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April 20, 2015 in

Miscellaneous

Tuition Reimbursement and Debt Collection

Does your company offer tuition reimbursement to employees? Do you have stipulations that require employees receiving tuition assistance to continue service with your organization for a given time period after reimbursement has occurred? According to a survey conducted by Benefits USA, nearly sixty-five percent of organizations impose work requirements on employees receiving tuition reimbursement. On average, employees are required to work 15 months after they receive a reimbursement from their employer. Sometimes an employee earns a degree on the company’s dime and resigns, leaving the employer with a lost investment. What are your options to recover the tuition expenses if you find yourself in this scenario?

1. Request repayment from the employee either in a lump sum or installments prior to them leaving the company. Present the employee with their balance owed back to your company and make sure they sign a document agreeing to repayment terms.
2. In rare cases, a new employer may agree to cover the expense if it was negotiated by the employee. Again, be sure to have this in writing prior to the employee’s departure.
3. Forgive the outstanding debt and move on. This is risky because it will set precedence for future employees that follow the same path.

If you are successful in establishing a repayment plan your next step is monitoring the agreement. Unfortunately, even after an agreement, there are times when an employee won’t pay you back. In those cases, you may decide to do nothing or pursue collection activities though a court or third party agency.

Using an agency to help collect outstanding tuition reimbursement is the most cost-effective way to pursue the debt. Most collection agencies operate on a contingency basis so if you don’t get paid back you don’t have to pay for their services. Fees to use collection agencies vary based on the age of the debt and balance owed. Many agencies also offer free credit bureau reporting which also helps greatly in recovering your investment.

Remember, if you are faced with employees leaving after tuition reimbursement, you have options. Understanding your options will help you make an informed decision about what is best for your company.