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Is Tuition Reimbursement Becoming the Norm?

College. University. When people - particularly parents - hear these words mentioned, they usually imagine looming debts from paying off a child's tuition or the other expensive elements of attending any higher level educational institution. At most universities, the student or the parents are expected to chalk up 40 to 60 grand a year for their college experience. That's the equivalent of buying a sedan-class BMW every year! In the past few decades, the prices for college textbooks have jumped almost eightfold. This surpasses the regular yearly inflation rate by two magnitudes of ten. According to a study from the American Enterprise Institute using data collected from the U.S. Census Bureau, the inflation of textbook prices at a rate of 812 percent in approximately 30 years casts a huge shadow over other areas that have been known for inflated prices such as medical prices or new home prices. From 1978, medical prices jumped up only 575 percent while new home prices jumped up 325 percent. The National Association of College Stores estimated that students would spend around $655 a year on textbooks. However, other institutes such as College Board have estimated rates of over $1000 per year. These rates are not unreasonable as an individual text on a very specialized topic could run upwards of $300 in costs. With the costs of higher education continuously soaring higher and higher to unprecedented rates, how will the common, middle class person hope to remain both competitive and comfortably debt-free in this changing society?

What options or alternatives could exist for such exorbitant tuition costs?

Luckily for many parents and students, there are a variety of alternatives and options for the subsidization of their educations. A new innovative approach is being taken by some businesses and institutes regarding the educational costs imposed on college students. For example, Starbucks has recently launched a "College Achievement Plan" in conjunction with Arizona State University. The program offers full tuition reimbursements for juniors and seniors in college while freshmen and sophomores can get a partial scholarship through the program.
Some people have denounced the seemingly magnanimous behavior of Starbucks as a contrived attempt to reduce its employee turnover rates. This accusation does not come without merit. If Starbucks receives a large amount of labor from college students, then dropping out of a college near Starbucks means that the student can no longer work there. Reducing the turnover rate would then correspond to reducing the dropout rate, which some claim that Starbucks intends to do through the incentive of a tuition reimbursement. However, if Starbucks is continuously receiving fresh labor from new attendees of college each year, this idea becomes slightly far-fetched in its considerations. Whatever the intent of Starbucks in offering these financial incentives, there is no question that it has caused an undeniable stir in the business community regarding their attention to undergraduate students.

Is Starbucks sparking a trend in tuition reimbursement?

Barbara Greenberg, a clinical psychiatrist, elaborates upon a theory regarding the infectious, viral behavior that one company's actions can generate: "This is how trends are born. One company generates the buzz and appeal and then others follow suit. We're going to see other companies jumping on this bandwagon in an impulsive way". Even though there are monetary costs, companies are willing to participate in a trend that the public perceives as popular or beneficial to increase their own image and to remain relevant. Now, one might question whether Starbucks' move to subsidize educational costs has truly created a trend. Where is the evidence for such a trend? Can we really expect that tuition reimbursement may become a normal element of tuition? Though it is impossible to tell the future definitively, a multitude of different companies have already offered similar tuition deals. Below is a list of such companies.
Apple offers a $5,000 tuition reimbursement.
AT&T gives its employees $5,250 in tuition aid for its full-time employees. Other options such as obtaining a undergraduate or graduate degree can lead to reimbursements of $20,000 or $25,000 respectively.
Boeing gives up to $3,000 for tuition assistance.
Chevron offers up to an extremely generous 75 percent reimbursement rate for employees actively pursuing an education.
Disney also has a very altruistic system. 100 percent of textbook costs are reimbursed by the company. $100 is offered for each course for course materials. Finally, $700 is given per credit unit. If one considers that most colleges may require 15 to 18 hours a semester for eight semesters, that comes out to around 100 to 130 credit hours. Multiplied by 700, one can potentially gain around $90,000 in tuition reimbursements from this!
Ford offers an Educational Tuition Assistance Plan of $5,000 a year for courses leading up to a bachelor's degree, an associate's degree, a master's degree, or a Ph.D.
Other companies with similar tuition deals include Gap, Home Depot, Procter and Gamble, Intel, UPS, and Verizon Wireless.
One important thing to note about each of these companies is that they are all very influential and large companies. Some are even much bigger and historically relevant than Starbucks. The fact that these companies are "jumping the bandwagon" and offering different forms of tuition reimbursement for the courses, materials, and classes of college undergraduates and graduates is clear evidence for the development of a trend.

What is the future of tuition reimbursement? Can we expect this trend to become tied to entry into a company or jobs?

As it is now, tuition reimbursement seems to have been adopted by a variety of powerful and large companies. Since these companies are willing to make an investment towards the education of students, it is a promising indication that other companies may follow their behavior and footsteps in the future. As Starbucks CEO Howard Schultz and the CEOs of other companies have pointed out, they have the necessary financial profits to be making these investments. They have indicated that point of participating in the tuition reimbursement system is that it differentiates your company. Recognition is extremely important in business. If idle cash can be used towards an objective such as differentiation, many companies would gladly pay the costs. As mentioned before, this financial stunt also does wonders to improve Starbucks' reputation as a business that is conscientious and a business that cares about the financial burdens of its employees as well as the future of the country. It creates a sense of familial unity and belonging in the business that undermines the vast scale of Starbucks as a brand. It is not an unreasonable expectation that chain stores and businesses dependent on a young workforce will be - sooner or later - investing in the very fuel of their business. As tuition reimbursements become increasingly popular, people will finally have an alternative and convenient solution to rapidly rising tuition costs.

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Alice Bryant's picture

Alice Bryant is the Editor of Creditnet and a personal finance expert with over a decade of experience writing about credit cards, credit scores, debt repair, and more.

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