Starbucks is in the news for offering “free education” to “thousands of its employees.” Reporting on this decision is probably best exemplified by Forbes‘s headline, “Starbucks Announces It Will Give A Free College Education To Thousands Of Workers.” This article declares that Starbucks’s program is “the first of its kind” and that it “will allow many of the Seattle-based company’s 135,000 workers to graduate debt-free.” But here are the details:
1. You only get full tuition reimbursement if you already have two years of college.
2. You can only get up to $6500 of support if you’re a freshman or sophomore.
3. It’s tuition reimbursement only (you will have other costs, but at least they will be more manageable, especially with federal financial aid).
4. You have to work at least 20 hours per week for Starbucks.
5. You can only attend Arizona State University’s online program.
6. You only get reimbursed after completing 21 credit hours of coursework — so you have to pay out of pocket until then.
And now for the reality:
1. Many employers already offer tuition reimbursement to their employees, and often pay on a semester by semester basis, so Starbucks isn’t doing anything new here, and in fact isn’t doing it as well as many employers. I worked in a university financial aid office for about four years during graduate school and had to process many of these students.
2. Starbucks should get kudos for offering this benefit to part time employees, however — I’ve never seen tuition reimbursement offered to anyone who wasn’t full time.
3. I have never, ever, even heard of tuition reimbursement being available for attendance at one school only. That’s very questionable, and I’m wondering if there isn’t some financial interest involved.
Why not let students take courses at any accredited college in the country? It’s about $500/credit hour* to take courses at Arizona State University Online, but college tuition at a typical community college is less than half of that. Looking locally, Owens Community College (in Findlay and Toledo, OH) charges $153/credit hour while Ohio State University charges about $10,000 a year for Ohio residents at its main Columbus campus and about $7,000 a year at satellite campuses, which works out to maybe $250-$350/credit hour. Why not let employees get the best locally available education rather than require them to attend ASUO, especially when it may be cheaper? Maybe limit attendance to state universities and community colleges?
Overall, Starbucks deserves praise for extending additional benefits to its employees, especially to its part time employees, but the media surrounding this benefit has been hyperbolic and misleading. I also think Starbucks deserves praise for being a company of this type to extend this kind of benefit. If Starbucks wants to catch up to the benefits other companies offer, though, it should allow its employees to attend any accredited college or university, and it should reimburse its employees no later than the end of the semester, when the student can produce final grades.
UPDATES 17 June 2014:
You can read details about Starbucks’s program on their website. USA Today is doing some stupid misreporting that you shouldn’t pay attention to. You will also notice from the link that there once was a thing called Starbucks U (which Inside Higher Ed claims was affiliated with Strayer University), and that the ASUO partnership will be phasing out Starbucks U by 2015.
The Chronicle of Higher Education just revealed that ASUO is heavily discounting its tuition for Starbucks students. It can do so because of “profits” (wait… isn’t ASUO a non-profit institution?) generated by the online program and because it won’t have to market to recruit these students. So, it’s essentially discounting the cost of marketing (which for online programs is massive) from its tuition costs.
The net result is that ASUO is actually paying out more for the education of Starbucks employees than Starbucks is, and is doing so in conjunction with federal financial aid (you and me). From the CHE article:
In broad terms based on current projections of the expected student profile, Mr. Crow said that, for every 1,000 upper-division students, the program would cost ASU about $24-million per semester and Starbucks about $11-million per semester. An additional $7-million would come from Pell Grants.
*I finally found the correct cost of attendance on ASUO’s website.
I don’t think any of these details affect my comments above. I’m just waiting now to hear about a business partnership between the Starbucks CEO and ASUO.