Many companies offer tuition assistance to help employees upskill and grow within the organization. However, some workers take the funds, earn their degrees, and then leave—saddling employers with the bill and no return on investment.
So, what can businesses do to recover tuition loans from departing employees—and how can they prevent future losses?
How to Recover Tuition Costs from Former Employees
Your employee has left with their fresh degree. How can you get your tuition funds back? If an employee jumps ship after taking advantage of tuition assistance, companies have a few legal and financial options to reclaim their investment.
Arrange a Repayment Plan
If you’re still in contact with the ex-employee, you can try to discuss the problem with them. Let them know that they owe you funds for the tuition used. In the case that the ex-employee agrees, set this agreement in writing. Include the repayment amount and the due dates.
Use a Professional Debt Collection Agency
One of the simplest solutions for employee debt collection is hiring a professional debt collection agency. These experts will contact your now ex-employee to arrange for a repayment plan on your behalf.
Debt collection experts are especially useful when your ex-employee is unresponsive to requests for repayment or they have “disappeared.” The right agency can use skip-tracing techniques to find the ex-employee’s current contact information.
Take Them to Court
If you have a tuition reimbursement agreement with your ex-employee, and they are not cooperating with repayments, you can take them to small claims or civil court (depending on the amount owed). The reimbursement agreement will serve as evidence of breach of contract. A judge is likely to take your side in the case and assign court-ordered repayments.
The court will not enforce these repayments from the ex-employee. To guarantee that you receive those court-ordered repayments, you should turn to a debt collection agency for help.
How to Prevent Future Tuition Fraud
You shouldn’t cancel tuition programs to avoid this problem. Tuition programs are still an amazing way for your company to enhance the skills of its workforce without having to conduct any new hires. Keep the programs–just implement policies to prevent employees from abusing them.
1. Shift to a Performance-Based Reimbursement Model
Instead of paying tuition upfront, you can:
- Reimburse employees after they complete each semester with a minimum grade requirement.
- Offer staged reimbursement—paying 50% during coursework and 50% after a required service period.
2. Implement a “Clawback” Clause
Some companies structure tuition benefits as forgivable loans rather than direct payments. If the employee leaves early, the balance converts into a debt that must be repaid.
3. Monitor Employee Retention Trends
If employees frequently leave after receiving tuition aid, it could signal broader engagement and retention issues. Conducting exit interviews and satisfaction surveys can help pinpoint problems before they escalate.
Tuition reimbursement is a powerful tool—but without safeguards, it can become a financial sinkhole. By arranging repayment agreements, using debt collection services, and implementing smarter reimbursement models, businesses can protect their investment while ensuring education benefits remain a win-win.