Critics Warn Starbucks Employees To Read The Fine Print Of New Tuition Plan

Starbucks CEO Howard Schultz CREDIT: REUTERS
Starbucks CEO Howard Schultz CREDIT: REUTERS

Starbucks unveiled a new plan to subsidize its employees’ tuition at Arizona State University (ASU) Online on Monday in New York, with Education Secretary Arne Duncan in attendance alongside officials from both the company and the university. A few hundred rank-and-file employees were in attendance for the announcement of the new program, offering applause and even some tearful gratitude to their company’s executives.

But the public relations fanfare about the new program buried a key reality about the Starbucks announcement. The new system means the end of an older one that was less generous but more flexible, and it’s difficult to say if the trade-offs that result from that transition will produce a net improvement for the company’s workers. Critics warn that details of the new Starbucks College Achievement Plan (SCAP) indicate it may not be a real improvement for the 15,000 to 20,000 workers the school expects to enroll.

The new plan is open to any Starbucks worker who averages at least 20 hours per week, and will reimburse all tuition costs beyond what ASU and federal financial aid covers for juniors and seniors. Workers who successfully enroll at ASU Online will be able to study any of 40 different degrees without any expectation that their studies will relate to their work for the coffee giant. The old tuition reimbursement system that is ending required that employees work toward degrees that “directly prepare you for a job at Starbucks,” and provided less money (between $500 and $1,000 per calendar year depending on an employee’s tenure).

But it allowed workers to enroll in any accredited college or university based on what made the most sense for them, including in-person classes that experts say are especially critical for low-income workers to succeed in their education. While Starbucks workers are still getting a benefit that is very uncommon for the food service industry, the new program means some stark changes for the 135,000 “partners” who staff the company’s stores.


“We’ll make sure we can get you through this year,” a Starbucks representative said on Monday when a worker named Jess asked about the current tuition reimbursements, “but at that point, they’ll begin to conclude and we hope that maybe you might be able to explore this as a different way.” Students like Jess will have to finish their degrees this year, or transfer to ASU Online in order to continue getting help from Starbucks.

“This is nothing particularly revolutionary, except that it’s an inside deal with one particularly aggressive institution.”

Despite being more generous in dollar terms and subsidizing employees’ education without requiring that they commit to staying at Starbucks after graduation, the restrictive nature of the new Starbucks plan compares unfavorably with other tuition assistance plans American companies offer, according to Dr. Siva Vaidhyanathan, the Robertson Professor of Media Studies at the University of Virginia and a commentator on online education models.

“Many corporations in America have public tuition assistance plans that vary in value and utility for their employees,” Vaidhyanathan said. “This is nothing particularly revolutionary, except that it’s an inside deal with one particularly aggressive institution.”

That inside deal is unlikely to serve Starbucks employees needs well, he said. “So far we know that online degree programs do the worst possible job with adults of low income who are working full-time. That’s the segment of society that tends to do worse online and better in person.”


“It’s a farce to claim to be offering ‘free college’ to employees when what’s being offered is simply the chance to pursue a degree at one specific university, only online, only if you enroll full time and work at least 20 hours a week,” Dr. Sara Goldrick-Rab, who is a professor of educational policy studies and sociology at the University of Wisconsin, said in an email. “The fit with the needs of employees here is weak. They are less likely to benefit from online education [link] and a supportive company would allow them to attend the local public college of their choosing in person.”

ASU Online has earned praise for being among the best online degree-granting higher education institutions, at least with regard to the quality of the instruction. Vaidhyanathan echoed some of that praise, noting that the ASU faculty who help create courses for ASU Online “keep a high level of accountability” for the school’s digital auxiliary.

The school’s reputation for quality may be in tension with its ambitions, however. ASU expects its online arm will bring in $200 million in profit by 2020, which means it is counting on tuition from online students for about one fourteenth of ASU’s total income. To hit those revenue targets, the program will have to enroll several times more students than it does now. That means “it’s all about quantity for ASU,” Vaidhyanathan said, “so there’s a lot of questions we should be asking about how ASU is going to retain a high level of quality when all of its incentives are geared to pushing more students through the system.”

ASU Online splits all revenues with the for-profit education services company Pearson, which has grown from being a minnow in the industry just over a decade ago to become the largest publisher and testing company in the education industry. The partnership benefits ASU and Pearson, “but it keeps prices much higher than they should be for the online student,” according to education policy expert and online course entrepreneur Burck Smith.

“the idea here is to make both brands shine here in the public mind”

Tuition at ASU Online ranges from $482 to $543 per credit. One community college near Vaidhyanathan’s Virginia office charges about a quarter of what ASU Online does, but Starbucks workers would be on their own to pay for that cheaper education.


“It seems to me to be a huge scam that Starbucks is running here in conjunction with ASU, because the idea here is to make both brands shine here in the public mind,” Vaidhyanathan said. “But in fact this is nothing close to anything helpful.”

Starbucks did not respond to requests for comment on this story, but it has offered praise for ASU Online elsewhere. “We spent considerable time looking for the right collaboration for our partners,” a spokesman told MSNBC’s Ned Resnikoff. “ASU’s mission, values and brand are a good match to our own.”

At Monday’s launch event, Starbucks CEO Howard Schultz explained that the company “actually spoke to a number of universities” and found “a significant separation between ASU’s ability to cocreate, manage, administer [courses]” that led him to settle on ASU Online. He also suggested that other online schools might eventually be added to the system.

For higher education watchers like Vaidhyanathan, though, the impulse to constrain worker tuition benefits to online degrees is troubling. “One of the basic problems here is there’s this mad rush to hand out as many cheapened bachelor’s degrees as possible as if that is the end in itself,” he said, warning that there is a difference between an education and a credential. “It’s some sort of fast track to degrees without any real sense of whether the degree has educational value or maintains educational value or has comparable educational value to a bachelor degree earned at a local state university.”

“I don’t want to discount ASU’s ability to create an excellent online degree, because it’s certainly possible,” Vaidhyanathan said. “I have no doubt that there are going to be Starbucks employees who will be better off because they finished a degree at ASU Online. The question is, how broad is that effect going to be? Was it the best possible policy overall?”