A New Tuition Reimbursement Model for Companies in the United States

What will the new tuition reimbursement model look like for companies in the United States in 2020?

In a previous blog, I suggested that the current tuition reimbursement model for adult learners in colleges and universities was ineffective and inefficient.  I also offered an outline of a model that companies and communities might adopt.  Posted below is a more detailed description of those ideas that will constitute the new model.

  1. Companies will identify formal learning certificates, degree-building, and degree programs from local colleges and universities that will be demonstrably in line with the company’s learning needs.  This is a focus that will be developed for groups of students from companies; not individual students.  The intent will be to use the forum for formal learning to move employees through the learning experience together.  The value of the approach will be to create both consistent learning and improved work-place relationships among participants.
  2. Classrooms move from the university to the company location.  In order to gain acceptance, companies will bring college learning to their location(s).  It will be one of the main ingredients in negotiating lower, flat-rate, per-course tuition rates.  It will also be a valuable marketing tool to get your employees involved in formal learning initiatives.
  3. Companies will re-allocate a percentage of tuition dollars toward budgeted, learning objectives focused on company needs.  Tuition reimbursement as a  tool to keep good employees is probably past its prime for that purpose.  Organizations will move to re-allocate a substantial percentage of their budgeted tuition dollars to learning that the company needs to grow.  In some cases, companies will replace tuition reimbursement dollars with budgeted dollars.  For example, budgeting $100,000 for 12 mobile application programmers or 18 graduate-level, trained project managers.  This budget approach will be particularly valuable for new technology and technology application skills that can quickly impact a company.
  4. Companies will negotiate with local colleges and universities for volume-based, flat-rate tuition pricing per course (not per employee) for employee learning cohorts.  Gone will be the days when companies paid tuition list price or ‘list-less’ discounted tuition pricing.  These organizations will negotiate tuition costs based on degrees and/or learning outcomes.
  5. Companies will negotiate for increased control of instructor quality and consistency in the formal learning process.  Today’s adjunct-heavy business model has increased the risk of students getting average or  sub-standard instructors.   Companies will increase the quality control on faculty by insisting on top-tier professors from local colleges and universities for their tuition dollars — and their employees.
  6. Employees in these cohorts will learn with their workplace colleagues — creating new skills for a company while creating and growing a learning culture.  The traditional model of individual students learning with tuition dollars from their employers will start to go away in many cases.  Companies will start to leverage groups or cohorts of students to drive content, quality, and cost.
  7. Companies will internally market the learning programs that provide the biggest return on invested tuition dollars.  Instead of offering a generic benefit like tuition reimbursement, companies will create incentives for employees to learn the skills and content needed for the company to grow.
  8. Local colleges and universities will create incremental revenue sources with limited direct costs.  The previously listed components of  a new tuition reimbursement model will be possible because local colleges and universities will see revenue opportunities that are not currently available to them.  The proposed model will offer college-credit courses at locations other than the valuable classrooms in a college.  The local colleges and universities will be able to limit their direct and incremental costs by designing agreements that allocate marketing and support costs to companies and community organizations.

I am interested in your evaluation of these 8 components of a new tuition reimbursement model for your company.

Comment below.

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4 College Cohort Programs Your Organization Can Start First with Local Colleges and Universities

I have listed 4  cohort programs in order of priority for your organization to consider in developing and implementing formal learning with local colleges our universities.  Of course, each organization will adapt to its business needs first.  But, these 4 are programs that can be successful and help build your learning culture.

1.  Degree building:  Adults tend to want successes in smaller increments than 120 – credit bachelor degrees.  Break bachelor -or even associate degree cohorts into smaller degree-building sets of courses.  You might have one set of courses for quantitative subjects (math, science).  You might have a second for basic communication skills ( writing and speaking).  Look at wrapping up the degree-building program with sets of courses in the degree subject matter ( science, business, etc.).  Make sure to celebrate the successful completion of each degree-building set of courses with your employees.

2.   Graduate business:  Depending on your organization’s needs, look to establish an MBA – or graduate degree programs in project management, leadership, or management.  Remember, one of the main values of cohort learning is the business relationships and ideas that develop in the context of academic learning.  These graduate level programs will provide your organization with formal learning at both graduate and undergraduate degree levels.

3.  Specialty certificates:  A reasonable argument can be made that workplace cohorts of college students focusing on skill-specific courses will gain more value at a lower cost.  If you business is customer-service heavy, develop a company-specific certificate that focuses on those skill sets. Ideally, make the courses offered by a college or university ones that can build toward a degree.  If you are uncomfortable with your organization’s overall analytical skills, work with an academic partner to create a 3-5 course certificate program with math, statistics, and logic courses.

4.  College preparation for 1st generation adult college students:  Many companies and communities will have employees not currently ready for their first, official college courses.  Develop a working relationship with one or more local colleges or universities to develop   college preparation courses.  These may not be for college credit, but they will increase the basic learning for your employees and prepare some for progress toward a useful degree for your company or community.

