Starbucks CEO Howard Schultz announced today that the beverage behemoth will begin offering the equivalent of two years of college classes at Arizona State University’s online studies program this fall to some 135,000 baristas across the country.
This is the most robust education incentive offered by any company in the retail industry. Other companies like Wal-Mart offer partial grants for tuition, but Starbucks' latest experiment offers free tuition for some workers with very few strings attached — workers don’t have to stay at the country’s mega coffeehouse after they earn their degree.
The increased focus on using free or discounted tuition as an incentive to recruit and retain employees is notable in the age of Obamacare. Before the law, employer-offered health coverage was a major draw for workers. But now large companies are required to offer coverage to all of their full-time employees. Part-time workers, like the thousands who work at Starbucks, can get coverage on the exchanges, forcing companies to look elsewhere for other incentives.
As Business Insider’s Joseph Weisenthal notes, Obamacare not only means employer-offered coverage is less of a draw, but it’s also less of a “hook” to keep current employees since people will no longer need to stay at jobs to have coverage. “This should help,” Weisenthal writes, as “employees who are working towards a degree will be less inclined to leave if it means losing subsidized access.”
Affordable education is in demand as tuition costs increase each year and the amount of student debt grows to more than $1 trillion. Lawmakers in Washington have offered several new proposals to make college more affordable, but now private companies like Starbucks are getting in on the game.
When unveiling the program, Schultz said the purpose is to help bridge the equality gap and try to minimize the amount of student debt. "There's no doubt, the inequality within the country has created a situation where many Americans are being left behind,” Shultz said. “The question for all of us is, should we accept that, or should we try and do something about it."
So here’s the deal: In partnership with Arizona State University's online program, Starbucks employees who work at least 20 hours a week can get full tuition if they are juniors or seniors. Freshmen and sophomores can receive scholarships worth an average of $6,500 for the program, which typically costs about $10,000 per year. ASU advisers will also be available to help the student workers apply for other need-based financial aid like Pell Grants.
“We don’t care what you major in. You major in what seems cool to you,” Crow told an audience in New York alongside Schultz and Education Secretary Arne Duncan.
For now, it’s unclear how much the program will cost the company, as they don’t have an estimate of how many student workers will take advantage of the offer. Starbucks spokeswoman Laurel Harper says about 70 percent of Starbucks workers — including those at Teavana, La Boulange, Evolution Fresh and Seattle's Best Coffee — are students or aspiring students, USA Today reported. Meanwhile, about 20 percent of Starbucks workers already have their Bachelor's degree.
The company already has a tuition reimbursement program, which started in 2011 and gives workers $1,000 a year for courses at the City University of Seattle and Strayer University. It’s paid out about $6.5 million under that program, The Wall Street Journal reported.
Other major retail companies that have tuition assistance programs include Wal-Mart, which started offering partial tuition grants for workers in 2010 through American Public University online, a for profit university. According to Wal-Mart’s website, about 400 workers have completed degrees through its program.
Top Reads from the Fiscal Times: