A tuition reimbursement program (TAP) is one in which a company pays for a portion or all of an employee’s tuition. Because the company wants to ensure that it is making a sound and sensible investment in an employee’s education, there are usually some conditions attached to the program. Large companies and government agencies may offer such programs, and a company that does not have a formal tuition reimbursement program may agree to help an employee by special arrangement or by providing scholarships to deserving employees.
When a company offers a tuition reimbursement program, it wants to encourage employees to further their education. Some companies limit the types of education they will pay for, expecting employees to take training and classes relevant to the company’s work or classes that can lead to a higher position within the company. For example, a company might pay for someone to get an MBA in order to keep them on staff and provide them with opportunities for advancement.
Other businesses may believe that education is enriching in general, and they may offer tuition reimbursement for any reasonable academic endeavor. These workplaces may believe that having an educated workforce is valuable and important, and that with more educated employees, they will be able to provide better service. Companies may also pay for language training in order to provide bilingual services or training on specific types of equipment in order to add new skills to the workplace.
Employees who are enrolled in a tuition reimbursement program are typically required to maintain a certain grade point average and are not permitted to drop out. They will be expected to repay the company if they fail to meet these standards, and they may also be required to pay if they quit working while school is in session or shortly after school ends.
Some of the money given out as part of a tuition reimbursement program is tax-free. In the United States, for example, up to $5,250 US Dollars (USD) are tax-free. Some companies cap their contributions at the taxable limit, while others will pay more, with employees aware that any funds over the limit will be subject to taxation. The tax-free status of funds received through a tuition reimbursement program is intended to serve as an incentive for both employees and businesses interested in participating.