REDUCED TUITION BENEFITS – UNIVERSITY POLICY 5-305
Applicants must meet eligibility rules before the first day of the semester and
must continue to be eligible on the first day of the semester.
Current Employee: Faculty and staff are eligible for tuition reduction after six months of full-time (.75 FTE or greater) employment.
- One-half of the applicable resident or non-resident rate for undergraduate, graduate, and Continuing Education courses.
- All undergraduate tuition reduction benefits and first $5,250 of graduate tuition reduction benefits are a tax-free benefit.
Spouse of Employee: Spouses of current employees are eligible for tuition reduction after the employee has completed one consecutive year of full-time employment.
- One-half of the applicable resident or non-resident rate for undergraduate, graduate, and Continuing Education courses.
- All undergraduate and Continuing Education tuition reduction benefits are a tax-free benefit. (All graduate tuition benefits are taxable to the employee.)
Child of Employee: Unmarried, dependent children under the age of 26 of current employees are eligible for tuition reduction after the employee has completed three consecutive years of full-time employment with the University.
- One-half of the applicable resident or non-resident rate for undergraduate and graduate courses (does not apply to Continuing Education courses).
- All undergraduate tuition reduction benefits are a tax-free benefit. (All graduate tuition benefits are taxable to the employee.)
Volunteer Faculty: Volunteer faculty members who receive no pay from the University and their spouses are eligible for tuition reduction. The reduction does not apply to differential tuition. Benefits may be taxable (see above).
Emeritus and Spouse: Emeritus faculty and staff members and their spouses are exempt from payment of tuition and student fees. Exemption does not apply to course special fees. Benefits may be taxable (see above).
Retired Employee: Retired faculty and staff, their spouses and unmarried, dependent children under the age of 26 are eligible for tuition reduction after the employee has completed five or more years of continuous service immediately prior to retirement as defined in Policy 5-112. All rules above apply.
Surviving Spouse/Children of Deceased Employee: The spouse and unmarried, dependent children under the age of 26 of deceased employees are eligible for tuition reduction if the employee completed six months of continuous service immediately prior to his/her death. Rules for spouse and children above apply.
ADDITIONAL RULES:
- Eligibility requirements must be met before the official first day of the regular semester in which classes are to be taken.
- Tuition reduction does not apply to special fees, program fees, lab fees, miscellaneous fees, student insurance, text books or study abroad charges.
- There is no limit on the number of credit hours per semester.
- If an employee is also a spouse or unmarried dependent child of an employee, tuition benefits are available in either capacity, subject to the limitations specified in University Policy 5-305 and Rule 5-305A.
TAXABILITY OF TUITION BENEFITS: The Internal Revenue Code (IRC) provides three sets of rules that may be used to determine whether a tuition benefit is taxable. If any of the three provisions applies, the tuition will be a tax-free benefit.
- IRC Section 117(d) (Qualified Tuition Reduction Programs). Tuition benefits provided to employees, their spouses and dependents for undergraduate courses may be excluded from taxable income. There is no dollar limit on the amount that may be excluded. However, Section 117(d) only applies to undergraduate courses – graduate level courses are taxable (unless the student is “engaged in teaching or research activities” for the University).
- IRC Section 127 (Educational Assistance Programs). The University of Utah Employee Educational Assistance Program qualifies as an Educational Assistance Program. Section 127 applies to employees only. The maximum amount that may be excluded from taxes under Section 127 in any year is $5,250. The Section 127 exclusion applies generally to graduate-level tuition benefits except for classes involving sports, games, or hobbies which are neither job-related nor required for a degree.
- IRC Regulation Section 1.132-1(f) “Fringe Benefit” rules. The IRS fringe benefit rules provide that tuition can be a tax-free benefit if the education “maintains or improves job skills”. Under these rules, the exclusion does not apply if the course is required to meet the minimum educational requirements of the employee’s job or if it qualifies the employee for a new occupation. The fringe benefit rules do not apply to tuition benefits provided to a spouse or child of an employee.
The University complies with federal and state tax regulations governing any applicable taxability, tax reporting and/or withholding of taxes on the University's reduced tuition and educational assistance programs. The value of any taxable tuition benefits will be added to the employee's taxable income and be subject to all employment tax withholdings near the end of the semester.
HOW TO ENROLL
If you are an eligible employee, you may apply for tuition reduction benefits through UBenefits. You must submit a new application for each semester.
If the application is not received and processed before the day tuition is due and tuition is not paid, all classes may be dropped. The student may re-enroll after tuition has been paid, but may not be able to enroll in a desired class if the class is full.