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The Case of Tuition Remission

Wednesday, May 17, 2017  
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By Christina Mimms, SAIS

Is it a tax-free bonus? A subsidized education? Would you call it unqualified financial aid? Or is it a benefit in exchange for loyalty? A tool for retention? A means to place parent ambassadors among your employees? The opinions on the subject of tuition remission vary significantly among educators, including our own SAIS schools.

A discussion of this subject on the SAIS listserv in the 2015-16 school year showed a wide disparity at schools. Of the school heads who participated in the conversation, 87% of their schools do offer some sort of discount to faculty and administrators who enroll their children at the school. Some automatically receive 25% with an option to apply for additional financial aid; others give 100%. The most common answer was a 50% discount for full-time employees, either faculty or administrators, though one school gives 50% remission to faculty and 100% to administrators.

One school offers discounts on a sliding scale, stating that all full-time employees can receive tuition remission. In the first two years of service they receive a 20% discount; after three, 30%; after four, 40%; after five, 50%, after six, 60%; seven or more, 70%. Another school gives 100% tuition remission for the first child of faculty, administrators, and staff, then 50% for the second child, and 25% for any additional children.

The schools also allow some variation in payments. One school offers discounted tuition and allows employees to break up the remaining payments over 12 months with deductions taken from payroll, which provides convenience. Another school discounts tuition but not fees. Some schools offer free lunch or free after-care for employees’ children.

On a related note, some schools offer discounted tuition to non-employee families with multiple children enrolled, though that practice seems to be fading. Of school heads who participated in that discussion on the SAIS listserv, fewer than half offer a sibling discount. Even those savings are very minimal, such as 5% or 10% for a second child. One school head stated that they do not give sibling discounts, but they do waive their new student fee for the second child and beyond.

One school head noted: “We moved away from all discounting a few years ago based on the advice of a consultant. It doesn’t cost any less to educate the second child, and we wanted to make all discounting or aid tie directly to a demonstrated need. On many occasions, we had families getting discounts that didn’t need them and certainly would not qualify for them. The goal was to stretch our aid money,” he said. That school does waive both a $75 application fee and a $200 enrollment fee for a sibling.

So if the cost of ABC School’s tuition is set at X dollars, why offer any discount at all for employees? Presumably, a teacher’s child will receive the same high-quality, independent school education as any child whose parents pay 100% of tuition.

NAIS published an article on this topic with some key thoughts: “While some of our greatest educators are and have been childless, and while schools need the talent and commitment of childless adults, they require also a critical mass of professional staff with the experience of parenthood. Especially in a time of family disintegration, it is important to have strong, committed parents among those who work with our children.

And while some schools do not offer a discount but give school employees first priority on financial aid, that effort does require some personal paperwork. In further recommending tuition remission, the NAIS article reads: “Professional staff members with children are spared the indignity of baring their financial souls to insider committees and school heads who will decide if they qualify. More important, their standard of living is left intact, and they are not penalized for having children, without whom there would be no schools. Assuming salary equity for all teachers and administrators, tuition remission may be seen not as a benefit, but as a means of maintaining equal spendable income for staff with and without children.

ISM also tackled this topic in an article, stating that schools are not required to offer any discounts or remission: “Not offering tuition remission doesn’t mean that you don’t support your employees. It simply means that the school’s strategic financial plan doesn’t support free tuition — especially if it supports generous financial aid.”

The idea of offering only need-based “gifts” opens the door for schools to ask employees who would not normally qualify for financial aid (let’s say a teacher is married to a highly successful cardiologist) to waive their tuition remission or perhaps ask them to make a particular gift to the annual fund or capital campaign. That scenario allows the employee to receive the tax benefit, both for the remission and for their donation.

While applicants for school jobs often inquire whether the school offers a tuition discount, the lack of such a perk does not necessarily eliminate the school as a potential employer, unless perhaps the candidate receives multiple offers from similar schools. Said one school head: “I do not believe that this policy has had any negative impact on hiring or teacher retention. Those who need the assistance receive it and those who do not don't.”

As well, with potentially changing tax laws and rules regarding compensation, tuition remission may come to be regarded as taxable income and require new reporting duties for the school. It may even be taxed as bonus income.

The debate undoubtedly will continue and the biggest question for a school to consider is whether this type of program is central to its hiring and retention practices, and ultimately, to its mission. 


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