The Expense of Education

Intel Corporation, based in Santa Clara, California, has always put a premium on education. At any one time, about 5 percent of the approximately 90,000 employees of the world’s largest producer of computer chips are enrolled in some sort of educational program. And as of last fall, about 600 of those Intel employees were taking courses through the Phoenix-based University of Phoenix, a private, for-profit institution that offers online and classroom courses at almost 200 campuses across the country.

But in November, Intel announced that it would no longer reimburse employees for classes taken at the University of Phoenix and other schools as part of a stricter set of standards it was setting for tuition reimbursement. Now Intel, which reportedly spent $25 million on employee education in 2005, will only approve reimbursement for business programs accredited by the Association to Advance Collegiate Schools of Business (AACSB).

"Employers should challenge the students to come back with something useful from their coursework."

Part of the reason for the change was that Intel employees with MBA degrees from the University of Phoenix weren’t as successful in competing for promotions and new positions as graduates from other MBA programs, leading the company to question whether it was getting a return on its investment. “Folks were earning degrees that weren’t necessarily needed at Intel,” Gail Dundas, an Intel spokeswoman, told reporters. “We’re strong believers in continuing education for our employees. We want to make sure our employees are benefiting from it.”

That concern is certainly warranted. Businesses that help pay for employees’ education expenses should be doing all they can to be sure that they are getting the best value possible for their investment, especially as the cost of higher education continues to rise. Knowing a school’s accreditation status is part of that picture.

“Companies should do their own internal analysis of the return on investment,” says Rachelle Holm, the director of graduate admissions for the Opus College of Business at the University of St. Thomas campus in Minneapolis. “They should be evaluating the value that those students are bringing back into the workplace. Are they meeting the needs of the organization? If so, then the tuition reimbursement is a good thing.” Holm suggests evaluating the performance of employees on a regular basis as a way to determine return on investment.