Helping Employees Pay for Education
Why Help Employees Pay for Education?
Paying for education or training can be a significant challenge to employees as well as employers. However, research has shown that offering educational assistance has great benefits for both the employer and the employee. In the 2006 U.S. Job Retention Poll findings by the Society for Human Resource Management Research, employees were asked about the effectiveness of employee retention strategies offered by organizations. The employees rated “Career development opportunities” far above others that include as “completive salary,” and “flexible work schedules.” It has also been found that tuition assistance has been most successful at retaining front-line employees and is proven as a competitive retention benefit for all levels of employees. Employees who use tuition assistance stay longer with an organization according to a Wharton School of Business study.
About 79% of companies nationwide have an educational assistance program of some sort, but the findings are that only a small percentage of employees – some say as low as 15% – actually access this benefit in companies where it is offered.
Linking Employees to Resources is a Valuable Role for Resource-Limited Organizations
Employer educational assistance comes in a variety of forms that fit with the organization’s structure. Even for those organization that may not have the resources to subsidize education or training, the employer can play an important role in linking the employee to the resources that are available through workforce development agencies as well as tools for financing the costs by themselves. In many cases, the workforce development agency may work directly with the employer to provide training and certification.
“Our tuition reimbursement program originated from a ‘total growth” philosophy, meaning that we believe a person is more likely to achieve when they are energized about their own personal and professional development. At L.L. Bean we view tuition reimbursement as one of the most meaningful ways that we can support a person’s development path. The growth of the individual and the growth of our organization are one in the same.” Marie McCarthy, LL Bean
Tuition remission – The employer pays their portion of the tuition at the time payment is due to the educator. This relieves the employee of paying in advance and then waiting for reimbursement. Typically, the employer requires the employee to earn a certain grade or else return the funding.
Tuition forgiveness – The total amount for the course, books and other fees are paid by the employer. This usually is often used to attract a hard to find knowledge or skill that is needed in the workforce.
Lifelong learning accounts – Lifelong Learning Accounts (LiLAs) provide an option for employers to help employees save for college. LiLAs are individual investment accounts, matched by the employer, to finance lifelong learning. Funds are invested in a LiLA account. In Maine these are special investment accounts recognized by the IRS to help people save for college through a payroll deduction option.The employee saves a minimum amount which is matched by the employer. The employee may also qualify for a matching grant from the Finance Authority of Maine. The money can then be used to finance education. Additional information is available here. Additional reference: Changing Lives Through Lifelong Learning Accounts, Taking it to the State – Implementing Lifelong Learning Accounts on a Broader Scale, CAEL’s general information on LiLAs, and FAME’s Next Gen Account information.
College Savings Plans – These are plans similar to the Life Long Learning Accounts listed above, but are set up solely by the employee to be used for their education.
Opportunity Maine Tax Credits – These are tax credits available to either the employee or employer for students who study in Maine and then work in Maine. The tax credit can be applied to the repayment of the loans from an official financial aid package from the institution of learning. If employers chose to pay the students loan obligations, the employer can then file for the tax credit in Maine.
Other Tax Credits – There are tax credits for employer payment of education. See the IRS rules for current opportunities.
Other assistance available – employers can help employees who are looking for educational assistance by linking them to the many resources available through the State.
An organization can “barter” with a school by trading available resources at the organization in return for classroom placement for employees. Some organizations have provided instructors for courses at a local college/university to help meet demand for oversubscribed or new classes. Other organizations have allowed the use of their facilities for college courses, giving the schools added space and flexibility as well as bringing the classes closer to the employees.
Key questions need to be answered to design a policy that works for employer and employee:
- When and how will assistance be given? The organization first determines what type of assistance it will offer: reimbursement, remission or other tuition assistance strategies.
- Who qualifies to receive tuition assistance benefits? Organizations need to consider which classifications of employees will qualify: fulltime, part time or other distinction. Sometimes there can be a reduced or prorated benefit for part time employees. Also there may need to be a consideration of how long the employee has been working there before qualification. If it is a recruitment tool, then having the benefit be available early in the employee’s tenure would be important. Many organizations require 90 days of employment before the benefit goes into effect, but others require up to one year.
- What will be covered? The organization needs to decide if it is just covering tuition costs or whether other costs such as books, lab fees, parking, etc. will be covered.
- How much will be covered? A company needs to determine what portion of the education costs it would like to reimburse. Examples include anywhere from 100% of State college tuition levels to 50% of tuition only. Any annual cap should be stated in the policy and should be based on the budget allowed. Employees should be made aware of any tax consequences of receiving tuition assistance.
