Tuition benefits are a proven asset for many employers. They help organizations recruit qualified employees and contribute to long-term employee retention, and the dynamic administration of tuition assistance programs, or TAP, ensures the skills development required to meet immediate and future business needs will actually take place.
TAP is a force for business and employee development. But most organizations aren’t taking full advantage of this. Promoting this benefit is the first step in getting the most return from a tuition assistance program investment.
TAP promotion needs to be a top-down effort. Employees will follow executives’ and managers’ leads if they position education as a path to career advancement and workforce development.
Society for Human Resource Management data shows that in 2015, 56 percent of organizations offered undergraduate educational assistance, 52 percent offered graduate educational assistance, and overall 84 percent of organizations offered their staff some form of professional development opportunities. However, less than one-tenth of HR professionals said their employees were very knowledgeable about employer-sponsored benefits.
Offer Student Loan Repayment
One of the most dynamic benefits employers can offer as part of a tuition assistance program is to help repay student loans. Student debt is not a new topic, and there are numerous studies showing that student debt affects personal lives by delaying major purchases like homes and cars or starting a family. It also can be a factor in postponing graduate school.
Currently, only 3 percent of businesses offer student loan repayment as a benefit, according to the aforementioned SHRM report. Those companies are on track to make their TAP benefits one of their most valuable assets with which to recruit and retain talent.
Loan repayment assistance is a preferred benefit for 80 percent of individuals with student debt, according to a July 2015 Iontuition survey. Some 55 percent of respondents said they would prefer the amount they are paying for health care go toward their student loan balance instead. Further, 49 percent of respondents said they would prefer student loan payment contributions over those for a 401(k) plan.
Student loan repayment is especially important for employers involved in specific industries such as legal or health care professions, which require advanced education and degrees. For instance, the Association of American Medical Colleges Center for Workforce Studies estimates there will be a shortage of 90,000 doctors in the U.S. by 2025.
Medical education is the most expensive graduate education in the U.S., and the average medical student debt is $176,348. Knowing the likely debt that will accrue might dissuade some students from attending medical school at all, particularly students from more diverse ethnic and socioeconomic backgrounds.
The American Medical Association recommends offering student debt relief through tuition assistance to help combat the predicted physician shortage. “Borrowers with less debt are more likely to start careers in medical education and research, practice medicine in medically underserved areas, or enter careers in public health service,” the AMA report states.
Student loan repayment also may encourage more diversity among medical students. “With recent health reforms seeking to eliminate health care disparities amongst the U.S. population, increasing the number of minority physicians is important to ensure a workforce more reflective of the general population,” the report stated. Health care facilities that can attract a diverse physician population will be best able to deliver services.
Tuition assistance programs are a business investment, and the best way to make sure this investment yields the best return is to support it completely. The College Board estimates students can spend an average of $1,200 a year on textbooks and other course supplies. This creates a significant barrier for many.
Tuition is already a major expense; if students have other barriers to performing their best in class, the investment won’t yield top return. Covering textbook purchases or rentals and other course fees as a complementary benefit gives students a better chance of success.
A recent United States Public Interest Research Group survey showed 65 percent of students didn’t purchase an assigned textbook because it was too expensive, and 94 percent of those students worried their performance in the class would suffer as a result. These ancillary education costs can have an even broader effect — 48 percent of students said the cost of textbooks affected how many and which classes they took each semester.
This directly affects an employer’s return on tuition assistance investment. Employees might not gain essential knowledge and skills, and business leaders might not emerge from school as quickly as they could, bringing their new skills back to work. The books and fees that appear to be “extras” are essential components employers can use to earn the highest return on investment for tuition benefits.
Seek Diversity in All Demographics
The U.S. population is changing rapidly, and the business world and the economy will both benefit when workforce and population demographics match. Businesses that encourage minorities and diverse groups to develop leadership skills will find their tuition benefits act as a valuable tool for growth.
Advancing diverse employees’ skills and talents strengthens the business talent pool. It also increases business potential. Multiple and diverse perspectives bring businesses opportunities for growth, development and strong competition in a diverse marketplace. Therefore, making TAP benefits available to all generations can yield value for employers.
Consider, millennials will be the largest segment of the workforce for years to come. They tend to want transparency in the businesses where they work, and they often seek opportunities for professional development. According to “What Millennials Want from Work, Charted Across the World,” an article published in February 2015 in Harvard Business Review, 40 percent of millennials in North America want managers who empower their employees.
Baby boomers are also an important part of the knowledge base in most businesses. According to Center on Aging and Work at Boston College fact sheet, 69 percent of employers say they will try to keep older workers on as part-time workers or consultants, and 46 percent will encourage older workers to stay as full-time workers. Baby boomers are used to being leaders. Those who stay in the workforce will want and need the opportunity to learn new skills so they can remain at the forefront of business and technology.
Align Career Opportunities With Company Goals
Employers should counsel all employees on which career paths align directly with business needs and goals. The third Manufacturing Institute and Deloitte’s Skills Gap study — “The skills gap in U.S. manufacturing 2015 and beyond” — shows business needs can and should translate to career opportunities for employees. Some 82 percent of surveyed executives indicate they believe the skills gap will affect their ability to handle customer demands, specifically customer service, new product development and any plans for international expansion. Some 78 percent believe it will affect how they implement new technology and whether they can increase productivity.
Further, the report suggests that many people who could fill businesses’ skills gaps are often already employees. To take advantage of existing internal resources, companies can focus on how to close the skills gap by thinking about their employees as a cluster of skills — some in use, others latent.
Career counseling is one option leaders can use to develop those latent employees’ skills. Currently, only 15 percent of employers offer career counseling, according to SHRM’s 2015 Employee Benefits report. Companies that use this strategic practice will see a great return on investment by averting business losses, and benefiting from employees who reach their career potential.
Today the paths to education completion are varied, and tuition assistance programs can expand to cover a lot. Employees may be able to benefit from earning Credit by Exam, taking Prior Learning Assessments or earning a certificate or license.
Expanding TAPs can help businesses respond more quickly to rapid changes in technology and market demands. Covering certificates is one way to achieve this quick response. The Georgetown Center on Workforce and Education’s 2012 report “Certificates: Gateway to Gainful Employment and College Degrees” states that certificates’ value is flexible. They can serve as a stepping stone to additional education and training or provide a learning supplement to workers who already have a college degree. According to the report, one-third of certificate holders also have an associate, bachelor’s or master’s degree. Of these workers, 2 out of 3 earned their certificates first, while 1 in 3 earned a degree first.
Tuition assistance benefits also can cover cross-training to develop skills that aren’t directly related to an employee’s job but that can have a positive, if indirect, effect on the business. For instance, a broader employee knowledge base will result in better problem-solving and communication skills, which many employers need but find difficult to hire externally.
Again, tuition assistance is a proven asset for many employers. According to “The Role of Business in Promoting Educational Attainment: A National Imperative,” a report by the Committee for Economic Development of the Conference Board, “employer-provided tuition assistance programs allow companies to hire better-quality, more-educated and more-productive employees whose increased productivity offsets most of the cost of tuition benefits. Further, employees who receive tuition assistance tend to stay at their companies longer.”
TAP also can help identify current and prospective employees with strong potential for advancement. It doesn’t always mean a degree, even the most basic-skills training — if needed — can create a positive organizational effect. That includes increasing morale and productivity, and reducing waste and on-the-job errors, all of which are boon to any organizations’ bottom line.
Adrienne L. Way is the owner, president and CEO of Edcor Data Services. To comment, email editor@CLOmedia.com.Filed under: StrategyTagged with: tuition assistance