The ultimate tuition reimbursement guide

The employee skill shortage scourge is on the rise: 87% of CEOs reported that their employees lacked certain skills, and the COVID-19 pandemic only increased that gap. T

hat means organizations already understand the importance of supporting ongoing education for their workers — and many are offering tuition reimbursement as a long-term investment in their workforce.

This perk is often part of a benefits package that includes health care, retirement plans, and staff discounts.

If the company offers tuition assistance, eligible employees can get reimbursed for tuition costs. This benefit can help you pay for college degrees and certificate programs from accredited institutions.

Examples of companies that offer tuition reimbursement include Chipotle, Walmart, Starbucks, The Home Depot, and McDonald’s.

Educational benefits can vary between companies, and you may be unsure about what to expect. So we’ve put together this comprehensive guide for you to make things easier.

In it, we cover requirements, types of reimbursement, FAQs, and how to ask your employer for this type of financial assistance. Plus, we’ll compare employers side by side.

What is tuition reimbursement?

Tuition reimbursement is an employee benefit where your employer offers to pay for part of your education expenses — mainly college tuition.

The price of education can be high. For example, at a private college or university, the average cost of tuition is $38,070 per year. For public colleges, the average cost is between $10,740 and $27,560, depending on where you live.

When you work for a company with an education assistance program, you don’t have to pay for it all yourself.

If you’re eligible, your employer will reimburse you for tuition costs. They’ll usually have a cap on their repayments, so you may not receive the full amount back.

But you’ll also need to meet their conditions.

For example, your employer may repay you after you get each course credit. Or you may have to wait until you’ve completed the entire degree. Your employer may expect your education to be job-related, so your eligibility may depend on the major.

Some employers cover the cost of books and other immediate expenses.

Companies offer tuition reimbursement to improve retention rates and boost the skills of their workers.

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It’s one of the most popular and impactful benefits an employer can offer.

Do you have to pay back tuition reimbursement?

If your employer does agree to help you pay for tuition, you’ll need to sign a contract. The details will depend on the company’s policy, and you should always read the fine print.

There may be a clause in your contract that ties your reimbursement to your employment. For example, if you leave your job within a year of completing your degree program, you may have to pay the money back.

So before you get saddled with the bill, make sure you’re happy with your role and agree to the terms before accepting any financial help.

Plus, tuition reimbursement can be taxable income. Any amount over $5,250 from your employer for educational benefits will be counted as taxable income. You’ll need to declare this to the IRS.

However, if the educational expenses are a working condition and a reasonable employee business expense, you can declare them as fringe benefits. You don’t need to pay taxes on fringe benefits. If you’re unsure, it’s best to check with an accountant.

Some employees pay a small fee each pay cycle that helps cover tuition reimbursement and other benefits.

What are the minimum requirements for tuition reimbursement?

The rules will depend on the company, but you usually need to be a full-time or part-time employee. There’ll be a minimum employment period, such as three, six, or twelve months.

Most employers expect you to be committed to the company. Your educational goals will usually need to align with their values. Popular options include business, finance, and marketing degrees.

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And you’ll need to continue working there for a set period of time.

If you already have a degree, you might not be eligible for further study.

There may be a list of approved educational institutions and courses that you can choose from. For example, Chipotle has 30 degrees from top-ranked universities ​​on its approved list. Those who want to study in an undergraduate program may also have access to a federal grant.

If your current employer has strict requirements or doesn’t offer a tuition support program, check out this list of employers that offer benefits even to hourly workers. We will also include a short list later in this article.

What types of courses are included?

The types of eligible courses vary between employers and industries. For example, some employers will support you in completing your GED or improving your English skills.

Other employers offer tuition reimbursement programs for undergraduate degrees and graduate degrees. For example, you can complete a bachelor’s degree or master’s degree, and your employer will reimburse a portion of your tuition fees.

There are a number of employers that cover the entire cost of tuition. However, you’ll need to study for an approved degree through an education partner. This may be a university or a college.

There may also be opportunities for other short courses and job certifications. And if you work in a skilled industry, there are initiatives for apprentices, including tuition reimbursement and on-site training.

Some companies will even help you pay for pre-existing student loans.

You can speak to the human resources department for more information about what your employer has to offer.

How to ask your employer for tuition reimbursement

If you’re interested in higher education and your employer has a tuition support program, here’s how to ask.

1. Understand your employer’s tuition reimbursement policy

Not all tuition assistance programs are the same. Before you approach your employer or HR manager, understand what you’re asking for.

Here are a few questions to consider:

• Do you work enough hours per week?

• Have you worked at the company for long enough?

• Does your course meet the requirements and align with your job?

• Do you need to choose a college from an approved list?

• Is there a minimum grade requirement?

• Are you prepared to pay any upfront costs?

• If you leave the company, will you need to pay back your course fees?

For example, McDonald’s also includes a work performance requirement in their Archways to Opportunity” education assistance program.

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You should make sure you have the energy and time to still perform at work. Otherwise, you might end up paying for tuition alone.

This employee benefit comes with conditions, so it’s important to have all the information before you take the next step.

