How Does Tuition Reimbursement Work?

Instructor: Matt McClintock
Tuition reimbursement is a great benefit that employers can offer their employees to help pay for their education. Find out how these benefits work and how you can make the best use of them.

Getting Started with Reimbursement

If you're looking to take advantage of your company's tuition reimbursement benefits, then you'll likely need to start by asking someone in the Human Resources department. HR teams are typically responsible for administering reimbursement programs, and they're required to keep information about the programs on hand for employees who might be interested. They'll be able to answer any questions or concerns you have, and, since every reimbursement program has different requirements and parameters, it's a good idea to get a thorough understanding of what your company offers.

How Does It Work?

As you discuss your reimbursement benefits with your HR representative, you'll want to keep a few things in mind about how these programs typically work. First, you'll want to be aware of how much money your company will contribute to your education because the IRS will be taking a look at that come tax season. The IRS currently allows employers to pay up to $5,250 in educational assistance tax-free, but if your company pays you more than that, the excess will be included as part of your income on your W2 form, and you'll be taxed for it. Companies can offer less than $5,250 in assistance, though, and it may depend on the degree or certification that you seek.

You'll also want to find out what academic requirements you'll need to meet and maintain as part of the program. Many companies offer tuition assistance based on a sliding scale related to your GPA. For example, if you maintain 'A' grades in your courses, you would get a full reimbursement for your tuition, but if you earn 'B' or 'C' grades, then you might not get a full repayment. In addition to this, it's important to know when your company will reimburse you. Some employers will repay your costs after you register for your courses, while others might not cover the costs until you've completed a course.

A third aspect to consider is when you might be eligible to receive reimbursement benefits. Companies that offer these benefits also need to protect the investments they make in their employees, and they want to be sure that people won't quit their jobs immediately after they receive a degree or certification. Because of this, there will often be restrictions on how soon you can take advantage of these benefits or how long you'll need to commit to the company. You might see restrictions such as needing to be with the company for 1-3 years or committing to the company for 5 years as part of the benefits program.

These are just some of the common considerations you'll want to discuss with your HR rep before you register for any courses. If you dive into courses and expect your employer to pay the bill, you might find yourself with some unexpected expenses later down the road.

Utilizing Your Benefits

After you've clarified the rules of your company's benefits, you'll want to find the best way that you can put them to use. Many companies will have some restrictions on the type of coursework they'll reimburse. For instance, a hospital may only reimburse you for taking nursing courses or a corporation may only allow you to take business courses. Some companies will cover full programs for undergraduate or graduate degrees at four-year universities, while others might only cover courses you take through online providers.

Once you've selected your education provider, you'll want to keep one more important factor in mind: how you're allowed to spend your tuition assistance payments. While your company can determine how much they'll pay you to assist with your education, you're limited in how you can spend the money. According to the IRS, your assistance benefits can only be used toward tuition fees, books, and supplies necessary for your courses. You cannot use your benefits to help pay for food, housing, transportation, or supplies that you can keep after completing your course, nor can you use them for sports or hobbies unless they directly relate to your company or are required to earn your degree.

Tuition Reimbursement with

A good way to get the most out your tuition reimbursement benefits is to take courses that can earn you college-level credit at multiple institutions. Over 60 courses are recommended by the American Council on Education (ACE), meaning that they are eligible for real college credit accepted at over 2,000 colleges and universities nationwide. These online courses are composed of bite-size video lessons and can be accessed on any device with an internet connection, making it easy for busy professionals to study anytime, anywhere.

For more information on how can assist you with your tuition reimbursement needs, reach out to us at

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