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Starbucks Brews Up an Enhanced College Education Benefit for Its Employees

Starbucks employees will have the opportunity to access a free online Bachelor’s degree through a new partnership with Arizona State University. The Starbucks College Achievement Plan (CAP) provides partial tuition reimbursement for freshmen and sophomores and full tuition reimbursement for juniors and seniors, after subtracting student financial aid from other sources.

The program is open to any of the company’s 135,000 domestic employees who work at least 20 hours a week, if they are admitted to one of the 40-plus bachelor’s programs offered online by ASU. The student’s academic program does not need to be related to Starbucks’ business. Participants are not required to commit to remain at Starbucks after graduation, although the company’s CEO believes that many will continue to work for the company.

Under the program, which is scheduled to begin this fall, students will be reimbursed every time they complete 21 credits (with no reimbursement until the first 21 credits are completed). Arizona State’s current online tuition rates range from $480 to $534 per credit hour.

Additionally, students will receive a personal enrollment counselor and will be required to participate in a one-week orientation program. Participants will be required to apply for federal and college aid for which they may be eligible. After that, the Starbucks CAP reimbursement would be available to help them cover the remaining costs.

Starbucks is not the first or only large company to offer employer-provided tuition assistance. Other large companies offering tuition reimbursement include Apple, AT&T, Bank of America, Berkshire Hathaway, Chevron, Comcast, CVS, Exxon Mobil, Ford, GE, GM, J.P. Morgan Chase, Kroger, Oracle, UPS, Verizon, Walmart and Wells Fargo.

A total of $10 billion in employer-paid tuition assistance was provided to 1.8 million recipients in 2011-12, the latest data available. It is unusual for companies in retail to provide such benefits. In 2010, Walmart partnered with American Public University, a for-profit college, to provide a similar benefit to its employees (up to $3,000 per year). However, the Starbucks program may be the first to partner with the online program of a public college.

Online education generally has a low retention and completion rate, although the program at ASU is known for good outcomes. The main reason for low performance at online programs in general has to do with the setting (not everybody can benefit from an isolated online learning experience, without the opportunity to study with peers and get more one-on-one handholding from faculty) and the demographics (low-income students are less likely to graduate).

According to Mark Kantrowitz, “In the future, large national companies and franchises are more likely to pursue online education because it is simpler administratively, presents the possibility of bulk discounts and offers more consistency in the quality of education.”