2. Think about your options

Studying is a long-term commitment, and it can be a juggling act if you’re already working full-time.

Do you have the time you need to take on such a busy schedule? If you’re serious about continuing your education, do your research. Compare different study options and educational institutions. Think about whether you want to study on-campus or online.

And you should look at the coursework — maybe you can transfer credits from a previous course.

Try to choose a course that aligns with your career goals and also benefits your employer. That increases your chances of getting tuition reimbursement.

Remember, you may have to work less to make time to study. Your short-term income can take a hit, so course length is also something worth considering.

3. Put together a plan

Once you’ve decided what you want to study, it’s time to share your goals with your employer. The company will have a process to follow. For example, they may want you to schedule a meeting with the human resources manager or fill out an online application.

If you have a meeting, don’t walk in without planning what to say. You should be clear about what you want to study, the educational institution, and the time commitment.

As you choose between studying part-time or full-time, you should know that a survey of full-time versus part-time students showed that, in overall satisfaction, feasibility, and accessibility, both groups felt relatively the same.

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And you should have some key points ready to explain how your study will benefit the company. For example, if you want to study management, you could contribute more in an assistant manager position.

When you have a clear plan, it shows that you’re serious about the mutually beneficial commitment.

If you’re feeling nervous, it can be helpful to go over the key points with a friend before the meeting.

4. Research costs

The cost of courses can vary. And so can the amount your employer will cover. Before you enroll, make sure you can pay the difference.

Depending on your situation, government assistance may be available to boost your tuition reimbursement.

Don’t forget — additional costs often aren’t covered. Think books, stationery, accommodation, and transport.

Consider whether it’s a course with opportunities for career progression. The short-term investment is worth it for a better future.

5. Sign a contract

If your employer agrees to reimburse you for tuition costs, you’ll need to sign a contract.

When you sign, you’ll be committing to the company and your career. Check the contract for any clauses and flag any issues before signing.

For example, if the company expects you to stay with them for five years, this may not be possible.

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You should also check for financial terms and conditions. Find out how long it’ll take to be reimbursed and how they’ll pay you. Will they add the amount to your paycheck, or will they pay you a lump sum?

And you should be comfortable with any performance conditions. For example, do you have to maintain a grade point average?

If you fail the course or quit your job, do you need to repay the money? Any of these finer details will be outlined in the contract.

What if your employer says no to tuition reimbursement?

Just because you ask for tuition assistance doesn’t mean your employer will say yes. They could say no for any number of reasons.

For example, you might not meet their minimum eligibility requirements, or the course might not be relevant to your role.

Or the company might have a cap on how many employees they support each year.

If your employer says no, try to find out why. Don’t be dissuaded because it could be a simple fix, such as changing colleges or waiting a few months.

There will be opportunities to reapply for tuition reimbursement in the future.

Which companies offer tuition reimbursement?

Employers across the U.S. offer tuition reimbursement plans. The requirements and inclusions can vary depending on where you work and your job type.

Not sure where to start? Here are seven companies that offer this perk:

1. Amazon

Amazon is a leading online retailer. It has an investment target of $1.2 billion for employee education expenses by 2025.

Amazon workers in the U.S. can get all their educational costs covered. The company’s Career Choice program takes care of all eligible tuition expenses, including fees and school supplies.

There are different study options. For example, you can get your fees covered for an associate’s degree or bachelor’s degree. Or you can get support for your GED or an English course.

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Amazon pays all eligible tuition expenses upfront. You won’t have to find the money because the employer will take care of everything.

If you meet the minimum requirements, you can get this perk after just 90 days of employment.

Learn more about Amazon employee benefits.

2. The Home Depot

The Home Depot is an American retailer that specializes in home improvement products. The company’s educational assistance program is available for approved associate, bachelor’s, master’s, and doctoral degrees. Some technical degrees are also covered.

Full-time employees on a salary get the biggest benefit, with a reimbursement of up to $5,000 per year.

Full-time employees on an hourly wage can get up to $3,000, while part-time workers on an hourly wage can get up to $1,500 per year. Only 50% of your tuition costs will be reimbursed, up to the maximum amount.

Eligibility begins on your first day at work but won’t cover any courses from before your employment start date.

Learn more about Home Depot employee benefits.

3. Chipotle

Chipotle is a popular fast food chain of restaurants that sell Mexican cuisine.

This company has generous tuition benefits designed to help employees pursue their professional goals.

There are different options for hourly workers. You can either take an approved course and receive a benefit of up to $5,250 each year or, if you haven’t finished high school, Chipotle will pay for your GED.

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For those wanting to enroll in higher education, Chipotle offers a range of debt-free degrees.

You can get 100% of your course fees covered through the company’s Debt-Free Degree program. Most of the options are online programs, so you can study at your own pace.

Learn more Chipotle employee benefits.

4. McDonald’s

McDonald’s is one of the biggest fast-food chains in the world. In the U.S., employees can take advantage of the company’s Archways to Opportunity program.

Those in full-time management roles can get up to $3,000 in tuition assistance per year. Other full-time employees may also receive this perk.

For part-time workers and restaurant crew members, the limit is $2,500 per year.

