The Starbucks Solution to Student Debt: Become a Barista, Get Cheap Tuition

Starbucks has opposed efforts to unionize the company’s workers, and Chief Executive Howard Schultz stopped short of full support for raising Seattle’s minimum wage to $15 an hour. But the company and its leader are otherwise known for treating their workers well. The legions of baristas get Bean stock (restricted shares in the company), the chance to participate in a matching 401(k) program, and a free pound of coffee every week. Now they’re going to get free college tuition, too.

Starbucks (SBUX) announced Monday that it will pay for its workers to attend Arizona State University’s online bachelor’s degree program. Employees who work at least 20 hours a week, which Starbucks says is the majority of its employees, will get half their tuition paid for the first two years—that comes to about $6,500—while the final two years will be paid for in full.

“In the last few years, we have seen the fracturing of the American Dream,” Schultz said in a statement. “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.”

Of Starbucks’ 135,000 U.S. store employees, about 25 percent already have a bachelor’s degree. Michael Crow, Arizona State’s president, expects as many as 15,000 Starbucks students to enroll.

The program aims to address a problem that’s gotten a lot of attention lately: the $1.2 trillion worth of student loan debt in the U.S. and a dropout rate approaching 40 percent. Other companies offer tuition reimbursement, of course, but usually not full tuition and usually with strings attached. Starbucks says students can choose what to study (nursing, business, electrical engineering, even art history) and they won’t be required to stay at Starbucks after being reimbursed. (Well, maybe the art history majors will.)

What kind of education will the baristas receive? It will be entirely online, which suggests the potential for certain problems. The Massively Open Online Courses (MOOCs) that are (were?) all the rage enroll an average of 43,000 students and have a completion rate of about 10 percent. Then there are for-profit, scandal-prone online schools such as the University of Phoenix.

Arizona State’s program isn’t a MOOC, though, and it isn’t for profit. It is one of the nation’s largest online schools and seems to be well-regarded. And as part of the deal, Starbucks employees will have a dedicated enrollment coach, financial aid counselor, and academic adviser to help them. If only every community college student was as lucky.

Schultz and Crowe have known each for several years and worked together on projects connected to the Markle Foundation, which is “dedicated to developing innovations that harness the vast potential of the digital age” (and run by Zoë Baird, of Nannygate notoriety).

As for the cost, which will be shared between the company and the university, a Starbucks spokesperson told USA Today that the company expected to spend more than $230 million on the program over time. That’s about what the company spent on its stock program for employees last year.