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Employer-provided education assistance tax credits extended

Michelle Hicks

Michelle Hicks

When the Tax Relief bill was signed into law on Dec. 17, it extended a program that is highly valued by employees and employers alike: employer-provided education assistance tax credits. This allows employers to provide up to $5,250 a year in tax-free educational assistance for graduate, undergraduate and certificate training.

In a knowledge-based economy, the tax credit encourages employees to continue to develop their skills and competencies and encourages employers to support those efforts.

Many companies find value in such programs when they are aligned to performance management and career development. If an employer can create a line of sight for the employee between embarking on a degree or advanced degree program and achieving the company’s business goals, it can enhance an employee’s performance in key areas important to business success.

Using HR professionals as an example, HR transformation efforts over the last several years have resulted in outsourcing many administrative functions and requiring the development of a more business-oriented, strategic relationship between HR professionals and company leadership. Competencies such as understanding how to read a balance sheet or project management skills needed to be enhanced among many HR pros.

Education assistance programs enabled companies to retain talented and loyal HR staff who needed to enhance their skills to meet these new expectations.

One of the greatest opportunities for companies investing in education assistance programs is to monitor its return on investment. The Institute for Corporate Productivity found that although 81 percent of the organizations it surveyed offer such programs, only 5 percent actually tracks the program’s ROI.

The CLC acknowledges, “The return on investment of educational programs is nearly impossible to measure.” However, that is no excuse for failing to monitor basic participation information and to evaluate the impact of education assistance programs on employee motivation, discretionary effort and productivity. All three of these factors contribute to a stronger workforce.

Some common education assistance tracking metrics include retention rates, graduation rates and professional advancement within the organization.

A common fear of company executives is that education assistance programs are merely training their competitor’s leaders because once employees acquire a degree – especially a graduate degree – they are more highly sought after. Smart companies are addressing this concern with proactive performance management programs in association with education assistance programs.

Examples of this approach include aligning education assistance with career paths by helping employees understand the skills and competencies required for desired jobs and then enrolling in degree programs to acquire those skills; providing career counseling, encouragement and support for employees who are enrolled; advising on school or program selection; rewarding or at least recognizing employees upon program completion or receiving a degree; and tracking employees who pursue graduate degrees and enrolling them in company leadership development programs when they are finished.

Employee assistance programs offer many rewards for both employers and employees. With the tax credit now extended, it should encourage employers with such programs to continue them and employers not currently participating to consider this benefit for their workers.

Michelle Hicks is a communications consultant with Buck Consultants. Contact her at michelle.hicks@buckconsultants.com.

About Michelle Hicks


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