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Education assistance benefits
Last updated: November 20, 2025
Education assistance benefits can help people manage their student loan debt or cover some of the costs they incur while pursuing additional learning and development opportunities. Employee engagement and retention rates may increase in turn.
Education assistance benefits key takeaways:
- Employees can receive up to $5,250 worth of education assistance benefits tax-free if certain conditions are met.
- Common education benefits include tuition reimbursement, student loan assistance and sponsored scholarships.
- Drafting an official education assistance policy can help ensure employees don’t abuse the program and fulfill their coursework obligations.
Accumulated student loan debt can have a profound influence on people’s life decisions, particularly where they choose to work. For many, the availability of education assistance programs is a major deciding factor when evaluating potential employers.
Employers who sponsor such benefits have an opportunity to differentiate themselves in the market and attract and retain talent. What’s more, helping employees manage student loan debt or pursue further education doesn’t have to be difficult or cost-prohibitive with the proper execution.
Table of Contents
What are education benefits for employees?
Education assistance benefits encourage employees to keep learning and may help them pay for their tuition. Programs can also include financial wellness resources to help alleviate the burden of outstanding student loans.
Types of education benefits
Depending on their budget, employers have no shortage of options when it comes to education assistance benefits. Programs can include some or all of the following:
- Educational leave
Employees receive time off from work to pursue their studies but have to pay their own way through school. A role within the company is reserved for them once they complete their education. - Scholarships and grants
Sponsoring scholarships or grants for employees or their children is a great retention tactic, but it may be considered taxable compensation unless it meets certain IRS requirements. - Educational assistance plans
Employers reimburse employees for some or all of their education costs, including those that may not be job-related. Payments can be used for books, equipment, supplies and tuition. - Work-related education courses
Employers pay for degree and certificate programs specific to their employees’ field of work. This benefit can be expensive, though there are tax incentives for both the business and the employees. - Student loan repayment
Helping employees pay off their student loans and get out of debt sooner shows them that the company cares about their financial well-being.
The tax implications of employee education assistance programs
Employers can provide employees with up to $5,250 worth of education assistance benefits tax-free if all of the following conditions are met:
- The program benefits employees who qualify under rules established by the employer and doesn’t favor highly compensated employees.
- The program doesn't provide more than 5% of its benefits during the year to shareholders or owners (or their spouses or dependents).
- The program doesn't allow employees to choose to receive cash or other benefits that must be included in gross income instead of educational assistance.
- Eligible employees receive reasonable notice of the program.
Employee assistance programs exceeding $5,250
If an employee receives more than $5,250 in education assistance benefits, the employer must treat the excess as taxable compensation. Working condition benefits, which include job-related education, are exempt from this rule. As such, employees enrolled in degree or certificate programs specific to their role may receive education assistance greater than $5,250 on a tax-free basis. The cost to the employer is also tax-deductible.
Tips for sponsoring an employer education assistance program
Employers can maximize their return on investment in an education assistance program by following these tips:
- Draft a written policy
- Simplify the qualifying process
- Celebrate and promote the benefit
- Follow up with employees
- Consider financial wellness resources
Draft an official education assistance policy
Policies may require employees to explain how furthering their education will benefit both their careers and the business at large. They might also be asked to provide specific details about their coursework and expected time to completion.
Additionally, employers should address non-completion of education and continued employment. For example, further education assistance might be suspended if employees can't finish their initial courses.
Make the qualifying process easy
Keeping the enrollment rules simple helps maximize participation and the program’s impact. For instance, student loan repayment might be extended to any employee with a loan in good standing, rather than restricting the benefit based on the loan’s origination date, the lender or the degree obtained.
Promote education assistance benefits
Employers can tout a new education assistance program via their careers site, press releases, job ads and company-wide announcements. Once the initial buzz has diminished, they can keep momentum going by celebrating individual achievements, like graduations and student loan payoffs.
Follow up with employees participating in the program
Scheduled follow-up ensures both employers and employees are honoring their ends of the bargain. It also provides invaluable feedback to improve the education assistance program further. Employers may want to ask employees what they’ve learned, if their career goals have changed and what they believe they can now bring to the business.
Consider offering financial wellness resources
Employers who can’t afford tuition reimbursement or student loan repayment programs can still help their people tackle their education-related debt. One way to do so is with employee financial education programs. Services might include curated insights or advice, refinancing options, and debt counseling from qualified experts.
Frequently asked questions about education assistance benefits
What is tuition reimbursement?
Tuition reimbursement means an employer covers some or all of the cost for employees to pursue education after work hours. In addition to tuition fees, eligible expenses may include books, supplies and equipment used during coursework. Some employee tuition assistance programs restrict education to the employee’s specific role within the company, while others allow participants to explore unrelated studies.
How do tuition reimbursement programs benefit employers?
Sponsoring tuition reimbursement benefits can help employers attract and retain talent, thereby reducing costs associated with employee turnover and recruitment. However, these benefits do not occur automatically. Employers need to establish a tuition reimbursement policy and follow up with employees to ensure they aren’t misusing the program and are committed to completing their education on time.
This article is intended to be used as a starting point in analyzing education assistance benefits and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax advice or other professional services.
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