We know that student loan benefits are a major boon to employees, and pay dividends to employers in terms of loyalty and retention. Now, evidence is starting to come in on the value of tuition assistance programs, and the news is just as good. A study by Accenture found that Cigna’s employee tuition reimbursement program had an ROI of 129 percent between 2012 and 2014—meaning for that every dollar spent, Cigna got that dollar back and generated an additional $1.29 in talent management savings, David McCann explains at CFO:
Cigna wanted to assess the impact of tuition assistance investment on both revenue generation and talent management costs. But because of the diversity of the company’s performance metrics across its workforce, it was unable to identify any revenue factors for which data was accessible for the entire population of program participants. Therefore, the analysis focused just on the impact on talent management costs. The 129% figure includes savings related to employee promotions, retentions, and transfers.
Specifically, the research found that [Education Reimbursement Program] participants were 10% more likely than other employees to be promoted. That saves money because the more senior the position, the more difficult it is to fill through recruitment. Indeed, from strictly a cost standpoint, retaining any employee is obviously vastly better than recruiting a replacement, and the study found that ERP participants were 8% more likely to be retained than other workers.
“Workers gained big, too,”the Atlantic’s Mikhail Zinshteyn adds:
The analysis found that entry-level and mid-management employees saw their wages grow by 43 percent over the three-year period compared to colleagues who didn’t take part in Cigna’s education-reimbursement program. The wages of participating entry-level workers alone grew by 57 percent, based on an examination of roughly 200 similar workers who did and didn’t take part in the tuition program.
In light of these unambiguously positive findings, Cigna is doubling down on the program:
The company raised its financial support for undergraduate degrees to $10,000 and graduate degrees to $12,000, but only in the roughly 15 strategic fields that are aligned with Cigna’s business interests and goals, such as cybersecurity, data analytics, and health law and policy. Degree programs that fall outside those strategic fields now come with $4,000 in reimbursements for undergraduates and $6,500 for graduates.