Many companies offer tuition reimbursement for the continuing education of employees.
An advantage to working at a well-established company is the possibility of qualifying for tuition reimbursement. Employees who seek to gain further education may join in a contractual agreement between themselves and the employer outlining the terms in which the company will pay for the employee's education. Normally the student will pay the tuition and will be reimbursed at a later date by the employer.
Classes
Most employers grant employees tuition reimbursement only if the courses taken by the student are work related. For example, if a bank teller wants to receive tuition reimbursement from his employee, he may be required to choose a major related to the financial industry. The goal in this decision of employers is to receive a return on their investment. After an employee receives education in a field related to the employer's company, he is able to utilize his skills while continuing work at the company. For most companies, a required grade average must be keep in order to qualify for tuition reimbursement. For courses where an employee earns a grade lower than a B, most companies won't pay.
Pay
Companies have the decision to withhold payment from an employee who is receiving tuition reimbursement. This ensures the employee will not leave the company after the degree is earned and allows the student-employee to prove himself on the job. If an employee does leave the company sooner than the company considers appropriate, the company may deduct the tuition cost from the employee's final paycheck. If the whole amount is not covered from the last paycheck, the company will continue to send bills until it is paid for.
Taxing
As of 1996, Congress approved changes on the taxing of tuition reimbursement. It is no longer treated as taxable income to the employee. Up to $5,250 of annual employer-provided assistance earns the status of being tax-free. In 2002, this status started to be applied to both graduate and undergraduate levels. In the case of many companies, if the courses taken by an employee are not job related, but approved for tuition reimbursement, taxes on the reimbursement will be charged to the employee.
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