Graduates across the country are gearing up to start repaying student loans, while other students feel like they can’t return to the classroom due to economic pressures such as inflation and rising tuition costs.
In both situations, folks are finding help from their employers to either help with student debt repayment or tuition reimbursement to further their careers and develop new skills. These benefits aren’t new, but continue to gain popularity as the cost of living increases and it becomes a more attractive employee benefit.
“When you have historically low unemployment rates, which we’re seeing right now, it just becomes that much more important to offer benefits that are not only attractive but really relevant to the lives of employees,” said Kevin Robertson, executive managing director, chief revenue officer at HSA Bank, a division of Webster Bank that launched their tuition reimbursement account solution in May. It helps employers provide a way for employees to pay for their degree, tuition, and other associated costs with ongoing education.
And it’s a win-win for the employer too, who can deduct as much as $5,250 per employee from their taxes, making it a tax-free benefit to their employees. Thanks to the CARES Act, through 2025, employers can also structure student debt repayment under the same tax code as tuition reimbursement, which makes it a little easier to offer for employers — at least until then.
“Tuition reimbursement is really designed to encourage people to continue their schooling, which student debt repayment is specifically for prior schooling and relieving financial burden,” said Robertson. “The CARES Act allows this. Normally it would be a taxable benefit, but it is not if an employer takes advantage of this.”
That’s especially helpful for people who need to start repaying their student loans for the first time in three years. It can ease a financial burden, allowing people to show up at work focused on that, rather than how they will pay this new bill on time.
But tuition reimbursement continues to stick out and has allowed people to return to school that otherwise would not have if they had to pay the tuition in full. According to 2023 SHRM employer survey data, tuition assistance of some kind is offered by 48% of responding employers.
Liberty Mutual helped 1,242 employees with that last year. The insurance company invested $8.5 million by covering up to $6,000 per year for undergraduate education and $9,000 per year for graduate education. Alex Hall is one of those employees who took advantage of the program to get his Master of Business Administration from Northeastern University.
“It was a really great benefit, and I think it provided me the opportunity to go about these programs where I might not have done otherwise,” said Hall, vp and senior director of talent acceleration. “I felt supported. My manager created a lot of space for me and checked in on me often. I felt the benefits and a lot of confidence pretty early on.”
At Liberty Mutual, they go beyond the tax deduction threshold for the graduate tuition cost, footing the rest of the bill. They also allow roll over. For example, if you incur $12,000 of graduate school costs, the company will reimburse you $9,000 that year but the rest you don’t need to foot – they will carry it into the future until it’s paid off.
It’s a helpful way to retain employees on many levels. For one, they will likely want to stay until they’ve paid off all of their tuition. But beyond that, they’re learning new skills that they might not have otherwise afforded to. It’s a clear career growth path, which is a high priority for most workers today.
But there’s still a lot to consider for employees. That’s why leaders at Liberty Mutual provide counseling through a lens of price, pace and program. Employees do need to foot the bill upfront, so price is still a factor. When it comes to pace, how do you want to ensure work-life balance as you add another thing on your plate? And for program, is it aligned with your career and development aspirations?
“It’s asking if it’s something you and your manager feel is aligned with your growth path, is it something you need urgently,” said Hall. “In some cases, a degree might not make sense. We provide a lot of other options, whether that’s LinkedIn learning, going to a conference, or maybe going to a workshop that will provide something significantly quicker.”
But they aren’t looking to build more barriers to helping people get degrees. They want more of that, which speaks to how much they invested last year. They are on the same track for this year, according to Hall. It took him two and a half years to complete his MBA, but he says it was worth it.
“I’ve been in HR for most of my career, and I got into a lot more conversations as I moved up that used a lot of data, and I felt insecure about my skill,” said Hall. “So I talked to my manager and a few others about it and went after the degree.”
Doing it through work also meant that they understood he was taking on an additional workload. And when it’s completed, it’s due for celebration too.
“You have a lot of people finishing their programs,” said Hall. “I just had someone on my team finish their masters and we had a celebration and sent out something to let people know it’s an important milestone she completed.”