What's the difference between a tuition assistance loan and a sign-on bonus?

  1. I just got my contract in the mail from my new employer. I was told there would be a promissory note to sign because I'm getting a "tuition assistance loan" which is, in essence, a sign on bonus that becomes payable if I don't complete two years of work for them. This note says that they are authorized to take out a certain amount toward the loan each paycheck and at the end of two years, I am responsible for payment of taxes on the full amount. Anyone else out there sign a similar contract? I didn't expect to see anything about paying back the loan while employed. I'm confooosed! What's the real deal?
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  2. 6 Comments

  3. by   llg
    It sounds to me as if the "real deal" is what they have clearly spelled out in the contract. That is a legal document and that is what they can (and will) hold you to if you accept their loan.

    Good for them! They are clearly telling you what the real deal is.

    Good for you! You have read the details and can now decide whether or not that is an agreement you wish to enter into.

    In common language, it sounds to me as if you are being offered a "loan" instead of a "sign-on bonus." A "loan" needs to be paid back. Some hospitals will "forgive the loan" and not require you to make payments on it as long as you are working for them. Re-read your contract carefully and see if that is the case with your loan. If you are not sure if that is a part of the contract and someone tells you that it is ... ask them to point to the sentence that says you don't have to pay it back if you work for them for 2 full years.

    A "sign-on bonus" is money given upon employment or received after you have worked for a specified length of time. Sometimes, if you receive the money at the beginning of employment, you will have to pay it back if you don't stay a specified period of time.

    A loan with a forgiveness provision and a sign-on bonus that has to be paid back if you don't stay end up being essentially the same in terms of the money. You get money up front and have to pay it back if you leave before a specified time. However, not all loans and not all sign-on bonuses have those provisions -- so, they are sometimes different.

    I hope that makes sense.

    The lesson is ... as usual ... read the contract carefully. Be sure you understand what you are signing before you sign. (I think you already know that.) Perhaps have a lawyer review it and/or someone knowledgable about these issues. It's hard to tell the specifics from what you have said in your post alone.

    Also ... don't forget ... once you sign the contract, "they have you." They don't have to please you by giving you the work assignments that are your first choice. Some hospitals use people like you to fill the unpopular positions they can't otherwise fill -- and use the popular positions (and schedules) to lure in additional nurses who have not signed a committment and therefore need to be "recruited" and "enticed" to come work there. Be careful and check that sort of thing out thoroughly, too.

    Good luck,
    llg
  4. by   Shadelyn
    I have almost the exact same thing, only it is to start school and after I graduate I have to work for them for 2 years for forgiveness (or as I call it indentured servtitude).

    In mine there were 2 clauses about taking money from my paycheck. The first was that they would take $X from my a pay to cover the taxes on the loan, because it is "taxable income" according to the govt'. They will give said money back to me later to pay these taxes. I think this is crap because I could save this money myself in an intrest bearing account until I have to pay the taxes, but beggers can't be choosers I guess.

    The second was that they would take $Y per pay to repay the loan. That is all the details that is gives, but I was told that that is in there incase I am "underemployed" according to the terms of the loan. In other words they are giving me money to be a full time RN, so if I work for them as anything other than a full time RN they will take $Y from my check.

    So legally according to my contract they can take X+Y from my check. I really wish that the underemployment thing was in there, but I can't complain right now it is free schooling and that's all that really matters.

    Hope this helped.
  5. by   Altra
    Quote from llg
    In common language, it sounds to me as if you are being offered a "loan" instead of a "sign-on bonus." A "loan" needs to be paid back. Some hospitals will "forgive the loan" and not require you to make payments on it as long as you are working for them. Re-read your contract carefully and see if that is the case with your loan. If you are not sure if that is a part of the contract and someone tells you that it is ... ask them to point to the sentence that says you don't have to pay it back if you work for them for 2 full years.

    A "sign-on bonus" is money given upon employment or received after you have worked for a specified length of time. Sometimes, if you receive the money at the beginning of employment, you will have to pay it back if you don't stay a specified period of time.

    A loan with a forgiveness provision and a sign-on bonus that has to be paid back if you don't stay end up being essentially the same in terms of the money. You get money up front and have to pay it back if you leave before a specified time. However, not all loans and not all sign-on bonuses have those provisions -- so, they are sometimes different.

    I hope that makes sense.
    Kathy,

    Having applied to the same institution, I'm familiar w/the terms. As llg stated, the bonus is essentially a loan which is "forgiven" as long as you meet your end of the deal - remaining employed there for the length of time specified.

    The part about taking taxes out kinda burns me ... as an adult I'm smart enough to be able to say to myself, "hmmm ... what are the tax implications of this?" and take appropriate action on my W-4 at my own discretion. But maybe that's just my own personal quirk ... :chuckle

    HTH
  6. by   wonderbee
    Thanks everyone for your input. I'm good with it. I've sent the papers back all signed and sealed and am on my way down the path of happy destiny.:uhoh21: Now I just have to pass this final semester

    MLOS, good to hear from you! Give me an email or pm when you can.
    Last edit by wonderbee on Sep 26, '05
  7. by   studentnurse74
    Mine's actually a sign-on bonus, but they call it a tuition bonus to make it tax-free. We sign a contract for 4,160 hours beginning after we accept an RN position. If we work only part of the hours, they pro-rate the bonus and we owe the difference.
  8. by   purplemania
    you have to repay a loan.

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