Educational Assistance - Tax Treatment

Educational Assistance - Tax Treatment

February 26, 2014

Professional Development

University employees can be reimbursed for approved employee developmental activities. These expenses are generally not taxable to the employee and should be paid from appropriate departmental funds. Reimbursements for developmental activities require advance approval by the department head or chief administrative officer (CAO).

UC Reduced-Fee Enrollment Program

University employees can receive a two-thirds reduction in fees for courses taken at any campus of the University of California. The Reduced-Fee Enrollment Program is available to career employees who have completed their probationary period (if applicable) and have gained admission to regular-session University classes while working at the University. UC Extension (UNEX) offers a separate fee reduction (see Related Information).

Eligible employees receive a two-thirds reduction on both University registration and education fees. A fee reduction is available each quarter for up to three classes or nine units, whichever is greater. 

Section 127 Educational Assistance

Under IRC Section 127, educational assistance provided to an employee is not taxable, up to a maximum of $5,250 per calendar year, and includes payment for graduate-level courses.

Obtaining Benefits 

  1. First apply for admission to the University of California by contacting the admissions office.
  2. After you have gained admission, complete the reduced-fee enrollment form appropriate to your employment status and campus location:
  1. Return the completed reduced-fee enrollment application to the appropriate Campus Human Resources office as noted on the form.

After review of your application and verification of eligibility, the online Billing & Accounts Receivable (BAR) system will be updated and will apply the appropriate reduction. 

Note: A reduced-fee enrollment application is required for each quarter in which you participate in the program.