QUESTION: If our company sets up a qualified educational assistance program, what expenses can the program reimburse? For example, can we limit reimbursements to courses that are related to our business?

ANSWER: The Code’s qualified educational assistance rules generally allow any form of instruction or training “that improves or develops the capabilities of an individual” to be reimbursed. The education can be part of a degree-granting program (including graduate-level courses), but it does not have to be. Reimbursable expenses include, but are not limited to, tuition, fees, and similar payments, and books. Employers may also provide educational assistance by paying an employee, or reimbursing the employee’s lender, for the principal and interest on a qualified education loan incurred by the employee for the employee’s education. Of course, there are some restrictions:

• Education cannot relate to a sport, game, or hobby, unless it involves the employer’s business or is required as part of the student’s degree program.
• Meals, transportation, and lodging cannot be reimbursed.
• Supplies and equipment (other than textbooks) can only be reimbursed if they cannot be kept after the course is completed.

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