One of the most moving commercials on television right now is for McDonald's. It's the one where a young worker brings in a letter, which his manager snatches and reads aloud to the staff. When he gets to the words "we are pleased...", everyone bursts into applause. He's going to college, and McDonald's is helping him through its corporate educational grants.
It's a feel-good moment. And you don't have to be a multibillion-dollar global powerhouse to make that moment happen for a high-potential employee on your own staff. Even small businesses can give workers the same leg up in life. And it doesn't have to break the budget.
Best of all, helping a team member's educational dreams come true can forge a bond that keeps that great employee on your team for the long haul. It's all about retaining talent.
Here are five proven strategies, ranked in order of expected cost to the employer.
1. Tuition Reimbursement, on the cheap:
The most popular assistance program is Section 127 of the U.S. tax code. This program lets employers of any size offer tuition reimbursement to employees and write the grant off their business taxes. The most that one employee can receive in a year is $5,250, but many employers offer lower amounts as a way to help prospective students stretch their tuition dollar. Small business owners can even use this Qualified Educational Assistance Plan to help their own children attend college, so long as the child is a legitimate employee and the same benefit is offered to all other employees. The grant is also tax-free to the recipient.
A Section 127 plan must:
- be a written plan established exclusively for employees;
- not discriminate in favor of company officers, owners, or highly compensated employees; provide employees with all pertinent details regarding the availability and terms of the program, including eligibility requirements, covered expenses, and reimbursement procedures;
- cover only payment for educational expenses such as tuition, fees, books, supplies and equipment, but not meals, lodging, or transportation; and
- preclude coverage for sports, games, or hobbies, unless those activities are directly related to the company's business or are a required part of the degree program.
Forbes magazine calls programs that help employees pay off their student loans the “hottest employee benefit of 2017,” especially for millennials. CNBC estimates that 44 million Americans are carrying a total $1.34 trillion - that's trillion with a “t” - of student loan debt. It's easy to see how help with paying that debt would be a powerful draw. In fact, a survey cited by CNBC found that 80 percent of the people surveyed, mostly millennials, would like to work for a company that helps ease that burden.
Only 3 percent of companies now offer this benefit, but more employers are looking at it - especially small companies, where decision-making is faster and recruiting is highly competitive. The assistance offered can be small - $50 to $100 a month - but that makes a difference, since the average student loan re-payment is $300 a month. Gradifi, a student loan consulting firm, has a tool to help employers analyze the impact such assistance would have on employees.
3. Collecting and Compiling Information:
Assistance for going to and paying for college can take less formal forms. Even just creating and maintaining a library of brochures and offering help with prepping for tests like the SAT and ACT, or even the LSATs and GREs, is crucial to getting your workers fired up and prepared to continue their education.
4. Writing recommendations:
If your employees have taken the first steps and filled out their applications, nothing has more impact in the admissions process than recommendations. Especially for employees who've been out of school for a while, a glowing recommendation from an employer may be the deciding factor between yes and no. Keeping up with the ambitions and dreams of employees is a lot easier at a small company than a giant corporation. And nothing keeps stellar employees working hard better than knowing that their employer cares.
Similarly, small business owners know how to network for themselves. They are members of local Chambers of Commerce, and they go to social events where they meet other prominent people. This is the time when a little networking about educational opportunities, from apprenticeships to advanced degree programs, can make a big difference. Also, asking other small business owners what they are doing may turn up truly inventive programs that are perfect for your employees.
So, to sum up, the reality of business today is that if a company, even a small one, doesn't offer tuition or other educational assistance, its competitors might. Without it, your best, most motivated employees may quit and go where they can get it. And finally, if simple gratitude doesn't guarantee they'll stay with you, a contract might. Some companies ask employees to sign an agreement to stay with the company for a set period of time during and after the educational program the company helps finance.