Investing in college tuition as an employee benefit helps companies attract and retain top talent, but a new study of Cigna Corporation shows there’s another compelling reason for employers to embrace the benefit: it improves the bottom line.
An analysis of health insurer Cigna’s Education Reimbursement Program (ERP) shows every dollar the company puts into the program is returned and generates an additional $1.29 in savings – a 129 percent return on investment. Lumina Foundation, a national foundation focused on increasing postsecondary attainment, partnered with Cigna to design the study, which was conducted by Accenture, a leading global professional services company.
“We’ve long known that when companies support their employees’ pursuit of a postsecondary education, it improves employees’ lives and addresses our nation’s overall need to increase talent in our workforce,” said Jamie Merisotis, president and CEO of Lumina Foundation. “With the release of this study, we also can further demonstrate that investing in employees’ tuition isn’t a benefit cost, but rather a valuable investment that positively impacts organizations’ bottom line. That should entice more C-suite leaders to embrace this approach.”
The study of Cigna’s ERP offers a rare glimpse at the financial impact of tuition assistance programs. About 60 percent of employers offer such support – investing an average of 10 percent of their learning and development budgets on tuition assistance – but only two to five percent of organizations evaluate the return of these investments. Cigna’s study examined differences in rates of promotions, transfers, and retention between employees who took advantage of ERP and employees who did not participate from 2012 to 2014, isolating factors such as employee tenure that could impact findings.
The study shows that Cigna’s ERP program increases career opportunity and employee retention, which drives financial payback. Program participants are 10 percent more likely to be promoted, 7.5 percent more likely to be transferred within Cigna, and eight percent more likely to stay at the company, reducing across-the-board talent management and recruiting costs.
“Attracting and retaining talent is essential to our success as a company, and to advance those goals, we’ve made tuition reimbursement a priority,” said Karen Kocher, Cigna’s chief learning officer. “Knowing that tuition assistance also reaps a financial return – and quantifying that return on investment – has affirmed our belief in the program and prompted us to make changes that will make it even more impactful.”
The evidence of tuition reimbursement’s financial impact comes at a critical time in the movement to grow postsecondary attainment. By 2020, two-thirds of all jobs in the U.S. will require some form of higher education, but today only about 45 percent of Americans have at least a two-year degree or other postsecondary credential. Employer investment in employees’ tuition can play a powerful role in increasing the number of Americans with education beyond high school and thereby help close the gap.
“For the U.S. to remain a leader in the knowledge economy, all providers of education beyond high school, especially employers, must help ensure more Americans earn postsecondary credentials,” said John Engler, president of the Business Roundtable. “Employers can make an outsized impact through providing tuition support. Cigna’s investments are proof that not only is it the right thing to do, but it is also a smart business decision. Additionally, as our workers learn and acquire skills on the job, we must be better able to document those competencies so individuals are both encouraged to be life-long learners and are able to increase their value and their take home pay.”
Lumina Foundation hopes to encourage more companies to support employees’ postsecondary education and training by illuminating the bottom-line benefits. The Foundation has supported a handful of other studies showing the financial impact of tuition assistance programs. Those results will be released in coming months.