- With college tuition prices skyrocketing, tuition reimbursement and student loan repayment programs are great ways to attract talent
- What a tuition reimbursement can do for you
- What a student loan repayment plan can do for you
- Things to consider before doing either once
- Quote of the lesson from Arthur Ashe
With the ongoing burden that student loan debt has become in our country employee tuition reimbursement and student loan repayment programs are a great way to either increase you education while paying nothing or a fraction of the cost, or reduce your current outstanding loan balance.
Today we continue our series we started last lesson looking at employee benefits that you are missing out on. While they might seem similar tuition reimbursement programs and student loan repayment programs are two different things.
Tuition reimbursement programs work like this: you go to school to further your education and knowledge in a particular subject. After you prove that you passed the class, your employer will pay for some or all of the tuition.
This can be a great way to increase your value in the market place for a lot less than what it would cost you if you did it on your own. It also ties you closer to your employer as they are investing money in not only your future success but the company’s future success as well.
Before you consider going back to school because of tuition reimbursement consider the following things:
- How much does the company cover?-Not all plans are 100% covered. Some are a lot less than that and others are tied to the grade that you get.
- What will be the method you pay?-Your company will reimburse you once you can prove that you passed the course, but it is usually up to you to pay the institution upfront for the class. How will you come up with the money to pay? I would never recommend a student loan but what can you do to come up with the cash up front?
- Is this something you want a degree in?-You can’t just get any old degree that you want. It has to be a degree that your company deems as beneficial to the role you are in. So if you aren’t really excited about what you are doing now, how is a degree or certification going to change that?
- Is there are time period you have to work at the company after the reimbursement?-Your company is going to be investing a lot of money in your pursuit of this degree, and often there is a time period in which you need to stay with the company or you will have to pay back all or a portion of the tuition reimbursement. So do you like the company? Do you plan to be there regardless of whether you get a degree there or not?
- If the tuition is not 100% covered, is this still a good deal for you?-Just because you are getting a tuition discount, it doesn’t necessarily mean it might still be a good deal for you. Again if you don’t want to stay with the company or are thinking about a career change to another field, spending the money and time to get the degree might not yield a proper payoff.
Student Loan Repayment
But what if you already went to school, and got your degree or not, and ended up with any kind of student loans? There are a small but growing number of firms that are offering that are trying to attract employees by offering to repay part of their student loans directly to the student loan servicer.
Now before you get too excited, realize that as of now the amount they are offering to pay is very small, often between $1,000 to $2,000 a year with a lifetime limit. So if you are drowning in student loan debt, working for one of these companies will not take you totally 100% off the hook.
But here are some other things to consider as well:
- This is basically another form of compensation-This just takes the place of some other kind of benefit including momentary compensation, 401(K) contributions, health insurance premiums, etc. In fact any money that they put towards your student loans is actually considered taxable income for you. So if you get an offer of $40,000 with a student loan repayment of up to $2,000 a year, it is the exact equivalent of getting $42,000 from another offer. Except you are guarantee to use the $2,000 towards student loan repayment.
- You still have to pay your minimum payment-The money they pay towards your student loan won’t get you out of making your monthly minimum payment. This is actually a good thing in that it will help to pay your loans off sooner, but it won’t free up any more money in your monthly budget, at least in the short term.
- Lifetime limits-A lot, but not all companies that I researched who offer this benefit, have lifetime maximums on how much you can payoff through this program. Most were around a $10,000 maximum cap. But some companies had no cap, but only paid off about $1,000 max a year. Which means you really can’t count of this program to pay off a significant amount of student loan debt. Only you can do that.
I think that these are a great benefit for employers to offer to their employee’s, however I don’t feel that it is a long term plan to pay off your student loans as mentioned earlier. But I think it can be helpful and we’ll see this becoming more and more popular as many college graduates continue to graduate with large amounts of student loans.
Other resources mentioned in today’s lesson:
- Does it matter what the student loan interest rate is?
- Taming the high cost of college with Brad Baldridge
- Student Loan repayment: The Hottest Employee Benefit of 2017
To send in your questions email me at Jon@JWFinancialCoaching.com
Today’s quote of the lesson is brought to you by Jeff Goins’ new book titled Real Artists Don’t Starve
“When bright young Americans can’t afford college, America pays the price” ~ Arthur Ashe
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