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Rethinking college tuition remission

Re-examining the free-college perks available to most higher ed employees and their families
University Business, October 2016
In an era in which every college or university expense must be scrutinized, tuition remission policy details may be worth analyzing. (Click to enlarge)
In an era in which every college or university expense must be scrutinized, tuition remission policy details may be worth analyzing. (Click to enlarge)

Almost 90 percent of colleges and universities offer tuition remission benefits to their employees and employees’ dependents, according to the College and University Professional Association for Human Resources (CUPA-HR). And with college tuition costs skyrocketing, that benefit has become increasingly sought-after—but expensive for the institution.

Campus leaders must balance financial strain with employee perks, and at least a few are finding that tuition remission policies need adjustment. Some colleges provide 100 percent tuition remission to employees and their families, and many provide lower levels of discounts.

In a few cases, these policies have been abused and cost the institutions much more than necessary, while in others, leaders found that their policies could be more generous.

“Some colleges and universities are reducing this benefit because they are weighing its value as a recruiting and retention tool against the cost,” says Leonard Spangher, vice president at Sibson Consulting, which provides HR strategy consulting to higher ed institutions and other nonprofits.

“Others simply need to meet budgetary constraints due to the challenging economic environment, and some are changing a benefit feature—such as eligibility—to curb use of the benefit.”

In an era in which every college or university expense must be scrutinized, tuition remission policy details may be worth analyzing. For some institutions, this has become an area where cuts can be made while still providing valued employees with an important benefit.

Taking back policy control

Institutions have varied reasons for tweaking their tuition remission policies—including wanting to ensure they provide a rich employee benefit—but for most, finances are the bottom line. Since Brian Johnson became president of Tuskegee University in Alabama in 2014, he has eliminated free tuition for relatives of employees, along with making other difficult changes.

While the changes were necessary to meet budgetary constraints, they were not necessarily popular. Still, officials have worked to be transparent about financial realities that make their decisions easier to swallow, Johnson told an audience at the July conference of the National Association of College and University Business Officers.

Few institutions ban tuition remission altogether, Spangher says, adding that changes are generally just adjustments. Common tweaks include requiring longer service before employees are eligible; covering employee education only when it’s job-related; adding a minimum course grade for reimbursement; or remitting a different percentage of the tuition, he says.

Many institutions participate in exchanges that allow employees’ children to attend partnering schools at a discount, so that’s another possible area to examine.

Tuition remission policy revisions can also involve ensuring the benefits will be used properly. For instance, although the policy at Guilford College in Greensboro, North Carolina, was intended to cover only tuition for eligible employees and their families, it had become common for employees to use the benefit along with other sources of institution-provided aid to cover fees, housing, books and supplies, says President Jane Fernandes.

In other words, employees could double-dip on benefits, with financial aid taken into account.

Previously, Guilford’s business office would credit the eligible student’s account with the price of tuition, regardless of whether the college was also providing other types of aid to the same student. But in many cases, a student might receive an institutional merit scholarship, or grants or other awards, allowing the tuition benefit policy to cover all other nontuition costs.

“The implementation of the tuition remission policy had mushroomed well beyond its original intent, causing the college to expend more resources than necessary to fulfill this benefit commitment,” Fernandes says.

While Guilford didn’t actually change its policy, leaders did decide to enforce the original policy more strictly. They clarified to clearly show that the benefit is available for full-time employees who have worked at least one year at Guilford, as well as to their spouses, partners and dependent children.

“We articulated that tuition remission covers tuition costs that are not met by other funding sources available through financial aid,” Fernandes says. “We no longer award institutional aid in excess of the cost of tuition for students eligible for this program, which means that institutional expenditures for this benefit are now in alignment with our policy.”

Because Guilford employees and their families were accustomed to receiving the full cost of tuition regardless of other credits received, campus leaders were met with resistance when they revisited the policies. “Employees and their families were understandably anxious and upset about the proposed change, since it would impact their direct cost and many had made plans in good faith based on past practice,” Fernandes says.

In response to employee feedback gathered a series of campus meetings, the college instituted a grandfathering period for those currently in the program. This showed employees that their concerns were heard and considered, and helped them ultimately accept the changes, she adds.

Undergoing the change process

The tuition remission benefit at The University of Toledo in Ohio has been used not just as an employee benefit but as a tool for sweetening community partnerships, says Chief of Staff Matthew Schroeder.

“Over the course of years, the university has at times included as an incentive in partnership agreements the opportunity for people to attend at some type of discount. Today, there are more than 15 different groups who have some sort of discount arrangement. We’re underwriting about $10 million in tuition remission each year.”

Groups eligible for benefits include community colleges, foundations and physician groups affiliated with the university hospital, with the university getting various benefits (such as fundraising assistance) in return.

Located in a competitive higher ed enrollment landscape, the university maintains tuition levels among the lowest in the state. And after five years of shrinking enrollment and seven years of budget stabilization efforts, forfeiting millions from the school’s largest revenue center doesn’t make sense, Schroeder says. “We’ve taken a rich benefit for our employees and spread that out among others, and we’re trying to focus on the UT family and get it back to just an employee benefit.”

Administrators have spent the past year researching current tuition remission policies and how they are used, as well as discussing how to preserve the benefit without constraining the budget.

The current policy provides 100 percent tuition for employees and their families, but university officials now believe the benefit should apply only to employees. By restricting tuition benefits to outside groups, the university expects to save at least $3.5 million to $4 million per year.

Years of handing out free tuition to various community partners has created an entitlement culture, Schroeder says. But university leaders are now talking to outside partners about amending or existing agreements to eliminate tuition remission benefits for nonemployees.

“For an opportunity like a tuition discount, it has to be a two-way street,” Schroeder says. “Just because we could do it five years ago doesn’t mean we can now. We are committed to preserving this benefit for our employees; it’s important to them and to the university as a great recruitment tool.”

Explaining the changes

Institutions revisiting their tuition remission policies should do so with the utmost care. Spangher recommends grandfathering the old provisions and clearly communicating how and why the tuition remission program is changing. Reductions will likely be met with some negativity, but colleges should let their communities know that the changes will allow for improvement or maintenance of some other important benefit, he says.

Specific messaging, he adds, could be something like: “Our medical plan will remain at the same employee cost while adding valuable wellness benefits because we were able to offset that with a benefit reduction in tuition remission.”

Another communications strategy is looking for ways to benchmark tuition remission benefits against specific peer institutions to help employees understand where the current program stands in today’s market. “Internal benefits can sometimes be invisible but can have substantial financial impact,” says Guilford’s Fernandes.

Ultimately, making a decision to adjust an employee perk like tuition remission requires adequate information and due diligence. “To unwind or modify a benefit, great thought and great care should be taken,” says Toledo’s Schroeder. “Employees are our greatest resources and we need to be sensitive to their needs.”

Nancy Mann Jackson is an Alabama-based writer.

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