Want Loyal Employees? Bring in the Teachers.

As student debt climbs, some workers prefer education benefits over bigger paychecks.  

Every Monday evening, Ryanne Guglielmo wraps up work at her desk at Dixon Schwabl, an ad agency outside of Rochester, N.Y., and heads downstairs to a conference room. There, she and six others gather for a four-hour class taught by local college professors. At the end of the 16-month program, Guglielmo will earn an MBA in marketing.

The best part? Dixon Schwabl is covering the $30,000 tuition and, through a partnership with Roberts Wesleyan College, her professors come to her office.

“I absolutely love this program,” says Gugliemo, who started as a receptionist at the agency eight years ago. After rising to become a public relations supervisor and spending seven years paying off undergraduate degree debt, Gugliemo says she wouldn’t have otherwise pursued a master’s degree without the employer-funded program. 

Dixon Schwabl’s on-site master’s degree program, which has awarded 10 employees with MBAs over the past decade, is unique. But the program underscores a bigger trend happening across workplaces nationwide: education at work is becoming a sought-after employer benefit.

The primary reason? The fear of student debt. Tuition costs today are three times as high in inflation-adjusted dollars as in 1988, and Americans have $1.5 trillion in student loan debt, according to Loan Hero, which helps people manage and repay student loans. Tuition assistance, in particular, is becoming far more common among large corporations, and some companies, such as David Weekley Homes in Houston, even pay for the tuition of their employees’ children.

Nearly 60% of 30,000 employees surveyed in the Working Learner Index see employer’s education benefits as a way to avoid debt and pursue higher education. Most surveyed felt educational benefits made them more prepared for the future of work, made them happier, more effective and more loyal. In fact, 43%  said they actually preferred educational benefits over making more money.

Each year, U.S. employers spend about $177 billion on formal and informal education and training with employees, according to the Lumina Foundation, an education-focused nonprofit. Tuition is tax-free to employees up to $5,250 and can be claimed as a deduction on the employer’s taxes.

Companies like Anthem, Bank of America and AT&T give their employees up to several thousand dollars a year for tuition and textbooks, while companies like Proctor & Gamble and BP cover 80% to 90% of those total costs for tuition and books. 

Others, such as Dixon Schwabl, partner with specific colleges and universities. Starbucks, for instance, pays for full-time college tuition—essentially a free bachelor’s degree—but students must only study at Arizona State University’s online program.  

Perks that pay off

For employers, such education-assistance efforts tend to pay off. Lumina and Accenture conducted a series of five studies in 2017 with leading U.S. employers—including Cigna, Advocate Health Care and Discover Financial Services. The survey assessed whether employees who used education benefits were promoted, stayed in their jobs longer and missed work less often than colleagues that didn’t use the assistance. The study showed this was indeed the case: Discover and Cigna saw return on their investments by 144 percent and 129 percent, respectively.

“Education should be more than a perk,” says Dave Gregory, CEO of Conatus3, an Omaha human resources consulting company. “It should be a strategic initiative for every organization.”

That said, offering full tuition can be expensive, especially for small firms. Some companies are getting far more creative when it comes to offering educational opportunities.

Cover, a San Francisco-based insurance brokerage, gives each of its 120 employees an annual “learning budget” of $1,000 that they can use on workshops, conferences, books or online courses. One employee has used the money to learn a new language through Duolingo while another used it for a Codeacademy course. In rolling out the program, the company gives employees autonomy over how they spend that money and doesn’t place expectations on specific results.

Cover hasn’t had any situations in which people abuse the perks. “We try and hire folks who are introspective and actively thinking about self-improvement,” says Karn Saroya, Cover’s co-founder and CEO.

Sometimes those pursuits don’t always align with what the company needs, but Saroya says that autonomy is important. He doesn’t see any downside to the program so far. “We have been told that it was a major draw in the interview process.”

Low-cost options

Ben Crudo, CEO of Montreal-based e-commerce agency Diff, created his own curriculum on web design and software engineering that he provides free to clients and new hires. The company’s internal team created the 10-episode content, and with a little video editing, it was a low-cost way to build skills and expand educational opportunities for the 100-person company. 

While employee retention is tricky to pinpoint and depends on everything from compensation and management to mentorship and opportunities, Diff has a 90% retention rate. Employees also rank the extra education and knowledge-sharing as a top benefit in surveys, says Curdo. “We’re in a competitive space, and we have to make sure we’re helping (employees) learn and evolve on their own,” he says.

As Diff and others show, education perks may look different at every company, but, as with any benefit, they can be powerful tools to attract and retain new hires. That’s increasingly important when companies can get tax benefits and student debt continues to climb. 

Guglielmo can attest to the importance of education as a benefit. The chance to earn an MBA through Dixon Schwabl makes her more effective in her job and makes her feel more valued. “It shows they believe in me,” she says. “And it makes me have a greater sense of commitment to the agency.”