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Making The Case For Corporate Tuition Assistance Programs

POSTED 09/17/2015
By Josh Kraus

More than 40 million Americans carry student loan debt. Students are in dire need of alternative ways to pay for college, and companies offering to foot the bill are poised to reap major returns on their investment.

A tuition assistance program is the very definition of a win-win. It benefits workers by reimbursing part, if not all, of their educational costs.  The employer benefits by reducing turnover, cultivating a stronger workforce, and enhancing brand image.

Wells Fargo, Verizon, and Chrysler are just a few of the many organizations offering such programs. Under Chrysler’s program, all of its 118,000 U.S. dealership employees will be eligible to earn free college tuition. Verizon and Wells Fargo offer their employees up to $8,000 and $5,000 respectively each year in tuition reimbursement.

UPS is another company with a robust tuition assistance program, and Tammy Caldwell, UPS’ director of talent acquisition, is in a unique position to comment on the program’s many internal benefits.

Caldwell started her career at UPS loading and unloading trucks, and financed her college education through UPS’s Tuition Assistance Program.

Recruitment Tool

As the economy continues to improve, companies must increasingly compete for talent. A tuition assistance program like UPS’ can be a key differentiator, and to a job seeker still weighing options, the opportunity to receive a free education might be enough to sway their decision.

“We want to offer something to our employees that helps them and supports UPS at the same time,”  Caldwell said.

As a recruitment tool, tuition assistance programs are especially important when other differentiators lose their significance. Caldwell said in the past few years, many of UPS’ competitors have raised their wages. Job seekers who might have chosen UPS based on higher pay now viewed pay as less of a deciding factor.

The advent of the Affordable Care Act has had a similar effect. UPS has and continues to offer substantial health care benefits to full-time and part-time employees, but with many young job seekers able to stay on their parents’ insurance until age 26, health care is no longer the differentiator it once was.

However, college tuition remains a significant financial burden for many Americans. To job seekers faced with years of potential student loan debt, a tuition assistance program gives a potential employer a substantial edge.

Promoting From Within

Many organizations prioritize internal promotions, and for good reason. Compared to outside hires, internal hires typically perform better, maintain less of a learning curve, and harbor a better understanding of the organization’s culture, values, and inner workings. It’s also less expensive for companies to promote from within, as they save on advertising and orientation costs.

Tuition assistance programs are a major asset to companies that promote from within. Encouraging employees to pursue education cultivates a highly skilled workforce and maintains a strong pool of talent from which to promote.

“UPS is looking at opportunities to promote from within and a college degree gives those an extra tool in their skill set to evaluate,” Caldwell says.

In complex, large-scale enterprises like UPS, internal promotees are valued for their hands-on knowledge of business operations. Much of UPS’ upper management, as well as the current CEO, are beneficiaries of internal promotions, and began at UPS loading and unloading trucks just like Caldwell.

Caldwell says without internal promotions, UPS would not be where it is today. “It’s sometimes hard to teach this business, so when you start at that level, and then are able to work your way up, you know the business.”

Employee Retention

Employee turnover can incur major financial setbacks. The average cost of replacing an employee is 16% of the employee’s annual salary for high-turnover, low-paying jobs, 20% of the employee’s annual salary for mid-range positions, and a staggering 213% of annual salary for highly educated executive positions. To put this in perspective, losing an employee making $60,000 a year costs the company $12,000.

Companies looking to reduce turnover should consider providing tuition assistance, which tempts employees to stay with the company longer as they utilize the benefits.

In UPS’ case, the average employee retention in 2014 was almost three times as long for part-time workers who participated in the tuition assistance program as those who did not.

Due to the increasing skills gap, companies are wrestling with talent shortages, making retention rates all that more important.

“We need to keep people that come with us as long as we can,” Caldwell says, “because theoretically, you eventually run out of people to hire.”

Brand Image

Brand image is how people perceive your brand, and it is a major determinant of success. A consumer’s perception of a brand — What’s their story? What do they stand for? What’s their reputation? — can influence the consumer’s buying behavior. Brands associated with promoting education are generally held in high regard.

“[The tuition assistance program] is an asset to company reputation,” said Dan McMackin, PR manager for UPS. “You saturate the job market with the notion that UPS is a company that cares about education and cares about helping students get through college. … If you reinforce that notion, the fact that you pay for tuition, eventually you become known as an education-focused company, and that’s a huge asset.”

An education-focused reputation can have an impact across a large swath of society. Besides students and younger job seekers, it also plays extremely well with parents.

“Parents think about how much debt they’re going to go into paying for an undergrad degree,” McMackin said. “So they care about companies who might offer assistance with that.”

Building an education-focused reputation yields more concrete advantages as well. Largely because of UPS’ tuition assistance program, many schools across the nation have partnered with the delivery company and encourage their students to work for UPS and apply for the tuition assistance program. Without having to expend further resources, UPS is increasing their applicant pool and spreading goodwill.


While providing a tuition assistance program requires an additional financial investment, the returns far outweigh the initial cost. The strategy attracts, builds, and retains great talent while enhancing public perception, and eases the financial burdens affecting so many of today’s students. Even if a beneficiary of the program decides to leave the company, Caldwell said, at the very least these programs are building great citizens.

Jagged Edge Media JAcom Consultants