If you work, you (or your children) may be eligible for financial aid from your current employer in the form of tuition assistance. The IRS specifies that employers can set aside $5,250 in tax-free funds each year for every employee. However, different companies work in a variety of ways, if they offer tuition assistance at all. Make sure that you ask Human Resources the right questions and know their rules about financial aid before diving into your education.

Tuition Assistance for Employees

Some employers offer educational benefits to their employees. They may subsidize bachelor’s or master’s degrees or certificate programs either fully or partially, depending on the cost and the company. To receive these benefits, your current employer must offer a tuition assistance program. Talk to a human resources representative if you’re interested in returning to school. You may be limited in your choice of institution, major, schedule, or classes. Employees using tuition assistance may be required to pick their major or classes based on their current field of employment or be required to work part-time while attending classes.

Once you know your options, you can choose a school and apply for admission. After you are accepted into a higher education program, tuition is due. Some employers will directly pay your tuition bill, while others will require you to make the initial payment and file for reimbursement after your grades come in. Many have GPA requirements, and the percentage of tuition reimbursement you receive may be based on your grade in each class (in case you needed an extra incentive to get A’s). Be aware, also, that your employer may require you to stay with the company for a certain amount of time after providing tuition assistance. This is your employer’s safety net since it will be spending company money on tuition. It wants to reap the benefits of your higher education (or lasting commitment to the company) just as much as you do.

It is possible for an employer to pay more than $5,250 toward an employee’s education, but any funds in excess of that amount must be taxed. You will be liable for these taxes (the additional money spent on your tuition will be displayed as “wages” on your W-2) unless your education qualifies as a “fringe benefit.” A fringe benefit is one that, if you had initially paid for it, would be able to be expensed for reimbursement from your employer. In this case, taxes on the amount in excess of $5,250 are paid by your employer.

Contact your human resources department to learn if employer tuition assistance is an option for you. Be sure to also ask about employer-sponsored scholarships. Some companies make tuition assistance funds available to the children of employees as well; a HR representative will be able to give you details.

Questions to Ask a Human Resources Representative

• Who is eligible for tuition assistance benefits? Are children of employees eligible?
• Are these benefits applicable to undergraduate and graduate courses?
• Can the courses be taken online?
• Must the courses be taken at a certain participating school, or can they be taken anywhere?
• What is the maximum amount of tuition assistance that an employee and/or their family can receive?
• What percentage or lump sum does the employer pay? Is the employee responsible for the rest?
• How is tuition assistance paid out? Does the employer pay the school’s bursar or financial aid office directly? Does the employee pay the school upfront and apply for a reimbursement from work? If so, with whom does the employee put in a reimbursement request?
• Must the employee maintain full-time employment status while participating in the tuition assistance program? Can the employee take a leave of absence for the duration of their education or shift to part-time employment?
• For how long do employees need to work at the company to receive these benefits?
• Are employees required to resign their contracts or continue working at the company for a certain number of months or years after participating in the program?
• What are the consequences of leaving the job before the educational program is completed? Who pays?
• What grade or GPA is necessary to continue receiving tuition assistance?
• What happens—and who pays—if an employee doesn’t pass a class or meet the GPA requirement?
• How long does an employee have to complete the class(es) or degree? What happens—and who pays—if these requirements aren’t met?

Other Employer-Sponsored Financial Aid

While tuition assistance is the big one, you may also be in luck if you or your parent work for an institution of higher education. Often, employees and their children will receive free or discounted tuition if they attend the same institution at which they or their parent(s) work. While you will still have to pay an application fee, get accepted on your own merit, and be responsible for your own room and board, there are huge savings to be had. Reach out to an HR representative for more information.

Page last updated: 05/2018