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BFS Capital Blog

Tuition Reimbursement: Does It Make Sense for Your Business?

August 27, 2013

As a small business, you’re competing mightily for good employees, with other small and medium-sized businesses and with larger companies. Even the best salaries have limits, so the deciding factor in snagging a desirable employee might just be in the benefits you offer, both intangible and tangible.

Intangible benefits can include things like flex time, telecommuting, and a casual dress code. These relate largely to the type of business you’re operating, your company culture and the kinds of employees you want to attract. Most of these will cost you nothing but should still provide some mutual benefit for you and your employees.

Tangible benefits, on the other hand, will cost you and are viewed as an investment in your workforce and ultimately, in the business. You need to choose them carefully and calculate the return, whether it’s health insurance or a retirement plan. And be aware that where there are federal/IRS requirements for programs; they must be administered according to detailed rules and regs.

There’s another tangible benefit that can be mutually rewarding for your business and your employees: Tuition reimbursement. Often associated more with large companies, tuition reimbursement has gained favor among small businesses seeking a competitive edge as well as an effective tool for employee acquisition and retention. There are huge plusses but some potential drawbacks and pitfalls, too. Tuition reimbursement is not for every business. offers three key factors to weigh in considering whether to offer tuition reimbursement:

    • Employee skills. In a rapidly changing world, everyone needs more and better skills. And businesses increasingly need employees with higher-level skills and/or a more varied skill set. We’re talking about everything from technology training to certification to graduate degrees.


    • Recruitment. Regardless of your specific business sector, you need an arsenal of tools to recruit and keep good people.


    • Morale. Offering tuition reimbursement tells your employees some important things about you—that you value professional development and care about their futures. Even employees with no immediate plans to use this benefit feel good about having it as an option. This builds loyalty.

How you provide tuition reimbursement, including the details and requirements of your program, are critical. Check out’s The ABCs of Tuition Reimbursement for some great observations and insights. First and foremost, never lose sight of the fact that when offering tuition reimbursement, you are making an important and long-term investment, in them and in your business. As with any investment, you want to get a return and to be able to quantify it whenever possible. Employment experts agree that paying for your employees’ tuition is, hands down, more cost-efficient than in dealing with the disruption of turnover and constantly having to hire new employees.

Getting maximum return on your investment means structuring your program with some clear parameters. Few companies offer open-ended tuition reimbursement; there are always strings attached, for good reason. Among the most common:

    • Type of education/training reimbursed. It must be related to the business—the employee’s current or future job with your company. You don’t want to be training someone for their next job somewhere else!


    • Completion requirements. Most now offer reimbursement on a sliding scale based on the grade obtained in the course. Full reimbursement for an A and so on down to a C. But nothing for a D or F.


    • Work commitment. You want to realize the benefits of the new skills, right? So build in a requirement for staying with the company after the degree or course(s) are completed and reimbursed. Two years is usually the minimum, and many companies have upped their requirements to as many as five years. If the employee leaves before the full term of the commitment, he or she must repay the entire amount that was reimbursed.

Tuition reimbursement is a fantastic way to improve your business performance, sharpen your competitive edge and recruit and retain the best employees. Hire a benefits consultant to ensure that your program is structured to meet your specific needs for maximum benefit.  By all means, spell out even the small details of the program in writing and have this regularly reviewed by your attorney. And don’t forget to showcase your tuition reimbursement program in your recruitment materials and in your onboarding process for new hires.
Image courtesy of sippakorn /

Do you offer tuition reimbursement for your employees? Do you feel like you’re getting a return on your investment?