TuitionManager Blog / best-practices

Should You Require Employees Who Leave to Repay Tuition?

An important part of your tuition reimbursement program will be determining whether or not you will require repayment after voluntary termination, and the various parameters you set around that.

But what are the pros and cons of requiring payment vs. not requiring payment -- and how do you know what's right for you?

Protecting Your ROI With a Tuition Repayment Agreement

The reason employers want to create a tuition repayment agreement is to protect their ROI. If employees are participating in tuition reimbursement programs and then leaving immediately after, the costs of paying for these programs will greatly outweigh the benefits.

But with a tuition repayment agreement in place, employees will be deterred from needlessly leaving their jobs, and it will help protect your company from applicants/employees only interested in free schooling and from those with zero to no interest in growth within your organization.

Parameters for Repayment

Jason Baum, Co-Founder at HostedHR, recommends employers require repayment according to the following terms:

"Typically companies will want to require repayment if an employee leaves the company within two years of receiving tuition assistance. Based on managing a wide range of tuition assistance programs, we recommend to require 100% repayment if an employee leaves within one year, and require 50% repayment within two years. The purpose of repayment should be to protect your investment and eliminate fraud - not to force unhappy employees to stay in a job they hate, as no one will be productive in that situation."

However, Baum also suggests another option, which is to create an exceptions policy that allows employees to fill out a form that will go through a tuition/finance oversight committee who will determine if repayment will be required.

It is suggested that HR not only requires a formal paperwork process in this instance, but also an in-person meeting with each employee. This will help to determine if the employee has a valid reason for leaving before their two years are up and if they will be exempt from repayment under your exceptions policy. The number of employees that qualify for this should be limited since the policy is designed for exceptions, so the amount of additional work associated with administering this should be minimal.

Why You Should Shift Your Focus

It's understandable to be concerned that employees might take advantage of your tuition assistance program, but it might benefit you more in the long run to be concerned about something else: creating the type of company employees don't want to leave.

If you shift your focus to creating a company culture that is more conducive to what your employees need and want (both professionally and personally) you may find that you're retaining the majority of employees who've completed tuition assistance.

Consider the following:

• Is their room for growth in all positions within your company?
• Are quarterly or yearly reviews provided to assess employees for not only raises/promotions but to ensure they're happy and growing in their current roles?
• Are anonymous surveys distributed on a regular basis to allow employees the ability to provide feedback on management/company culture in a safe and comfortable manner?
• Do you offer a competitive benefits package that includes medical, vision/dental, life insurance, 401(k), paid time off, sick days, parental leave, stock options, etc.?
• Do you offer additional benefits, like healthcare stipends, phone reimbursement, bonuses, gas/commute/parking reimbursement, etc.?

Consider the areas in which your company could improve to help create a workplace that not only fosters growth, but job satisfaction - both of which can lead to increased company loyalty.

For a look at the most commonly offered benefits (and the least common), take a look at this survey, conducted by the Society for Human Resource Management to see how your company stacks up.

Consider Being a Trailblazer

While smaller businesses will need to have a tuition repayment agreement in place, those with larger budgets have another option available to them, which is to not stipulate repayment whatsoever.

The reason a company would consider this option is to attract better job applicants - and to retain the best talent currently employed. The Society for Human Resource Management says, "Tuition reimbursement programs can be a key benefit in recruiting, developing, and retaining a competitive workforce," but to go one step further and not require repayment sends a strong message to employees: that your company is so confident in its ability to keep them happy that you don’t feel the need to lock them into a contract.

Brett Relander, founder of Launch & Hustle says, "When you treat your employees well, the best and brightest want to work at your company and they are more likely to stick around. If you're keeping them happy and challenged, why would they look for work anywhere else?"

Determining What's Right for Your Company (and Budget)

While Relander makes a great point, not every company can skip a repayment agreement and/or offer extravagant benefits and perks to attract the best talent available. But the one thing all companies can do is treat employees incredibly well, whether in positive reinforcement (which costs nothing but time) or through competitive benefits like tuition assistance. Still, if you are able to afford it, letting applicants and employees know that repayment of tuition assistance won’t be mandatory can speak volumes.

As Diane Bergeron, an assistant professor at Case Western's Weatherhead School of Management, says, "The more [employees] feel they can leave, the more likely they are to stay."