This is very unusal for any small business based on my experiences. I commend you for offering this incentive. I think your $1200 per semester is a nice sum. I know some larger companies that pay more, but for a small business, this is excellent. And I imagine you picked the $1200 figured based on what you can afford at this time.
The one thing I would suggest is to eliminate the 2.5 grade incentive level. Personally, if they can`t reach a 3.0, no reimbursement. If you set a low mark to hit, someone will hit it. Set the benchmark high - it is a reflection on you and your company and the employees will know you expect the best out of them and will want to continue working with you and other quality employees.