College Costs Soar

July 29, 2007
| By Pete Daly |
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Tuition at many of Michigan's state colleges and universities surged upward this summer, making the cost of a college degree more expensive — which would seem to increase the value of the tuition reimbursement benefit offered by many West Michigan employers to their employees.

Ironically, despite its potential short-term and long-term value, tuition reimbursement is one of the less utilized employment benefits.

Jennifer Schramm is a trends manager at the Society for Human Resource Management in Alexandria, Va., a nonprofit research organization serving HR professionals throughout the country. She said the group recently did a survey in which it asked both HR professionals and employees to rank certain employee benefits.

When it came to tuition reimbursement, "HR professionals seem to think it's more important than employees do," said Schramm.

Forty-seven percent of HR professionals said tuition reimbursement was "important," and 38 percent said "very important."

Thirty-three percent of the employees polled said it was "important" and 31 percent said "very important."

Schramm said that in discussions with HR professionals, she has heard the comment that "it's a great benefit, but (there is) not a lot of uptake."

The Employers' Association is a nonprofit organization offering assistance to HR departments at more than 550 member companies in West Michigan. Currently the association is wrapping up a survey with more than 100 companies responding; more than half of those indicated that they offer tuition reimbursement for work toward a bachelor's or master's degree. However, most of those companies also indicated the percentage of employees who actually take advantage of tuition reimbursement ranges from only 1 to 5 percent.

Mike Sabbe, director of administration and human resources at Beene Garter in Grand Rapids, said he sometimes works with clients on their employee benefits plans. Beene Garter is an accounting firm that also provides human resources consulting.

Sabbe said he seldom gets questions from employers relative to tuition reimbursement.

"Everybody wants to talk about health insurance," he said.

While it can be a valuable benefit, tuition reimbursement, unlike health insurance, is obviously limited in its appeal to employees. Many people working full time do not need or desire to continue their education. Then there are often restrictions on what tuition reimbursement will cover, and some companies reimburse in varying amounts, depending on the final grade the student gets in the class.

At both X-Rite Inc. in Kentwood and Perrigo Co. in Allegan, about 4 percent of employees avail themselves of the tuition reimbursement benefit. But at both of those companies, some of those employees "max out" the tuition reimbursement benefit, which is limited to $5,250 per year. Any amount above that would be subject to federal income tax.

Most companies restrict their tuition reimbursement to course work that pertains to the employee's job, or would otherwise enhance the employee's potential.

"If you're a scientist here who wants to be a dentist, that probably won't work out. But if you're a scientist who wants to get an advanced business degree, that would probably be where we would apply tuition reimbursement," said Ernie Schenk, manager of investor relations at Perrigo, one of the world's largest manufacturers of over-the-counter pharmaceutical and nutritional products.

Schenk knows the value of tuition reimbursement: He holds an MBA degree that a previous employer helped him pay for through tuition reimbursement.

Some companies, such as X-Rite, recognize that the rising cost of college can be daunting to employees who have children in college. In general, tuition reimbursement benefits only apply to the employee's education, not their children’s. But X-Rite does try to help those families by reserving a number of summer jobs for college students whose mother or father is an employee. This summer X-Rite is employing 20 college students who are children of employees.

"That helps," said Tony Sanders, director of people services. He mentioned that one X-Rite employee has two college-student daughters working there this summer. When possible, X-Rite tries to put college students into departments where the work is related to their studies.

At National City Bank in Grand Rapids, tuition reimbursement is available for both full-time and part-time employees, according to Sean Welsh, the bank's regional president. Courses and training usually must pertain to the employee's job at National City, but "we'll send people to training for intangible skills" such as business etiquette and public speaking, he said.

Tuition reimbursement is "just something you have to do," said Welsh. "We're in a business driven by people. Training them and educating them is critical to our success."

It is also a valuable benefit for attracting and retaining motivated employees who want to improve their knowledge and advance their careers, noted Welsh.

Tuition reimbursement is particularly useful in the health care industry, which faces chronic shortages of employees in certain types of careers, such as nursing, radiology and pharmacy.

"We encourage our employees to go back for further education" — especially in the fields where qualified employees are in short supply, said Tom Karel, Saint Mary's vice president of organization and talent effectiveness.

For that reason, the number of employees using the tuition reimbursement benefit is well above the average at other types of organizations. At Saint Mary's, 237 employees — almost 10 percent of the hospital's work force — are currently using their tuition reimbursement benefit.

"We have two programs," said Karel. The first is reimbursement of 60 percent of undergraduate and graduate course fees, with limits on the per-credit cost of tuition. The other program is called Careers in Demand, which returns 100 percent of up to $300 per credit hour.

Of the 237 using tuition reimbursement, 47 are taking courses qualifying for Careers in Demand. Eighteen of those are in a program for nurses to earn a bachelor's degree.

"Particularly in the nursing area, we have become very creative" in recruitment methods, said Micki Benz, vice president of communications at Saint Mary's. The creativity involves helping pay the cost of getting an education: Saint Mary's will offer a deal to promising nursing students who haven't yet graduated; if they agree to work for three years at Saint Mary's after graduation, then the hospital will repay the employee up to $7,500 of the cost of getting that degree.

Aquinas College and more than 120 employers — corporations and school systems in West Michigan — have formed a partnership using the John F. Donnelly Scholarship to encourage working adults to resume their college education. Donnelly, the founder of the Holland-based manufacturer of automotive glass, mirrors and other components, was a member of the Aquinas Board of Trustees.

The scholarship is for employees at the participating companies or school systems, and covers a portion of the student's tuition that is not reimbursed by his or her employee benefits plan. The students must be new to Aquinas or have had at least a two-year interruption since last attending Aquinas.

Brenda Hennink, director of adult student recruitment at Aquinas, said she gets up to 100 applications per year for the John F. Donnelly scholarships. Once a scholarship is granted, "it's good for seven years or until they graduate, whichever comes sooner. Which is nice, because adult students tend to take longer" to get a degree, mainly because they are going part-time at night or on weekends. More than 180 adult students were using the Donnelly Scholarship in the 2006-2007 school year.

For a list of the companies and school systems participating in the John F. Donnelly Scholarship, see www.aquinas.edu/financialaid. Click on "continuing education," then "financial aid."    

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