A Complete Guide to Educational Stipends

Education doesn’t stop when you graduate high school. Adults continue to pick up new skills throughout their lives, whether learning how to retile their bathroom, teaching their pet a new trick, or even exploring AI prompts for the first time. 

Research suggests middle-aged and older adults can learn just as effectively as younger people. In fact, the brain has a remarkable ability to keep growing and changing throughout adulthood. Companies can tap into this potential by supporting employees with their development. 

This guide explores how companies can use education stipends as a funding method to boost personal and professional growth. 

What is an educational stipend? 

An education stipend, also known as a learning stipend or a professional development stipend, is a sum of money employers give their employees to spend on expenses related to their growth and development. 

They’re a tax-deductible way for employers to support their employees with their continuous learning journey, meaning that employees don’t need to pay taxes on the amount they receive. This allows workers to use the full amount toward their education, making it a highly beneficial perk for both parties involved.

Real-life example: Prospecting platform Crunchbase uses the Benepass Professional Development Account, which employees can use to spend on work-related professional development expenses, including student loan repayment, travel (airfare, hotel, car rental, rideshare), and food purchases during conference attendance.

Education stipends vs. tuition reimbursement

Stipends aren’t the only way to fund employee development. Tuition reimbursement is another common vehicle to use, but there are distinctions between the two: 

• Employees can use education stipends for a broader range of expenses—for example, books, online courses, and workshops. Tuition reimbursement programs are usually limited to traditional degree programs.  
• Employees often receive learning stipends with no strings attached. On the other hand, tuition reimbursement may require employees to remain with the company for a set period after receiving payment or else pay part or all of it back. 
• Employees receive their educational stipends upfront, meaning they never have to go into debt or go through a lengthy reimbursement cycle to receive their money back. With tuition reimbursement, employees typically receive the cost of their training back after they’ve completed their program and submitted receipts. 

Megan Schulze, People Operations Partner at Crisis Text Line, explains why the reimbursement model wasn’t a good fit for Crisis Text Line’s professional development: 

“We have a lot of Justice, Equity, Diversity, and Inclusion (JEDI) initiatives, and asking someone to pay $650 upfront for professional development is a big blocker to being able to use their perks.”

How do educational stipends work? 

An education stipend program should be formal and fair.

For employers, this means defining: 

• Eligibility and usage guidelines
• The company’s funding level and frequency of payment 
• A reasonable process for reviewing and approving stipend requests 
• A tracking system to understand how your employees spend their educational allowance 

Once set up, employees can: 

• Consider the types of educational purchases they wish to make 
• Access their stipend allowance 
• Spend it according to their employer’s eligibility criteria without going out of pocket 

8 types of educational stipends 

Educational stipends come in all shapes and sizes but are usually tied to three distinct categories—those based on funding levels, frequency of disbursement, and flexibility.  

1. Fully funded stipends 

Best for: Companies with a strong focus on upskilling and retaining employees. 

As an alternative to tuition reimbursements, fully funded stipends cover the entire cost of eligible educational expenses without workers having to front the cost. This works well for higher-end costs such as conference fees and professional certification courses. 

2. Partially funded stipends 

Best for: Companies wanting to offer development support while managing costs. 

Of course, it may not be possible to fund the entire cost of an employee’s education. With the average cost of an online bachelor degree course reaching $54,231 in 2024, it’s entirely understandable this may be out of reach for many employers. 

Stipends are the perfect middle ground, supporting employees with just a portion of the cost but expecting them to pay the remaining balance. This is also an effective way to encourage employees to take ownership of their education. 

3. Monthly stipends 

Best for: Companies aiming to create a continuous development culture and keep up with ever-evolving skill trends. 

In this model, employers pay their team members a set upfront amount each month. For example, employees might receive a $100 monthly stipend to spend on online subscriptions, books, or smaller online courses.

4. Annual stipends

Best for: Organizations focusing on strategic, long-term development where employees can plan yearly educational activities. 

As it says on the tin, employees receive their lump-sum stipend once a year, which gives them more flexibility in planning (or booking) bigger learning initiatives. For example, they might receive an annual stipend of $2,000 to put toward major training programs and certifications or conferences.

5. One-time stipends

Best for: Companies wanting to make a large, meaningful contribution to an employee’s professional growth without a recurring cost.

One-time stipends tie in well with the partial or fully funded stipend model. They allow employers to offer a significant educational investment, perhaps enabling them to complete a highly specialized course. For example, a junior employee may receive a one-off stipend of $5,000 to complete a certification in their field. 

6. Restricted stipends

Best for: Companies wanting to direct their educational investment toward high-priority employee skills that are directly beneficial to the business.

Companies can limit their stipends to specific types of educational spending aligned closely with the employee’s role or the company’s goals. For example, technology-focused companies may offer stipends for coding boot camps, while sales-driven organizations could focus on public speaking or leadership courses.

7. Flexible stipends

Best for: Employers committed to accommodating diverse interests and employee learning needs.

Flexible stipends are the opposite of restrictive—they allow employees to choose career development opportunities that excite them and match their interests. Of course, employers can still play a huge part in shepherding employees toward their career goals. They can also set up eligible spending criteria to ensure employees spend their allowance on approved expenses. But ultimately, employees can use their stipend for whatever they believe will elevate their expertise, experience, or professional growth. 

8. Tiered stipends by seniority or tenure 

Best for: Aligning stipends with career progression, rewarding tenure, or offering greater resources to roles with higher personal development requirements.