Keep in mind that the options can depend on the franchise owner and whether they’re participating in the program. You’ll have to meet the minimum number of days and hours of employment to be eligible.

Any courses need to be from an approved school, such as a college or university.

Learn more about McDonald’s employee benefits.

5. UPS

United Parcel Service (UPS), a multinational company that receives and ships parcels, has a tuition reimbursement benefit called Earn and Learn. 140,000 team members have already signed up for this program since 1999.

The exact benefits can vary depending on where you work, your hours, and your job title.

For example, part-time package handlers are eligible from the first day of work, and you can choose to enroll in any subject. This means you can follow a career path that you’re passionate about.

Earn and Learn gives up to $5,250 per year toward tuition expenses. However, you’ll get a maximum of $25,000 over your lifetime.

Learn more about UPS employee benefits.

6. Walmart

Walmart is a one-stop retail chain that sells everything from groceries to electronics. Its employee tuition reimbursement program is called Live Better U (LBU).

Walmart pays the full amount for college tuition and books for employees who meet the minimum requirements. LBU is open to both full-time and part-time associates.

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You’ll need to choose an educational institution from the approved list. Potential areas of study include business, supply chain management, and cybersecurity. Walmart wants to upskill its workforce, so the options are all job-related courses.

The retailer also offers its employees professional development and leadership pathways.

Learn more about Walmart employee benefits.

7. Starbucks

Starbucks is the biggest coffee chain in the world.

U.S. employees can access tuition benefits if they study online at Arizona State University. This perk is available for part-time and full-time employees.

When you study for a bachelor’s degree, your tuition fees will be covered in full. There are 100 different programs on the approved undergraduate degree list. Potential fields of study include business, finance, criminal justice, education, and media.

Starbucks’ tuition reimbursement program doesn’t cover extras such as textbooks, computers, or stationery. Additionally, you might not be eligible for it if you already have a bachelor’s degree.

Learn more Starbucks employee benefits.

Tuition reimbursement FAQs

Still have questions? Keep reading because we’re about to answer some frequently asked questions about tuition reimbursement:

What happens if I fail the course?

When you study, it doesn’t always go to plan. If you accept tuition assistance and fail or withdraw from your course, it can impact your assistance.

Your contract with your employer may include clauses that require you to pass. If you fail, you may have to repay a portion of the employer’s contributions.

If you’re having difficulty with your course, reach out for help. Don’t be afraid to discuss your situation with your school or college. You may even be able to get an extension.

What if I already have financial assistance?

It depends on your situation and company, but in most cases, you’ll also be able to apply for tuition support from your company. It depends on the type and level of financial aid you already receive.

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But you’ll need to declare your employer’s benefit as it can affect the amount of financial aid you’ll get. Most employers will only give you $5,250 per year because anything over that isn’t tax deductible.

As an example, Starbucks has the $5,250 yearly limit. While that amount doesn’t cover textbooks, your financial aid may fill the gap.

Do I have to stay with the company long-term?

Reimbursement contracts often have a clause stating you have to stay with the company for a minimum period.

Your employer is investing in your skills, and they expect you to continue working for them. It’s not uncommon for employers to ask you to stay with the company for one or two years after completing your course. Anything longer than two years is unreasonable.

If you leave the company early, you may have to pay back your tuition support in full. You should consider your long-term goals before agreeing.

What if I decide to change courses?

Employees who are selected to participate in a company’s tuition reimbursement program will have their courses approved by human resources.

If you change your mind and want to switch to a different career field, you should speak to your employer.

Before you decide, consider if the new course still meets the requirements for reimbursement. Consider whether the degree is still beneficial to the company, if it’s similar or something entirely different. Furthermore, colleges and universities have their own considerations about whether to accept transfer credits:

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Depending on the course structure, you may be credited for work that you’ve already completed.

Can I study online and get tuition reimbursement?

The rules can differ depending on your employer. In some roles, you’ll have to choose from an approved list of colleges. Other employers will give you more flexibility.

The good news is online classes are becoming more common. Universities and colleges often have online degrees that you can work on in your own time. Business owners that offer tuition reimbursement are usually comfortable with virtual learning.

No two tuition benefit programs are the same. You should always discuss your situation with your employer before enrolling in a course.

Tuition reimbursement can help fund a better career

Tuition reimbursement is one of the biggest perks an employer can offer you. If you’re eligible, you can pay the upfront tuition costs, and your employer will pay you back.

There’s usually a cap on the amount they’ll contribute. And there are specific conditions you’ll need to meet. For example, you may need to stay with the company for at least a year after completing your degree.

If you want to apply for tuition reimbursement, you must understand your employer’s policy. Once you’ve confirmed your eligibility, you can think about your options and put together a plan.

You should present your plan to your employer, highlighting any benefits they may receive. Remember to research costs and read the fine print before you sign the dotted line.

Examples of companies that have a tuition reimbursement policy include McDonald’s, Chipotle, Amazon, UPS, The Home Depot, Walmart, and Starbucks.

Don’t currently have a job that offers tuition reimbursement? Browse our job board for jobs with great benefits. Or you can find more articles like this in our Getting Hire resource center.