A New Age for Education: Corporate Tuition Reimbursement Program

Yesterday, our latest blog post examined the business effects of the new tuition reimbursement plan of Starbucks at a macro-level. Today, we will cover the plan in more detail to learn how it could affect workers on an individual level. In attempts to decrease employee turnover, many large companies are seeking new retention strategies. Starbucks is using an education incentive to achieve this goal. Its new “Starbucks College Achievement Plan” will help qualified workers pay their full tuition for online courses taken through Arizona State University. And although the program has impressive benefits, some critics believe that it will not help workers as much as it promises.

The Starbucks College Achievement Plan is open to any of the 135,000 employees currently working in the U.S. In order to be eligible for full tuition reimbursement, employees must work at least 20 hours a week and be admitted to ASU as a junior or senior. Freshmen and sophomores are also able to receive partial tuition scholarships and need-based financial aid for 2 years of full-time study. Another almost unheard of perk is that these workers will not have a commitment to remain at the company following graduation. CEO Howard D. Schultz believes that their employees’ experience “would be accredited to our brand, our reputation, and our business” and that this would be sufficient.

In an employee survey, 70% of Starbucks employees responded that they do not have a degree, but wish to earn one.  Aside from providing education for these employees, the goal of the program is to lower attrition, increase employee performance, and to attract and retain better employees for at least some length of time.  And while many employers such as Apple, Disney, and Ford have also offered tuition reimbursement programs, Starbucks’ program is unique in that the full cost is paid, new employees are not excluded, and reimbursement is not limited to work-related, business courses.

What was failed to be mentioned in both the initial press release and on the site’s dedicated webpage is that those juniors and seniors in the program must earn 21 of the 120 credits needed for a BA from ASU before being reimbursed. This is not good news for the typical student worker according to education policy analyst Rachel Fishman who emphasizes that “given the upfront cost, it pushes a lot of risk onto the student”. Considering the typical class of 3 credits and a price range of $480 to $543 per credit hour at ASU, the 21 credits needed prior to the program would range in price from $10,080 to $11,405.

Responding to the leak of this program feature, Starbucks informed the public that the company would provide financial aid upfront. Allegedly, they claim, the student would not have to pay more than half the cost of their initial tuition in combination with federal aid disbursed directly from the university. In an age muddled by student loan debt, this would not be anything too unusual. However, the course load in combination with work may be more challenging to the student worker through this university than others. Since ASU has 5 terms during the school year, each course is shorted and more demanding. The university’s website even states that students should expect about 18 hours of work a week per class. Should a student take 1 class a term year round, it would take about 17 months to earn the initial 21 credits.