Starbucks to pay college tuition for thousands of baristas

Starbucks announced plans to offer full and partial scholarships to employees to attend Arizona State. It's not the first program of its kind, but it's likely the most generous.

Starbucks, which already offers its employees a number of generous perks such as company stock and pensions, announced Monday that it would pay college tuition costs in part or in full for thousands of its baristas.

The Starbucks College Advancement Plan was created in conjunction with Arizona State University. It will offer full scholarships to employees with at least two years of college credit who enroll in ASU's online program, and partial scholarships for freshmen and sophomores. Of the 135,000 US-based Starbucks employees who work at least 20 hours per week – and are thus eligible for the grant – about 70 percent are currently attending or plan to attend college in the future.

Starbucks CEO Howard Schultz and ASU President Michael Crow announced the plan during a webcast Monday attended by US Secretary of Education Arne Duncan.

“In the last few years, we have seen the fracturing of the American Dream,” said Mr. Schultz. “There’s no doubt, the inequality within the country has created a situation where many Americans are being left behind. The question for all of us is, should we accept that, or should we try and do something about it.”

Starbucks says it’s too early to give any specific figures about the costs to the company. Tuition for an online degree at ASU runs about $10,000 per year, though in many situations this cost will be defrayed by the government, as many workers will likely qualify for Pell grants, which can be worth up to $5,730 annually.

According to an ASU press release, the project was incubated by the Markle Economic Future Initiative, which seeks to “enable Americans to flourish in a global networked economy,” according to the group’s website. Schultz is a co-chair of the Initiative, and President Crow is one of its members.

This is not the first time that a multinational corporation has offered tuition benefits to its service employees.

In 2010, Wal-Mart, in partnership with the online, for-profit American Public University, offered to pay 15 percent of tuition costs to its workers to attend that institution. The program, however, faced criticism from higher education commentators for the significant portion of credits that could be gained simply by working at the mega-retailer – credits that would be difficult to transfer in many situations. So far, only 400 Wal-Mart employees have signed up for the program.

Other multinational retailers, including Target and Gap Inc., offer partial tuition reimbursement programs to full-time employees taking classes specifically related to their employment.

Even Starbucks has helped defray college costs in the past, albeit to a more limited extent. Under a program rolled out in 2011, employees of the company could receive up to $1,000 annually in corporate scholarships to attend the City University of Seattle or the for-profit Strayer University.

Still, Starbucks’ new plan is by most accounts far more ambitious than previous corporate scholarships – both within the company and among larger retailers more generally. Employees can enroll in any of 40 ASU online degree programs, from art history to nursing, and, according to the Chronicle of Higher Education, Crow is expecting up to 15,000 new enrollees as a result of the plan.

What’s more, Starbucks is throwing a number of extracurricular resources at its employees – including personal enrollment coaches, academic counselors, and financial aid counselors – and scholarship recipients will face no obligation to remain with the company after graduation.

This report includes material from the Associated Press.