With its offer of free or sharply reduced tuition to some 135,000 U.S. employees, Starbucks is brewing up a plan that higher education advocates call a potential game-changer for low-income students, and one that could benefit American employers too.
The coffee giant is partnering with Arizona State University to offer free or subsidized access to all of the more than 40 degree programs offered online by ASU.
Sign up for top Business news direct to your inbox.
“It’s a remarkable thing really,” said Anthony Carnevale, director of the Georgetown University Center on Education and the Workforce, calling the program “incredibly generous and smart.”
“We need more and more opportunities for low-income kids to go to college,” agreed Ron Haskins, senior fellow at Brookings Institution. “We have very good evidence that kids from the bottom 20 percent [of the income spectrum] who get a college degree increase by a factor of four the chance of making it to the top 20 percent, and reduce by almost two-thirds the chances of staying in the bottom,” he said. “If they’re serious, and all they lack is the money, this is a tremendous opportunity.”
Starbucks says most of its “partners,” as it calls employees, have aspirations for college: either they’re in school, completed some college and dropped out, or want to earn a degree. Nationwide, only about half the students who start college actually complete it, leaving many with crippling student loan debt and without the added earning power a degree confers.
This makes the new program smart for Starbucks, too.
“It is unusual for companies in retail to provide such benefits,” Mark Kantrowitz, senior vice president and publisher at Edvisors.com, said via email.
In this economy, hiring people for front-line retail positions is easy. It’s getting the good ones and keeping them that’s harder, Carnevale said. “I think they’ve closed the last barrier to retention, which is allowing people to continue their education or start up their education while it’s on the job,” he said. They also are laying the groundwork for when the labor market eventually reaches full recovery.
“Employers must invest in talent development to meet their own needs, to respond to the needs of the communities where they operate, and to contribute to our national well-being,” Jamie Merisotis, president and CEO of the nonprofit Lumina Foundation, said via email. “Starbucks is doing just that,” he said.
While online degree programs have suffered from a poor reputation in the past, that’s starting to change, experts say. “Online education generally has a low retention and completion rate, although the program at ASU is known for good outcomes,” Kantrowitz said.
“Employers must invest in talent development to meet their own needs, to respond to the needs of the communities where they operate, and to contribute to our national well-being.”
“The main reason for low performance at online programs in general has to do with the setting … and the demographics,” Kantrowitz said. Not all students thrive in an isolated learning experience, he pointed out, and low-income students face hurdles that make them less likely to graduate.
Starbucks’ new program takes a stab at addressing these challenges. “Partners will have a dedicated enrollment coach, financial aid counselor and academic advisor to support them through graduation. The program also will include adaptive learning services to help students progress at the right pace for them,” the company said in a news release.
There are hints that even free tuition won’t be a walk in the park for some workers. A store manager at the New York event Monday took the microphone to ask how employees were going to juggle full-time course loads with the demands of the job, and a worker stood up and asked what would happen to people who wanted to work 20 hours but struggled to get that much every week.
“It may not help as many students as it sounds like,” cautioned Sandy Baum, a senior fellow at the Urban Institute. Baum pointed out that, for freshmen and sophomores, who won’t get a free ride, even the cost of subsidized tuition could be out of reach, and that Starbucks’ method of reimbursing students after credits are earned could be a barrier for those living paycheck to paycheck. “It’s certainly a good thing for employers to take some responsibility [but] it may not be quite as big a deal as it sounds,” she said.
First published June 16 2014, 3:21 PM