Job Perk: Starbucks to Subsidize Workers' College Degrees

Starbucks Education
Ted S. Warren/AP

NEW YORK -- Starbucks (SBUX) is giving its baristas a bargain on an online college degree.

The company is partnering with Arizona State University to make an undergraduate education available at a steep discount to 135,000 U.S. employees who work at least 20 hours a week. Workers will be able to choose from 40 educational programs, and they won't be required to stay at Starbucks after earning the degree.

For freshman and sophomore years, students would pay a greatly reduced tuition after factoring in a scholarship from Starbucks, ASU and financial aid, such as Pell grants. For the junior and senior years, Starbucks would reimburse any money that workers pay out of pocket.

That means employees who already have two years of college under their belts would be able to finish school at no cost.

CEO Howard Schultz plans to make the announcement Monday at the Times Center in New York City, where Education Secretary Arne Duncan will be in attendance, along with 340 Starbucks employees and their families.

Tuition reimbursement is a rare benefit for low-wage workers in the retail industry. In 2010, Walmart Stores (WMT) started offering partial tuition grants for workers at American Public University, a for-profit, online school.

Starbucks already has program that reimburses workers for up to $1,000 a year at City University of Seattle or at Strayer University. Starbucks says that will be phased out by 2015 in favor of the new program, which is far more generous.

The Seattle company doesn't know how many of its workers will apply, and it isn't saying how much the program might cost it. Tuition for an online degree at ASU is about $10,000 a year, although it can vary depending on the program. Many Starbucks workers would likely qualify for a Pell grant, which can be worth as much as $5,730.

Michael Bojorquez Echeverria, a 23-year-old Starbucks worker from Los Angeles, was flown to New York City by the company for the event Monday. He said that he works 60 to 75 hours a week, including a second job, and also attends community college.

He hopes the program will allow him to reduce those hours and focus on school, where he does not pay tuition because of wavers. But he is applying for the Arizona State University program because he feels there will be greater certainty about financial assistance.

He says he will miss the socialization that occurs on campus.

"But hey, if they're going to be paying my fees, I can manage," he said.

Cliff Burrows, head of the Americas for Starbucks, said he hopes the program will encourage other companies to offer similar benefits. He added that Starbucks plans to look at expanding the educational perks to workers overseas.

The financial terms of Starbucks' agreement with Arizona State aren't being disclosed.

Starbucks workers would have to meet the same admission standards as other students at ASU. Only workers at Starbucks' 8,200 company-operated stores would be eligible. Another 4,500 Starbucks locations are operated by franchisees.

The program is also available to Starbucks' other chains, including Teavana tea shops and Seattle's Best.

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I agree with the commentary concerning the need to be selective with which higher ed schools a program like Starbuck's (SBUX) should support.
I respect Schultz, SBUX founder and CEO. he believes in his employees. SBUX is very much a post modernist corporation. It owns little real estate. It rents or leases a great deal of its infrastructure and it creates a product that is not t r u l y needed to survive.
His employees do well by SBUX. I am a SBUX shareholder of ten years plus. It is not a
'widows and orphans' stock. I can't say that it is a 'growth' stock. It's been a stock of intellectual interest. At some point I will have to trade it for an intangible that can help more with the bills and less with the ego.

June 16 2014 at 4:29 PM Report abuse rate up rate down Reply

Oh yes, and Strayers 'drive by college' which is under investigation as we speak. I will never buy any coffee at Starbucks for dons't want to subsidize for profit cancer schools

June 16 2014 at 2:10 PM Report abuse +1 rate up rate down Reply

Right, the will send them to the University of Phoenix sor some suchs for profit predatory college. Then we will have the government and Starbucks among others, subsidizing these drive by criminal enterprises

June 16 2014 at 2:09 PM Report abuse +1 rate up rate down Reply
1 reply to weilunion's comment

I'm really curious, what school did you go to for your college degree, because your post is rather interesting to read?

June 16 2014 at 4:29 PM Report abuse rate up rate down Reply