While it’s important to offer an equitable work environment, there may be situations where it makes sense to offer different stipend amounts based on different employee roles or levels of seniority. For example, you might offer your technical or accounting teams higher stipend amounts, knowing the professional development costs are expensive in these fields. 

What can employees spend their education stipends on? 

The beauty of setting up an education stipend is they’re entirely customizable. The ball is in your court to decide what you wish your employees to spend their allowance on. And, of course, the amount you're willing to offer will influence the types of educational activities they can afford with their stipend. After all, there's a world of difference between the cost of a textbook and a four-year degree course. 

Here are some ideas: 

Online or in-person courses and classes

Courses on online learning platforms offer flexible scheduling so employees can learn at their own pace. In contrast, in-person classes provide more hands-on learning opportunities and networking possibilities. Both have their advantages, so preference boils down to the employee's learning style and availability. In either case, the stipend can help cover the cost of the training plus any associated exam fees. 

Real-life example: Andres, aged 39, from Madrid, Spain, uses his Benepass Professional Development Account to pay for CFA exam fees, enabling him to advance his career in finance.

Virtual and in-person conferences 

Attending industry events is a great way for employees to stay up-to-date on the latest trends and network with professionals in their field. Stipends can cover registration fees, travel expenses, and accommodations.

Career coaching 

Time with a career coach can help employees identify their goals and any blockers preventing them from reaching their full potential. Career coaching is different from mentorship in that it encourages the coachee to explore their own ideas and take actionable steps towards achieving them. Unlike mentoring, there’s usually a cost involved. 

Regular weekly, biweekly, or monthly coaching sessions can quickly add up, which is where an educational stipend can support this growth. 

Real-life example: Jared, aged 28, from Nashville, Tennessee, uses his Benepass Professional Development Account to pay for a career coach who helps him plan for his future in leadership. 

Professional memberships 

Memberships to professional organizations like the Josh Bersin Academy can provide employees with access to valuable resources, networking opportunities, and educational materials. Running at several hundred dollars per year, stipends can cover the costs of membership fees, allowing employees to stay connected with their industry and continue learning.

Learning materials 

Books, online subscriptions, software licenses, or even language courses can be valuable resources for employees to expand their knowledge and skills. With a stipend, they can invest in these materials without worrying about the cost.

5 best practices for setting up educational stipends 

Follow the steps below to design and roll out a successful education stipend program and quickly boost employee productivity through upskilling: 

1. Develop a clear and transparent stipend policy 

Set clear guidelines and expectations for how employees should use the stipend, including eligible expenses and any limitations, to ensure a smooth rollout. Communicate these guidelines to staff members through your employee handbook or during onboarding to provide clarity from the start.

2. Align your stipend offerings with organizational goals 

Stipends are most effective when they align with the company's goals and objectives. Consider what skills or expertise would benefit your business in the long run, and tailor stipend offerings to support these goals.

3. Customize the program to your employee needs 

While setting a clear framework for your education stipend is important, make sure it's not too rigid. Employees should enjoy a decent amount of flexibility, giving them the freedom to invest in their professional development and personal growth as they see fit. 

4. Gather employee feedback 

Want to know how your employees are experiencing your platform? Ask them. Giving your workforce a voice about the benefits they receive and their potential growth within your company is an important way to boost employee morale. 

Ask questions in your 1:1 meetings or as part of your employee job satisfaction surveys to understand: 

• If you’re offering the right breadth of education categories within your stipend
• If your employees find the stipend easy to access and use 
• If the stipend allowance is generous enough to meet their educational needs 

5. Review and update your stipend offerings

Alongside the feedback you collect above, consider tracking some of the following metrics to evaluate your stipends: 

• Stipend usage rates: Track how often employees are taking advantage of the stipend to gauge its popularity and effectiveness 
• Preferred educational activities: Look at which types of educational activities your employees are most interested in and adjust offerings accordingly 
• Employee retention rates: Keep an eye on retention and turnover after implementing the stipend program to see if it’s helping to retain talent 
• Internal mobility rates: Monitor if employees are using their new skills to move within the company, indicating the stipend is contributing to employee growth
• Skills assessment scores: Regularly assess employee skills before and after implementing the stipend program to measure its impact on their growth and development. 

Support employee education with Benepass 

Benepass makes it easy to support your workers' personal career growth with a central, streamlined platform. Our Benepass Professional Development Account works as follows: 

• You’ll select a professional development allowance for each employee in your organization. Our benefits specialists can help you create a budget that makes sense for your business. 
• You’ll define what qualifies as part of your Professional Development Account, such as conferences, seminars, coaching, networking events, books, and courses. 
• We’ll implement your unique policy into our platform and code your Visa Benecards, which your employees can use just like a debit card to make educational purchases. 
• We’ll connect to your payroll system to automate enrollment.
• You’ll communicate your new benefits offering to your employees and invite them to join Benepass, where they can start spending from day one. 

Here's how one enterprise employee describes using Benepass to support his education: 

“I love being able to buy courses that benefit me with not only my professional interests but personal hobbies. Benepass helps me read up on things I usually wouldn't and it's been an amazing privilege to be able to get new books.”

Ready to fill skills gaps in your organization? Learn how companies can offer an attractive education stipend package by booking a free Benepass demo today. Alternatively, you can contact sales@getbenepass.com to connect with a benefits specialist.