Finally,  one of the key components to a successful academic partnership with local colleges and universities is to negotiate flat rate pricing per class.

Should Companies Only Use Local Colleges and Universities?

In the last decade or so higher education has seen a substantial increase in the number of national, online learning vendors.  I will make the argument that, like politics, higher education for adults is best served locally.

In my experience, one of the most substantive points of value for the college cohorts I created was the work-place relationships established.  The content offered through our academic partnerships was the same as that offered in open enrollment classes at most universities.  However, the value from having employees learn together was obvious to us, but difficult to measure.

Imagine a scenario when you have your members of your organization learning the same college course content term after term.  The class discussions will more likely  focus on how the academic content can be applied to your company or organization.  The cohort of learners can become a focal point for change and growth in your organization.  They are taking the daily tasks and responsibilities of the job and evaluating those items in the context of new learning.

In addition, think about the relationships your company or organization can establish with your local college or university.  The career placement team can help you identify talent, the faculty can become off-line resources for the latest in research and practice that could benefit your organization, and they both come together from an organization that is making your employees better employees.

In a May 2013 report, Gallup suggests that CEOs and other executive leaders of organizations must get to know their local college and university leaders.

Here are 3 reasons to focus on creating academic partnerships and college cohorts with local colleges and universities:  

1.  Keep the talent local.  Whether your company is local, regional, national, or international, your community is best served by those who live there.  The natural incentive to ‘make home better’ is best served by those who live and work in your community.  Both the faculty from the local colleges and universities  — and your employees or members provide talent.  Farming out faculty talent to far off lands can make your local business community weaker.

2.  It creates the opportunity to improve the community.  National college and university brands may provide strong marketing and brand management, but they can’t be everywhere for everybody.  Working with your local higher education providers will provide benefits to the community that cannot be readily matched.

3.  Relationship leverage:  If you think about the first 2 reasons to only use local colleges and universities, it leads to the third reason.  Your business — all business – is based on relationships.  The business intimacy of those local relationships is one that long-distance relationships cannot match with the same degree of success.

Pre-Case study: Degree-Building Cohorts


Degree-Building Cohorts

Note:  This is one, in a series, of pre-case studies that demonstrate how your organization can create learning cohorts.

Executive summary:  This organization was looking for way to improve its employee satisfaction while developing systems and process to ‘grow their own’ future, skilled employees. A business learning unit was formed to provide both internal learning events and external academic partnerships.

Describe the problem:  Employees used their tuition reimbursement benefit, but it was done so at a variety of colleges and universities.  The organization wanted to both increase college degrees while having some leverage on the costs of tuition. The tuition reimbursement benefit was becoming cumbersome and difficult to manage.  Employees were taking courses from a variety of local and national colleges and universities.  There was no way to monitor the quality or comparative cost.

In this particular program, the company wanted to design a set of college courses that would help employees complete the general education courses needed.  It planned on then providing employees with a degree program that would benefit both the employee and the university.

ID Corporate and business strategy:  This organization wanted to create college learning opportunities for all of their employees.  The corporate training unit was tasked with moving that strategy forward.

Major Problems:  Employee interest, internal accounting, classroom space, quality control of faculty,

Details on the implemented solution:  The company identified a local university provider that was willing and able to create a set of college courses that would satisfy the general education requirements for many bachelor degree programs.

The learning unit worked to market the degree-building program to employees. The classes were to be held at the company’s location(s) one night per week in the evenings.  The initial response from employees was modest and included an attrition rate that potentially impacted the viability of the program.

The company negotiated substantial tuition discounts with its university partner.  The partner was able to direct bill the company for tuition for each employee participant.  In addition, the university relied on using the company for program marketing, classroom space, and on-site support.  The university provided the company with dedicated support staff from the university.

Outcome:  The organization was able to slowly grow the program in its first 2-3 years.  Early attrition problems subsided as the employee base started to recognize the opportunity – and a more interested set of employees started enrolling in the program. Subsequently, employee interest peeked to the extent that the company had to double the number of cohort groups it offered.

A single, company-endorsed bachelor completion program and a specialty associate degree program were developed and offered to employees. Both were well received.

Substantial tuition cost savings were documented.

The Current Tuition Reimbursement System in Companies is Ineffective and Inefficient

It is time to look at the traditional employee benefit of tuition reimbursement (tuition assistance).  The current model is ineffective and inefficient.

Tuition reimbursement programs came into use in the middle part of the 20th century and were based on the success of the post WWII GI Bill. In the decades that followed, it became viewed as a standard employee benefit, much like healthcare.  Historically, tuition reimbursement has been used as a competitive benefit.

I would argue that those days are gone and the time has come to move this scattershot approach to formal learning for the employees of companies to the same secondary status that printed textbooks are becoming.

