What Is Tuition Reimbursement? A Guide to Employer-Paid Education

Workers interested in getting their college degree may be able to get help paying for their tuition from an unexpected source: their employer. According to the 2024 Society for Human Resource Management Employee Benefits Survey, 46% of companies offer some form of tuition assistance — including tuition reimbursement — to eligible employees.

When you qualify for tuition reimbursement, you pay your educational expenses up front and your employer will reimburse you after you've successfully completed the course. If you're interested in using employer-sponsored tuition reimbursement to help pay for your college education, here's what you need to know.

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What is tuition reimbursement?

Tuition reimbursement is an employment benefit that kicks in after a worker has completed an educational course. Dr. Darla Bishop, author of “How To Afford College,” explains that tuition reimbursement requires the employee to pay for the course up front.

“Your employer pays you back after you complete it, usually with the expectation that you must pass with a certain grade,” she says.

Companies offer tuition reimbursement because it can be beneficial for both the employee and the employer. The employee gets to further their education for free or at a reduced cost, and the employer can benefit from the worker's new knowledge and skills. Educational benefits like these can also inspire loyalty among employees and reduce turnover.

How tuition reimbursement differs from scholarships and student loans

Prospective students who don't have access to employer-sponsored tuition assistance may turn to other sources of college funds, such as scholarships or student loans.

Scholarships can be a savvy way to pay for school since there's no limit to the amount of scholarships you can receive, and you don't have to repay them. Scholarships also don't require you to pay up front for your courses or be reimbursed. But like tuition reimbursement, your scholarship may require you to pass your courses with a certain grade level to keep the funds.

Student loans are available to just about anyone, and most do not require up-front payment. While federal student loans require you to make satisfactory academic progress by maintaining good grades, you don't have to maintain a specific grade or even pass your classes for private student loans. However, that means you'll have to repay the student loan even if you don't get the education you borrowed the money for.

See Also: How To Take Out a Student Loan

How does tuition reimbursement work?

To get tuition reimbursement, here are the general steps you must follow:

1. Meet preliminary eligibility criteria: Employers typically require you to have been employed full-time for a certain number of months before enrolling in tuition reimbursement. Additionally, your workplace may only offer reimbursement for courses related to your job or may require pre-approval of your course before you enroll.
2. Pay up front for the course: You will pay out of pocket for the cost of your course.
3. Complete the course: Most tuition reimbursement programs require you to pass the course with a minimum grade to qualify for reimbursement.
4. Receive reimbursement from your employer: Your employer can offer you up to $5,250 in tax-free tuition reimbursement per year. Any tuition reimbursement above that dollar limit will be taxed as wages.
5. Remain employed for a specified time period: “Many companies require you to stay for 1 to 2 years after receiving tuition reimbursement,” Bishop says. “If you leave early, you might have to pay some or all of the money back.”

Benefits of tuition reimbursement programs

There are a number of advantages to tuition reimbursement programs for both the employee and the company. Here are several ways these programs help workers and employers:

Companies that offer tuition reimbursement

A number of companies offer tuition reimbursement programs to their employees. Among these well-known employers are:

• Amazon: Both full- and part-time employees can access Amazon's Career Choice education assistance program, which helps cover everything from career coaching to college tuition to skills training and more.
• Chipotle: Through Chipotle's education assistance program, Guild Education, employees can access 100% tuition coverage for select associate and bachelor's degree programs, and up to $5,250 in annual tuition reimbursement for any other undergraduate or graduate programs.
• Deloitte: The Deloitte Graduate School Assistance Program offers participants an opportunity to return to Deloitte as senior consultants after obtaining a graduate degree. You'll receive full tuition reimbursement after 2 years of employment at Deloitte.
• Home Depot: Both salaried full-time and hourly part-time Home Depot associates can access tuition reimbursement for a college, university, or technical school education.
• Starbucks: If you've worked at Starbucks for at least 6 months and are eligible for the company's group health benefits plan, you can access up to $1,000 in tuition reimbursement.
• Target: Eligible employees may receive up to $5,250 per year in tuition reimbursement for undergraduate programs and up to $10,000 per year for graduate programs through Target's tuition reimbursement program.
• UPS: The UPS Earn & Learn program offers $5,250 in tuition reimbursement per year, with a generous lifetime maximum of $25,000. Additionally, UPS puts no course restrictions on this benefit.
• Walmart: Through the Live Better U program, Walmart and Sam's Club associates may access tuition reimbursement as of their first day of employment. There is also no obligation to stay employed with Walmart after completing your degree.

How to qualify for tuition reimbursement

The specific requirements to qualify for tuition reimbursement will vary from one employer to another. To make sure you're eligible, check your employer's specific policy for tuition reimbursement and talk to your HR department to understand all the eligibility requirements.

You'll need to submit the required documentation both at the onset of the tuition reimbursement program and whenever necessary to maintain your eligibility. You should also ensure you understand what grades you must maintain to receive the reimbursement and if there is a requirement to remain employed by your company after completing your program.

Tuition reimbursement vs. tuition assistance

You may hear the terms tuition assistance and tuition reimbursement used interchangeably, but there's an important distinction.

While tuition reimbursement requires the employee to pay for their education and wait for reimbursement, tuition assistance doesn't require an out-of-pocket payment.

“With tuition assistance, your employer pays the school directly or gives you the funds before the course starts,” Bishop says. “Timing and access to funds are the key differences, and they can really affect whether someone feels able to take advantage of the benefit.”

A student who can't afford to pay for tuition up front might not be able to use a tuition reimbursement program. Tuition assistance may be a better fit for younger employees since they're less likely to have the financial cushion necessary to pay for tuition and wait for reimbursement.