NEW YORK – Starbucks is rolling out a program that would allow its workers to earn an online college degree at Arizona State University at a steeply discounted rate.
The coffee chain is partnering with the school to offer the option to 135,000 U.S. employees who work at least 20 hours a week. The Seattle-based company says it will phase out its existing tuition reimbursement program, which gave workers up to $1,000 a year for education at certain schools.
The company says the program doesn’t require workers to stay at Starbucks after they earn their degrees. They can also pick from a wide range of educational programs that aren’t related to their Starbucks work.
Starbucks CEO Howard Schultz is scheduled to announce the program today in New York City, with U.S. Education Secretary Arne Duncan and about 340 workers and their family members in attendance.
The company isn’t disclosing the financial terms of its agreement with Arizona State University. But the program could significantly boost the enrollment for Arizona State’s online program, which charges tuition of about $10,000 a year. That’s roughly the same as the school’s traditional degree program.
Tuition reimbursement is a rare benefit for low-wage workers in the retail industry, but Starbucks isn’t the first to offer it. In 2010, Wal-Mart Stores Inc. launched a partnership with American Public University, a for-profit, online school, to give workers and family members partial tuition grants.
As with most matters involving financial aid, the terms of the new program are somewhat complicated.
For the freshman and sophomore years, Starbucks and Arizona State say they will put $6,500 toward the estimated $20,000 in tuition. Starbucks won’t say if it’s paying Arizona State for any of that amount, or if the college is simply providing a discount for Starbucks workers as part of their agreement.
To cover the remaining $13,500, workers would apply for financial aid. Since Starbucks workers don’t earn a lot of money, they would likely qualify for the full Pell grant of $5,730 a year, or $11,460 over the two years, said Mark Kantrowitz, publisher of EdVisors.com, a website about paying for college. That would potentially leave workers with a bill of about $2,040 to pay out of pocket over the first two years.
The program would work similarly for the junior and senior years, except that Starbucks would reimburse any money workers end up having to pay out of pocket.