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Starbucks U.

June 16, 2014

Starbucks on Sunday night announced a major effort to help its employees earn bachelor's degrees. The company will pay for the junior and senior years of any employees who work at least 20 hours a week if they are admitted at junior or senior level to one of 40-plus bachelor's programs offered online by Arizona State University. There is no requirement that the degree program relate to Starbucks business.

The Starbucks program puts an emphasis on completion, not cash up front. Students will be reimbursed every time they complete 21 credits (with no reimbursement until the first 21 credits are completed). Participants, who can enroll either part time or full time, a Starbucks spokeswoman confirmed, will receive a personal enrollment counselor and will be required to participate in a one-week orientation program.

Inside Track will provide the pre-enrollment and post-enrollment counseling to program participants. Pearson, which provides many services for Arizona State's online programs, has a contract with Inside Track for those services.

Partial scholarships will be available for freshman and sophomore years. An explanation by the company on its website explained the emphasis on junior and senior years this way: "Degrees are about careers, and we’re thinking about your future, whether you decide to stay with Starbucks or not. This program is designed to support college completion by offering full tuition reimbursement for juniors and seniors to finish their undergraduate degree, and providing an on-ramp and access to higher education for freshmen and sophomores."

Arizona State's online tuition rates (which are the same for in-state or out-of-state students) range from $480 to $543 per credit hour. (Bachelor's programs are 120 credits).

Students are required to apply for federal aid for which they may be eligible, and then the Starbucks reimbursement kicks in after that. A spokeswoman for Starbucks said that those who receive scholarships for their first two years should end up paying about half of what they otherwise would, while those in their junior and senior years would be reimbursed for all tuition and fees.

The Starbucks announcement said that it would be phasing out an existing program through which employees received a discount on tuition at Strayer University, although current participants will be able to continue through 2015. Starbucks is not the only major company offering significant educational benefits. But it may stand out in the breadth of the offer to employees. Walmart, for example, has an arrangement with American Public University System, but it is for a discount, not full tuition reimbursement.

A video released Sunday night about the program features Starbucks employees and others talking about their inability to finish a college degree -- even though they want to do so. Lack of funds is cited as the reason to drop out. One college dropout talks about leaving a community college after a year and a half with $10,000 in debt.

Howard Schultz, CEO of Starbucks, talks in the video about "a fracturing of what I would loosely describe as the American dream," and he says that he worries that "many, many Americans are being left behind."

He says that Starbucks employs more than 100,000 young people in the United States and that a majority do not have a college degree. "We can't be a bystander, and we can't wait for Washington," he says. He calls on other businesses and business leaders to "do more for their people."

The video closes with Starbucks employees sharing the news with loved ones that they will be able to finish their degrees.

The program will be officially announced today at an event featuring U.S. Education Secretary Arne Duncan.

Peter Cappelli, the George W. Taylor Professor of Management at the Wharton School of the University of Pennsylvania, said via email that "it's a big deal when any low-wage, service employer does anything nice for employees." In terms of the specifics of the program, he said that "I suppose the significance here is that the support is mandated for a particular provider and a particular delivery model that hasn’t been supported – probably not available – in the past."

Here is the video announcement of the program:

 

 

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