Workplace

Should Companies Help Pay Employees' Kids' Tuition?


Should Companies Help Pay Employees' Kids' Tuition?

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If you think so, you’re not alone. In a new Gallup survey, three-fourths of people said their employers don’t provide financial support for their children’s higher education. Another 68 percent believe companies should provide more assistance to employees to help make higher education more affordable.

As fewer companies pay for employees’ health insurance, it’s hard to imagine any more will start paying for workers’ kids’ education. But that doesn’t mean parents aren’t wishful.

“If colleges don’t reduce the cost—which is hard to imagine they’ll do because they have fixed costs—and it’s not going to be funded by federal and state dollars—which have been drying up in great proportion recently—then the only answer you have to turn to is your employer,” says Brandon Busteed, Gallup’s education director. “We’re going to see a trend where more Americans think this is the only way to get college to be affordable for their kids.”

Adjusting for inflation, family income has fallen in the last five years. Meanwhile, tuition and fees at private nonprofit colleges have seen a real increase of about 12 percent to $29,056, according to data from the College Board (PDF).

Most employers surveyed by the Society for Human Resource Management do provide tuition aid to workers themselves, as there’s a clearer return on investment. “But the kids are a stretch,” says Busteed. Even perks leader Google (GOOG) doesn’t do that. As it stands, only universities and schools can offer tuition assistance to employees’ children tax free, explains SHRM’s Vice President of Government Affairs Mike Aitken; taxes apply to help for workers’ kids at other types of employers.

Also, economic troubles have meant the few companies that do offer aid (typically to high-performing students) are cutting back. The share providing scholarships to family members dipped to 17 percent in 2012 from 20 percent in 2008, and the share offering educational loans to employees’ families ticked down to 2 percent from 3 percent, according to surveys by SHRM.

Richard Vedder, director at the Center for College Affordability and Productivity and an economics professor at Ohio University, says while offering tuition assistance for children can be a powerful incentive for employees to stay, tuitions are rising as companies face increasing pressure to keep costs down. “This is an increasingly costly benefit,” he says.

Venessa-wong-190x190
Wong is an associate editor for Bloomberg Businessweek. Follow her on Twitter @venessawwong.

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