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Lumina Foundation’s ROI study proves the value of your tuition assistance investment


| Executive Director

Posted In: Workforce Insight, Workforce Research

Apr • 28 • 2016

The i4cp, in partnership with UpSkill America, recently released a report sharing that 82 percent of employers offer tuition assistance to frontline workers, and 39 percent of employees in high-performing organizations take advantage of it. Now the Lumina Foundation has followed up with detailed research about the return on investment (ROI) of tuition benefits investments, starting with a case study of Cigna Corporation (Cigna), a major global healthcare payer.

US employers spend approximately $177 billion annually on formal training and talent development, $28 billion of which is tuition reimbursement, according to a study from Georgetown University.  And C-suite leaders want to see return on those investments: a 2010 ROI Institute survey of Fortune 500 CEOs revealed that 96 percent of respondents reported interest in understanding the investments and impact of their company’s learning and development initiatives.

However, as few as 5 percent of organizations have evaluated the ROI on their tuition assistance programs. So where is the disconnect? In part, it is because tuition assistance programs have long been considered a benefit and not part of a strategic learning and development strategy. This mindset is changing, though: Higher education and business-education partnerships are increasingly being used as talent development strategies to bridge skills gaps, engage workers, and promote frontline employees.

This week, we learned how well this approach is working at Cigna. The Lumina Foundation partnered with Cigna and Accenture, an international consulting organization, to design and execute their study. From 2012 to 2014, Cigna provided 2,200 employees with millions of dollars in tuition assistance through its Educational Reimbursement Program (ERP), equating to a 5.8% utilization rate over those three years. While its HR leadership believed that ERP was an important benefit for its employees, Cigna had not quantified its business value.

The April 2016 report “Talent Investments Pay Off: Cigna Realizes Return on Investment from Tuition Benefits” shares the fantastic results of the study.

Over the three year period, Accenture and Cigna determined that, for every dollar spent on the ERP, the organization recouped that investment and saved an additional $1.29 in talent management costs—a 129 percent ROI. Additionally, employees who took advantage of the ERP saw 43 percent incremental wage gains and had more career opportunities. And ERP participants versus non-participants achieved more promotions (by more than 10 percent) and transfers (by more than 7.5 percent) and stayed longer with Cigna (more than 8 percent).

Working closely with our partners to achieve these types of metrics is central to College for America’s model—in fact, all of our students come through employer partners. Our competency-based degree programs are built explicitly with business needs and ROI in mind: they are designed around skills that are required to advance in the workforce, and our low cost means that tuition reimbursement dollars go farther in extending access to the benefit and in paying back the investment. We believe organizations should start fostering higher education partnerships as part of their talent development strategy, as our partners do. College for America’s partner Anthem Inc. has seen tremendous success with our program, including 20 percent of Anthem associates who have graduated from College for America have earned promotions.

We’re very excited about the Lumina study, which contributes to a growing body of evidence that partnerships between higher education and businesses can yield great impact—for students as well as their employers.

Download the full report here.