- What Grade Criteria Will Be Utilized? Will the full amount of the benefit be paid for any passing grade? Or will there be a sliding scale for the assistance based on the grade? Examples include 100% of assistance for an “A”, 75% for a “B”, and 50% for a “C”. A decision needs also to be made if the employee does not pass the course.
- Will Course Restrictions or Degree Requirements Apply? Many organizations have the stipulation that the course work needs to relate to core organizational functions. It is important also to decide if the company will only pay for certain types of classes, or will the company pay for core courses required by the school in order for the employee to get a beneficial degree. Does the employee need to be enrolled in a degree program” or will the policy also support a certificate bearing curriculum, or possibly a few specific courses that the employee wants to take to “brush up” on specific skills?
- Will There be a Time Restriction? It may be necessary for an employer to specify a time period by which the degree needs to be completed as well as the consequences if the employee voluntarily leaves shortly after completion.
- Androscoggin Home Care and Hospice – includes a sample application form
- L.L. Bean
- Madison Paper Company – includes a sample payroll deduction form
- Maine Oxy – LiLa account policy
- St. Mary’s Hospital
- TD Bank
- City of Waterville
There are a number of financial education and training resource providers in the state of maine as well as online resources to support you and your employees.
Competitive Skills Scholarship
The Competitive Skills Scholarship is a state-sponsored program that provides workers with financial assistance to help them earn a degree or certificate in certain education or training programs.
Who is eligible: Open to low and moderate income adults pursuing a degree or certificate in high-wage in-demand occupations.
How it works: In addition to paying for tuition, the program covers educational supports for workers in training including, child care, transportation, books, supplies, equipment, and remedial and prerequisite training.
For more information:
Contact your local CareerCenter at (207) 623-7981 1-888-457-8883
(TTY: 1-800-794-1110) or Auta Main by email: email@example.com or visit:
Family Development Account
The Family Development Account Program (FDA) is sponsored by a coalition of non-profits to enable low-income families to establish savings accounts that will be used to buy a home, pay for education, or start or expand a small business. Participating families establish a savings account to be used toward their identified goal. These savings will be matched when withdrawn to purchase an approved asset. (The program is administered by the Maine Family Development Account Coalition.)
Who is eligible: Families who are eligible for TANF or the Earned Income Tax Credit usually qualify to open a FDA.
How it Works: Families complete an application, detailing future plans and savings goals. The family completes money management training and asset specific training. Once the account is opened, the family can then save between $20 and $80 per month from earnings for a maximum of $2,000. The money can be used for education.
For more information:
The program administered by the Maine FDA Coalition. For more information, please call 1-800-442-2092.
Finance Authority of Maine (FAME)
The Finance Authority of Maine (FAME) provides access to a variety of financial solutions to help Maine citizens pursue higher educational opportunities. Products include education investment savings accounts, the Alfond College Challenge, links to resources to complete financial aid forms, lists of loan opportunities and scholarships.
Who is eligible: Any Maine resident.
How it works: The program administers a variety of investment, loan, grant and scholarship programs to help pay for higher education and provides outreach and counseling to help young people aspire to and pursue post-secondary education.
For more information:
Call 1-800-228-3734 (TTY: 207-626-2717) or visit: www.famemaine.com
Lifelong Learning Accounts
Lifelong Learning Accounts (LiLAs) provide an option for employers to help employees save for college.
Who is eligible: Employees at LiLA sponsoring businesses.
How it works: LiLAs are individual investment accounts, matched by the employer, to finance lifelong learning. Funds are invested in a LiLA account. In Maine these are special investment accounts recognized by the IRS that are used for the employee’s higher education expenses.
Maine Apprenticeship Program
The Maine Apprenticeship Program allows workers to learn new skills through on-the-job training and related classroom instruction.
Who is eligible: Programs are sponsored by employers, employer associations, or labor/management groups. Apprentices are hired/or trained directly by those organizations.
How it works: The Maine Apprenticeship program sets up a structured program based on the specific needs of the employer. The program can reimburse up to 50% of the apprentice’s tuition for college credit courses while the worker is employed and also learning new skills on the job.
Maine Community Foundation
The Maine Community Foundation is a private foundation that provides information on a variety of scholarships available for people seeking post secondary education.
Who is eligible: Eligibility requirements vary by scholarship.
