Should We Require Employees Who Leave to Repay Tuition?

Dear Feeling Cheated:

It’s important to remember that you don’t have complete control over this situation, in that employees will adjust to your decision in ways you might not like. If you get too cheap—paying only part of the tuition costs, requiring a very long payback period—employees won’t use it. Those with resources will pay for it themselves and then leave immediately after.

Most companies now require that tuition-reimbursement costs be paid back when the employee leaves. At least at the Master of Business Administration level, the requirement has been about two years of subsequent service.

It’s useful to ask what problem you are trying to solve by imposing these restrictions. Employees who attend school while also working full time tend to be highly motivated, so the best workers are likely to be the ones using the benefit. They tend to take courses or degrees that improve their performance, which is exactly what you want, and they are making the bigger investment by doing all the work on their own time. We know that they also tend to stay with employers longer than those who don’t use the programs. It’s a great win for the employer. So do you really want to make it more difficult for your employees to use tuition reimbursement?

If the concern is losing investments in people who leave after getting an education, remember: It was only partially on your dime. Second, the overwhelming reason people leave is they have acquired new skills—but often leave because their employer won’t give them jobs or even tasks that use those skills. That is an aspect firmly within your control.

Contracts that require payback don’t keep people from leaving. But if the employee leaves, thus breaking the contract, his new employer pays off the debt.

SOURCE: Peter Cappelli, Center for Human Resources, Wharton School, University of Pennsylvania, Philadelphia

LEARN MORE: Tuition assistance benefits typically have not been assessed for their bottom-line effect. But some see the programs as vital to employee development and retention.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.