Class Appeal

Although Starbucks is getting a lot of attention for the new tuition-assistance program it offers employees, at least one other company offers even-more generous educational benefits.

Wednesday, June 25, 2014
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Seattle-based Starbucks Corp. may have delivered a caffeine-rush jolt to workplace tuition-assistance programs, the number of which has been static or in decline during the past few years due to the stagnant economy. 

"I do think that, with the attention being paid to Starbucks, we could see a reversal in this decline," says Bruce Elliott, manager of compensation and benefits at the Society for Human Resource Management in Alexandria, Va. "The saturation coverage Starbucks is getting over this is going to generate a lot of interest among employees at other organizations."

Starbucks has announced that it will offer full and partial tuition reimbursement for all employees who work at least 20 hours or more per week for taking online courses from the University of Arizona. Participating employees will receive tuition benefits of $6,500 for each of their first two years as online students -- those who go on to complete their junior and senior years of study will have their tuition costs completely covered.

According to SHRM's just-released 2014 Employee Benefits Survey, 54 percent of organizations offer undergraduate educational assistance, and 50 percent offer graduate educational assistance, with the maximum reimbursement allowed for tuition and education expenses of $4,591, on average. The number of organizations offering these programs is down slightly from the previous year's survey, which found that 61 percent of organizations provide such assistance (the survey's 4 percent margin of error could account for much of the difference).

Although Starbucks has won praise for the generosity of its new tuition-assistance program, at least one other company offers an even-more expansive program. Under its Employee Scholar Program, United Technologies Corp. fully reimburses its employees (full-time and part-time) for any degree they wish to pursue and provides up to three hours per week of paid-time off in which to attend classes and study.

"We launched our program in 1996 with the basic tenet that we wanted to ensure we have the best-educated workforce in the world," says Elizabeth Amato, the Hartford, Conn.-based aerospace-and-defense firm's senior vice president for HR and organization.

Unlike the TA programs offered by Starbucks and many other employers, UTC provides payments directly to the college or university rather than reimbursing employees for tuition after they've completed their courses, says Amato. "There are no out-of-pocket costs to our employees -- we pay for textbooks and fees as well as tuition," she says.

To date, UTC employees have earned 36,000 degrees since the program was launched, says Amato, and the company has spent over $1.1 billion educating its employees. UTC received an award from the National Association of Independent Colleges and Universities in 2012 for its program.

Unlike UTC, most companies that offer tuition-assistance require employees to pursue courses in subjects that are aligned with their jobs, with one of the main reasons being the tax benefits, says Elliott.

"Courses that are job-related are not subject to taxes by the IRS," he says. Course subjects that aren't connected to the job in some way are subject to the IRS' $5,250 cap on educational reimbursement -- any funds above that amount will be treated as income and taxed accordingly, he says.

Tuition-assistance programs tend to suffer from low rates of employee participation partly due to the difficulty of balancing a job and class work, says Elliott. "I'm pursuing a doctoral degree while holding down a full-time job myself, and it's not easy," he says.

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Amato says granting employees up to three hours off per week to pursue their studies makes it easier for them to balance their workloads. "We do recognize that having a full-time job and a full course load requires a bit of accommodation," she says.

HR can encourage more employees to take advantage of TA programs by showing them the potential ROI from college credits, says Jay Titus, director of academic programs at EdAssist, a Watertown, Mass.-based firm that helps companies manage their TA programs. 

"Show them the advancement opportunities that can be unlocked by getting a degree," he says. As for employers, the ROI from providing these benefits not only includes a better-educated workforce, but decreased turnover among employees who participate, he adds.

"Some companies are worried that they'll end up paying for employees to gain knowledge they'll end up applying elsewhere, but our studies show that employees who receive this assistance tend to stay with the employer and have a high degree of loyalty to the company," says Titus.

At UTC, the company sees its Employee Scholar Program partly as recognition that a "job for life" is largely a thing of the past, says Amato.

"We can't guarantee a job for life, but -- through this program -- we can provide employees with the tools and skills to grow professionally and grow careers which may or may not be based here at UTC," she says.


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