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How to benefit from employer tuition assistance

March 22,2012 by: Dallas Browne

An employer tuition assistance program is provided by the employer for the financing the education of the employees. The tuition assistance program from employer is provided under certain clauses that the employee is supposed to adhere by, in order to receive the financial assistance for furthering the education. Such programs are particularly chosen by employers who want their employees to further their education, which will benefit the organization, eventually. For instance, an employer may provide financial assistance to an employee pursuing an MBA degree, as the degree is sure to benefit both of them, until the contract period expires.

The terms and conditions of the tuition assistance program are decided between the employee and the employer, and the employee would have to ensure that the educational fund provided by the employer is in the right use of learning futuristic business trends and apply the same to the work after the education is completed. This way, the employee can positively contribute to both his career growth and also to the growth of the company. Positive contribution is the keyword that decides how the benefit of the assistance program is distributed to the employee. It becomes the responsibility of the employee to provide new and creative inputs to his work and drive the company towards growth.

There is a limit however on the Employer Tuition assistance. According to the legal provisions of the section 127 of the internal revenue code, the employer can only provide up to $5,250 for education assistance program every year, which is considered a tax free investment for the employer. This educational assistance is applicable to both undergraduate and graduate students, the inclusion of the graduation education being from the Economic Growth and Tax Relief Reconciliation Act or EGTRRA. According to these acts, precise provisions decide the extent of educational assistance provided by the employer. For instance, the expenditure includes the cost incurred in paying the tuition fees, the books, supplies and other educational equipment. Travel, lodging and meals expenditure is not included in the assistance program. This program is exclusively for education that is related to furthering the business of the employer and vocational courses like sports and hobbies are not included in the education program, unless they contribute to further growth of business of the employer.

The $5,250 limit is a combined limit so the employee pursuing the MBA or MBA like education cannot obtain more of the reimbursement by contribution from multiple employers. Most important criteria of such Education Assistance Program is that the employer may require the employee to study a certain course and remain employed with the employer for a certain duration after the course is completed. The Education assistance program can be understood as a paid training from the employer where the educational expenses and certain duration of lifetime are purchased by the employer to have the employee employed with the employer. If you are already pursuing a course with your employer’s funding, you will have to make sure that after the completion of the course you are positively contributing to the growth of the company, in a good meaning way.


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