How it works: The foundation’s website includes links to dozens of different scholarship programs and contact information for individuals interested in applying for each scholarship.
For more information:
Visit the Maine Community Foundation website at: www.mainecf.org/scholarships.aspx
The NextGen College Investing Plan® is a Section 529 Plan — designed to help families achieve their dreams of providing funding for higher-education costs for the next generation. Section 529 Plans have been around since 1996 and have become a popular way of investing for college costs because of the advantages they can offer.
Opportunity Maine is a new initiative that provides a tax credit for student loan payments after a student graduates from a Maine school.
Who is eligible: Graduates from Maine colleges with student loans originating after January 2008 who live and work in Maine are eligible. Businesses that pay a student’s loan are also eligible for the tax credit.
How it works: Maine graduates fill out paperwork to claim a tax credit based on level of education attained and the amount of their student debt. The average tax credit will be $2,100 each year, but the students with the highest debts will be able to claim up to $5,500 each year.
Provides grants to encourage Maine residents to start post-secondary education at the University of Maine System or Maine Community College System.
Who is eligible: Eligibility varies depending on the campus.
For more information:
Contact the admissions office at the Maine community college or university campus you will be attending.
Parents as Scholars
Parents as Scholars is a state sponsored program for parents involved in a two year or four year post-secondary education program. It offers a monthly benefit based on the guidelines for the TANF program.
Who is eligible: Parents who are otherwise qualified for Temporary Aid to Needy Families (TANF) and are pursuing a two- or four-year degree.
How it works: Provides cash assistance in an amount equal to what the individual would have received through TANF.
For more information:
Contact Dawn Mulcahey at (207) 287-6897 or email: firstname.lastname@example.org
Vocational Rehabilitation is a state-sponsored program that provides employment and training services for people with disabilities.
Who is eligible: People who have a disability that keeps them from getting or keeping a job.
How it works: The program works with people to develop a career plan and pays for education or equipment needed to help the person become employed.
For more information:
Call 1-800-760-1573 (TTY: 1-800-633-0770) or visit: www.maine.gov/rehab [accordion title="Maine-specific Financial Aid Options for your Employees"]Maine has a variety of programs available to help individuals pay for college. Employees can explore some of these options at the Finance Authority of Maine website.
Some of your employees may be eligible for local or state scholarships that will help them pay for school. Be sure to encourage them to utilize the FAME scholarship search tool.
Maine adults who want to return to college may qualify for as much as $4,000 per year on scholarships for up to four years, in a new Adult Degree Completion Scholarship Fund through the University of Maine System.
The System’s fund aims to help Maine people complete their academic studies at one of the Universities of the University of Maine System —many adults started their university education years ago, but did not complete a degree program for some reason, likely due to family or work obligations.
The new scholarships are for adult students enrolling in a System university after an absence of three years or more from higher education, and who are completing their very first baccalaureate degree. Courses may be taken at any of the seven universities in Maine.
In addition, a new “concierge” service has been established to assist and guide adult students, in the same way that the hospitality industry has concierges to help guide guests to explore a new area. The university concierges, based in 15 Maine communities, will help adult students achieve their educational goals through activities such as applying to a university, choosing a major, finding financial assistance, and registering for courses. Learn more about these scholarships: http://www.maine.edu/future-students/adult-students/scholarships/
The Competitive Skills Scholarship Program (CSSP) offered through the Career Centers: Post-secondary degree or certificate programs for high wage jobs in industries that need skilled workers; Income eligibility – 200% of the federal poverty level. For more details go to: www.mainecareercenter.com/services-programs/training/cssp/index.shtml
Sunrise County Economic Council’s (SCEC) Eaton Foundation Young Adult Scholarship Program targets young adults aged 18-29. Financial assistance of up to $500 for Washington County residents attending training and/or certification courses, not covered by traditional forms of financial aid, which will increase their employability and/or career advancement potential. For details go to: www.sunrisecounty.org/crmacna.html
Osher Scholarships are available to Maine residents of all ages. Osher Scholarship covers costs to take one course, including books and required materials for individuals who have never completed a college course. For details go to: www.mccs.me.edu/student/osher.html
The Maine Sea Coast Mission Scholarships for non-traditional students of all ages and HS students who are residents of the islands and coastal communities of Downeast Maine enrolling in degree programs or taking specialized courses to prepare for advancement in a variety of fields. For more information about the scholarship deadlines and requirements, call Terri Rodick, 207-288-5097. For details go to: www.seacoastmission.org/scholarships.html