal tax law allows employees to receive up to $5,250 in tax-free tuition refunds from their employer,” Francies said. However, if the cost of your tuition and related expenses exceeds this, you may need to declare the excess as an income benefit, changing your tax obligations.
Many programs, such as Walmart’s tuition program, cover all employee tax consequences. But the total amount of the program and any tax implications are worth asking before you start.
Additionally, some college grant programs or some colleges themselves may apply for and accept college grants — grants and scholarships — on behalf of the student. Some of these grants may have annual or lifetime limitations. Likewise, it’s good to ask if your employer’s degree program uses federal, state, or private grant funds to help pay for the costs of your educational program and to know what limits or restrictions these may have. If you quit your job and want to start studying again later or somewhere else, it may be that you have already collected and spent part of your limited achievements.
Other considerations, costs
Even if your employer pays tuition, other expenses of attending college can be significant. For example, be sure to ask if a college benefit plan includes tuition or textbooks or technology assessments that may be billed by the school. Since it’s likely that your classes will be online, experts recommend also asking about the cost of any educational technology you may need, such as laptops, web cameras, high-speed internet, or data charges for your smartphone.
And even if all direct costs for attending school are covered, indirect costs for studying alongside work can arise. “It’s a guarantee you won’t be paying your hourly rate while you’re taking classes, so one consideration is how much time it will take away from your paying job’s hours, or whether your work schedule can work around class hours and you’re still getting it.” your full time and full salary?” Thomas said.
Finally, say the experts, consider offering a generous package of study grants instead of other benefits or bonuses that may be even more valuable, such as a higher salary.
If you’re just a few credits away from graduating or just starting out in college, you might be better off negotiating a better salary or salary and paying for those tuition costs yourself. With the right guidance and planning, starting or completing a college degree on your own can be surprisingly affordable and offer greater flexibility than a work-based education plan, which can limit your study or school opportunities.
A job extra from free college tuition or continuing education can be very valuable and extremely rewarding. But it’s still important to ask questions — to understand what commitments and commitments it requires, and what you might be waiving by using it.