The pandemic has created a labor shortage in many industries and companies have responded to the increased competition by expanding the size and scope of benefits they offer. Tuition assistance is one of the most prevalent perks being used to attract and retain employees.
The pandemic also created decreases in revenue and enrollment for colleges and universities, due in part to the accelerated decline in international student enrollment, and in addition to the oncoming demographic cliff in domestic enrollment. Higher education is looking for new revenue streams and company-sponsored students is a great opportunity if managed well.
Traditionally, some businesses have paid for managers and executives to obtain graduate degrees such as MBAs. Now, tuition benefits are being extended to all or nearly all of companies’ employees, and broadened to cover a wide range of post-secondary education, including certificates, credentials, associate degrees, and bachelor’s degrees. Most company tuition programs either cover a percentage of costs or a set dollar amount per year.
Many of these education benefits programs are new, but some have existed for more than a decade and are now redefined and more heavily promoted. Some allow employees to choose any course of study, while many require selecting from a set list of courses, programs, or majors. Waste Management is even extending their tuition benefits to include the more than 30,000 benefits-eligible dependents of their 36,000 employees, including children and spouses.
While the total size of enrollment in all higher education benefits programs is not known, Walmart revealed that 52,000 employees have benefited from their Live Better University program since inception in 2018 and currently has 28,000 active employees enrolled. Amazon says that over 50,000 employees have participated in their Career Choice program, and they will spend $1.2 billion to expand the program by 2025.
The increase in higher ed students sponsored by employers will likely continue for the next few years. A 2021 study by Willis Towers Watson found that 94% of employers said voluntary benefits — such as paying for education expenses — will be important to their talent management strategy over the next three years, as compared with just 36% in 2018. Further, 88% of employers said tuition assistance is a benefit they currently offer or are planning to offer over the next two years.
The Challenges of Benefits
For colleges and universities, the upward trend in sponsored students means increased enrollment. While any institution would happily accept a larger revenue stream, sponsored students come with the challenges of managing the often complex process of third party payments.
Sponsored students are not like traditional students and the distinctions appear in administering their enrollment and payments. Many third parties are not accustomed to how higher education does business and complications arise in the differences between campus and corporate practices.
For instance, colleges and universities often require tuition payments due before a semester begins or shortly thereafter, while third parties wish to pay after a term is over. Sponsoring organizations often request student financial details communicated in their in-house accounting format that does not match traditional academic bookkeeping. Sponsors also want oversight of student activity, such as the classes students are enrolling in, their grades, and other key information. Subsequent data gathering and ad-hoc reporting adds extra work for staff.
Since companies often sponsor many students at one institution, allocating payments becomes a complex process of identifying which accounts should receive which funds. Administering refunds can add further difficulties. In response to these situations, manual processing routines demand significant staff time and effort to coordinate and accurately handle. In addition, printing and mailing bills and checks can cost tens of thousands of dollars, and mail can be delayed or lost.
Solutions for Complications
Software solutions that integrate into existing campus systems can ease the complexities of administering sponsored payments, whether the source is a corporation or one of the many types of third parties that sponsor students: public school districts, philanthropic groups, the Veterans Administration, and foreign governments, to name a few.
Sponsor payment solutions increase the efficiency, clarity, and accuracy of the entire third party payment process by providing students, sponsors, and institutions:
- a dynamic online, self-service portal with visibility and direct management of accounts and secure transfer of sensitive data
- functionality and flexibility to fit the needs and requirements of sponsors and institutions
- automation of previous manual processes such as statements, payments, reconciliation, and alerts and notifications
- integration into campuswide systems so departments can easily review and share data
- paperless invoicing to reduce costs and increase the speed and security of delivery
Rather than forcing the square pegs of third party payments into the round holes of traditional tuition payment processes, software solutions tailored for sponsored students reshape routines to fit the accounting and operations demands of colleges and universities as well as sponsors. Altogether, an unwieldy set of accounts are simplified and efficiently managed, supporting a new relationship and the revenue it affords.