June 16, 2014
Starbucks soon will be helping college kids with more than pulling all-nighters.
The company best known for its pricey java chip frappuccinos said Sunday it will pay a huge chunk of college tuition for its baristas and the rest of its 135,000 U.S. employees through a new partnership with Arizona State University.
Many companies reimburse students for a portion of the undergraduate or graduate school tuition, but fewer go this far—and the coffee chain won't require employees who use the benefit to continue working at one of its 8,000 stores past graduation.
"There's no doubt, the inequality within the country has created a situation where many Americans are being left behind," Starbucks CEO Howard Schultz said. "The question for all of us is, should we accept that, or should we try and do something about it?"
The Starbucks College Achievement Plan will fully reimburse employees enrolled as college juniors and seniors in one of more than 40 of ASU's online degree programs. Starbucks will pay partial tuition and provide need-based scholarships if students are enrolled as freshmen or sophomores.
Schultz will officially kick off the program Monday in New York City alongside ASU President Michael Crow, Education Secretary Arne Duncan and 350 New York-area Starbucks employees at a forum on college access and how business can play a role in addressing college affordability.
"Those who've been clamoring for bold, new initiatives to reduce the barriers to quality higher education in America should applaud this announcement," Crow said. "As others follow Starbucks's example, we will hear those barriers come crashing down, to the lasting benefit of all Americans."
The Obama administration has set a goal of having the highest proportion of college graduates in the world by 2020 and has pressed colleges to improve access, especially for minority and low-income students. And last week, the White House and several Democratic senators began using collective student loan debt—which is now more than $1 trillion—as a political bargaining chip for the midterm elections. Obama also signed an executive order that would allow more borrowers to benefit from past White House action capping monthly loan repayments.
Starbucks said it can't project how many of its employees might use the benefit. Only a quarter of its workforce has a bachelor's degree, however, and the company says 70% are current or aspiring students. About 60% of U.S. students who set out to earn a bachelor's degree actually earn that credential within six years of enrolling in a four-year school, Education Department statistics show.
"Our partners have told us that help earning—and more importantly finishing—their college degree is the most important benefit we could offer beyond the comprehensive health care coverage and our Bean Stock [company stock] programs we introduced for our full- and part-time partners more than two decades ago," Starbucks spokesman Jim Olson said.
Starbucks employees who work an average of 20 hours per week are eligible for the new program, the same qualifications the company requires for its comprehensive health care benefits.
Schultz said the new reimbursement program, far richer than Starbucks's current tuition benefit, was inspired by participation in the Markle Economic Future Initiative. He co-chairs the group with Zoe Baird, head of the Markle Foundation and one-time U.S. attorney general nominee. ASU's Crow is a member.
ASU will accept transfer credit from Starbucks's employees and as part of the Starbucks program, the university will provide coaching and academic advising for students. It was chosen because it was the only institution that could offer high-quality education at scale to all Starbucks's employees who might be interested, Olson said. ASU's online undergraduate program costs between $480 to $543 per credit hour.
Part of what makes Starbucks's program unusual is that it isn't expecting graduates to stay at the company after they graduate—though Olson notes the company already has a high retention rate.
"It's actually more common for companies to support postgraduate studies, because they want to hold on to those workers," said Mary Alice McCarthy, a senior policy analyst specializing in higher education at the New America Foundation. "That said, companies do have an interest in growing their own talent pipelines so they can hire and promote from within, which is why they often provide some tuition reimbursement."
McCarthy noted another program working on a related effort to Starbucks's: Southern New Hampshire University's "College for America" program, in which about 10 employers, including giants McDonald's and ConAgra, help employees earn associate's and bachelor's degrees online, at their own pace. And the program is very inexpensive: $2,500 a year, an amount typically covered by an employer's existing tuition-reimbursement benefit.
But it offers fewer degree options than ASU's online programs. Starbucks's employees will be able to choose programs including electrical engineering, nursing, philosophy, political science and Spanish.
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