Starbucks Innovates Employee Benefits with ASU Partnership

I recently came across some interesting news. It seems that Starbucks has partnered with Arizona State University (ASU)—and also my alma mater—to offer Starbucks employees the Starbucks College Achievement Plan (CAP), an initiative ASU deems “a powerful, first-of-its-kind program designed to provide thousands of Starbucks workers a chance to complete their degrees.”

How Does It Work?

Starbucks’ 135,000 U.S. full-time and part-time employees will have the opportunity to complete a bachelor’s degree through ASU’s online degree program.

The company’s website, which includes a compelling video that quotes, “finish a college degree, tuition free,” explains:

• Partners (employees) admitted as a junior or senior, according to ASU’s admission requirements, will earn full tuition reimbursement for each year of coursework they complete toward a bachelor’s degree.

• Freshmen and sophomores will receive a partial scholarship and need-based financial aid toward the foundational work of completing their degree.

• Partners will have no commitment to remain at Starbucks past graduation.

The site also explains that, aside from financial assistance, the CAP will offer partnering students a dedicated enrollment coach, financial aid counselor and academic advisor.

ASU’s website even says that the university plans to hire new faculty as needed by each department to maintain the school’s average faculty student ratio of 1:24.

So, here we have Starbucks, an employer already well known and loved for its great company culture and benefits, now taking its dedication to its staff a step further by helping workers receive an education (the CAP program will replace its tuition reimbursement benefit). And this new initiative will also create jobs as ASU hires more faculty members to fulfill the teaching needs as the number of online degree students expands.

This entire undertaking sounds like one heck of a deal, right? Well, according to some reports, the “glitter” of this new partnership may not fully be gold.

A recent USA Today article highlights some of the partnerships criticism—specifically its “free” claims. The story says that under the CAP, students must first complete 21 credits at ASU — or seven courses — before they are eligible for a payout.

The writer then does the math:

For online students, ASU undergraduate tuition ranges from $480 to $543 per credit hour, regardless of residency status and without additional program fees. That means 21 credits would cost at least $10,000.

It also references an article from The Chronicle of Higher Education, which explains that the CAP would provide each third- or fourth-year student scholarships of $2,420 per semester, based on a student enrolled for 12 credits. (It estimates the CAP scholarship covers about 40 percent of online degree programs for upperclassmen and 22 percent for lower classmen). Students will also be eligible for university-based grants and government aid, depending on their need.

Upperclassmen Starbucks employees would then be reimbursed by Starbucks (on their paychecks) each time they complete 21 credits, the article explains. Yet, the article notes, freshman and sophomore Starbucks employees will only receive $1,267 each from the CAP scholarship, “and no reimbursement on the gap between their student aid and their costs.”

Also, the USA Today article quotes Sara Goldrick-Rab, a professor of educational policy at the University of Wisconsin-Madison. She explained that Starbucks’ reimbursement will ultimately count against employees looking to complete degrees, because in the financial aid process, “students will still have to work while they go to school to qualify for the reimbursement, so their earnings are also counted against need-based aid.”

So, on the one hand you have Starbucks and ASU looking to help workers, especially Starbucks’ younger partners, receive or complete a degree, yet unlike the CAP’s claims, the initiative isn’t totally free and workers will most likely incur some debt, especially those who will begin as freshman and sophomores.

Yet, I venture to say that this CAP is still a great deal for those looking to get a degree. According to The Project on Student Debt, “seven in 10 college seniors (71%) who graduated last year had student loan debt, with an average of $29,400 per borrower.” And many graduates carrying this debt also worked while in school.

Anyone who has gone to college has undoubtedly heard the saying, “every little bit helps,” and this is true for the new CAP. Incurring some student loan debt your first two years of college while being reimbursed for the second two years produces a vastly different end result than incurring student loan debt all four years of college with no type of reimbursement.

Every little bit helps.

I think it’s expected to incur some debt while in school, even if you receive scholarships. I’ve met many people on full-ride scholarships who had to take out a small loan while in school. But the difference is having the opportunity to receive financial assistance and not have to incur the amount of debt that you would without a tuition reimbursement plan like the CAP.

And like any other student, the Starbucks’ employees who enroll as freshman or sophomores can apply for grants and scholarships outside of ASU to help offset their out-of-pocket expenses and cut down on student loans.

I don’t think any initiative is perfect; everything has pros and cons. Yet, I do think having the chance to earn a degree that your employer helps pay for—completely free to you or not—is a worthwhile benefit to employees.