With emerging employer interest^[1] in providing access to debt free educational assistance benefits (i.e., employer directly pays the cost of tuition and fees as opposed to the traditional educational reimbursement benefit) to attract and retain employees and build the capabilities of the workforce, employers should consider and apply the painful lessons of providing health care benefits to employees before offering enhanced education assistance programs.

Quality: Just as employers and plan administrators do not rely on U.S. News and World Report for quality indications of hospitals and physicians, the same applies to colleges and universities.  Employers have attempted unevenly to address health care quality (e.g., patient safety, care coordination, treatment patterns) and disparities in care (i.e., differences in treatment and outcomes by patient race, ethnic group, gender, and income) with the introduction of tools and patient support services.  With an emerging benefit, employers with their university and plan administration partners have the opportunity from the outset to map out criteria or accreditation requirements for participating colleges, universities, and certification programs along with additional quality measures that address class size and student interaction, instructor competency, academic advising, time to credential/degree, and curriculum structure.

Transparency: Employers lack access to detailed information on provider/hospital and pharmacy billing and rebates, administrative fees (e.g., shared savings) on poorly defined “negotiation” practices, and intermediary revenue streams (e.g., supplemental commissions, placement fees, pay to play schemes).  Education has the advantage over healthcare where the list price of tuition and fees is actually published (see any university website). Like healthcare, education has its own maze of discounts that materialize in college grants/scholarships, financial aid, and in-state tuition.  Employers with deep pockets that are part of a group purchasing model should not pay the list price for employees participating in debt free educational assistance programs.  Full disclosure and itemization of the components of the tuition and fee net cost plus detailed accounting of administrator/consultant revenue streams are integral components to avoid the current health benefit scenario.

Cost Guarantees: There are no guarantees on health benefit costs (service level agreements as a percentage of supplier fees don’t count).  Employers continue to pay escalated costs with no visible evidence on the improvement of patient outcomes.  With the cost of college tuition (5.4% annual increase) and fees outpacing medical services (4.2% annual increase) over the last 30 years^[2], employers should focus on negotiating and measuring guarantees on factors like completion percentage, graduation rates, employee performance, and workforce retention and skills to balance the financial liability with positive workforce returns.

Employees: Employers offer health care benefits to employees/patients who often lack “…ability to find, understand, and use information and services to inform health-related decisions and actions for themselves and others.”^[3] Similarly, employers should expect employees/students who may benefit from a debt free educational assistance program to need ongoing academic support in addition to guidance balancing the education time commitment with work and family responsibilities.

Expanded education assistance programs like health benefits have the power to transform the workforce and the employment relationship.  However, education like healthcare is big business. Before becoming the checkbook for tuition and fees, employers should seek equitable partnerships with plan administrators and higher education that focus on quality, transparency, cost guarantees, and student employees.

For more information contact Bill Kerrigan at info@kerriganreid.com

This document is intended for general information purposes only and should not be construed as advice or opinions on any specific facts or circumstances. The comments in this summary are based upon Kerrigan Reid’s preliminary analysis of publicly available information. The content of this document is made available on an “as is” basis, without warranty of any kind. Kerrigan Reid disclaims any legal liability to any person or organization for loss or damage caused by or resulting from any reliance placed on that content. Kerrigan Reid reserves all rights to the content of this document.

---

^[1] Employers like Target, Starbucks, Amazon, Walmart have introduced programs

^[2] Bureau of Labor Statistics, CPI for All Urban Consumers (CPI-U) for College tuition and fees and Medical services

^[3] U.S. Department of Health and Human Services, Healthy People 2030, What is Health Literacy?