Tuition reimbursement is indeed analogous to the scattered approach of a shotgun shell.  In its current format, it does not provide companies with the directed learning focus that can most effectively move organizations forward.  The collective mind set seems to be that if we throw enough tuition reimbursement dollars out there – our employees will stay and the business will grow because of it.

There are 4 main reasons why the current model of tuition reimbursement is ineffective and inefficient.

  1. Companies usually pay list price for their employee’s tuition costs; thus, a company cannot leverage its buying power to control tuition costs.
  2. Employees are in open enrollment classes in a variety of colleges and universities, making a culture of learning much more difficult to develop with the a la cart consumption of  courses and degrees from a pot pouri of colleges and universities.
  3. The challenges of managing the tuition reimbursement program are cumbersome.  This includes the application process, tuition cost allocating, and collections from non-compliant employees.
  4. Companies cannot reasonably expect to control the quality of their employees’ courses and degrees.  The quality of the content and the quality of the instructor are inconsistent. Today’s adjunct-heavy faculty staffing model by many colleges and universities can increase the risk of lower quality instruction on a company’s tuition reimbursement dollar.

While most companies have general guidelines for the types of classes and degrees covered, programs are generally administered from a transactional, not a strategic, perspective. “We were startled to find that such huge sums of money are allocated to corporate benefits with little or no measurement of impact or effectiveness,” said Josh Bersin, president, Bersin & Associates. “While the intangible, personal value of higher education is clearly very high, we see a tremendous opportunity for companies to more effectively align and manage these dollars toward strategic talent needs.”

“Most tuition assistance programs are institutional and considered to be a standard employee benefit,” said Chris Howard, principal analyst at Bersin & Associates. “Consequently, most companies do not capitalize on the potential to use these dollars to support specific talent management objectives. In fact, 27% of the companies we surveyed do not measure program effectiveness in any way.”

Here is a summary of the 2009 Bersin report on tuition assistance programs.

While many of the respondents to a 2008 SHRM study had access to tuition reimbursement benefits, they were uncertain about how their corporate culture viewed continued learning.  Tuition reimbursement, in its traditional form, has created an inconsistent organizational culture of learning.  Companies would be better off determining their learning needs and engaging their employees directly – not through the buckshot approach of tuition reimbursement.

In most organizations, a small set of employees use their tuition reimbursement benefit to either subsidize or completely pay for their education.  SHRM confirms that surprisingly few employees are taking advantage of tuition reimbursement programs offered by their employers.  They go on to suggest that the fast-paced, over-stressed culture of modern work might contribute to that.

Maybe.  I would suggest that tuition reimbursement – in many organizations – is so scattered that many employees don’t think about it.  After the initial, new employee orientation, tuition reimbursement is rarely marketed.  In my experience, the initiative of single employees is the only marketing of formal learning in organizations.  The benefit is used neither strategically nor tactically.

You will find few academic studies have looked at tuition reimbursement programs. Anecdotally, the primary reasons given by firms as to why they offer tuition reimbursement programs are recruitment and retention.  However, if most organizations offer tuition reimbursement benefits, it is unlikely that there is any sustainable competitive advantage.

From an individual employee’s perspective, there is a tax-advantage value for tuition reimbursement programs.   Up to a cash value of about $5,250, there are usually no taxes against an employee’s income.  Effectively, $5,000-plus dollars of untaxed income.

Finally, it would be wrong to suggest that the current tuition reimbursement model is wrong for everyone.  That is clearly not the case.  Many have used the current model to improve their career opportunities.  However, I offer readers that the exclusive use of the historical model inhibits companies from maximizing the benefit of tuition dollars.

What Could Supplement or Replace Tuition Reimbursement?

Groups of employees in an organization studying the same content would allow both for more controlled learning and better tuition cost control.

What could a new tuition reimbursement model look like for companies in the United States?

  1. Companies start to identify formal learning certificates, degree-building, and degree programs from local colleges and universities that will be in line with the company’s learning needs.
  2. Classrooms move from the university to the company location.
  3. Companies would re-allocate a percentage of tuition dollars toward budgeted, learning objectives focused on company needs.
  4. Companies would negotiate with local colleges and universities for scalable, tuition pricing for employee learning cohorts.
  5. Companies would negotiate for increased control of instructor quality and consistency in the formal learning process.
  6. Employees in these cohorts would learn with their workplace colleagues — creating new skills for a company while creating and growing a learning culture.
  7. Companies would internally market the learning programs that would provide the biggest return on invested tuition dollars.
  8. Local colleges and universities would create incremental revenue sources with limited direct costs.

I will expand on the new model in future blogs.

Here is a list of companies that provide tuition reimbursement to their employees.

Check out my professional profile and connect with me on LinkedIn. 

 Details on implementing a new tuition reimbursement model at collegecohorts.com