Beware of Frappucino U

June 27, 2014 | Blog, News

By Sara Goldrick-Rab

Starbucks is nothing if not ambitious. So far this year, the Seattle-based coffee chain has announced plans to let customers wirelessly charge their phones, to open hundreds of additional coffee shops, and to reach a market capitalization of $100 billion. Now it wants to be known as the employer of choice when it comes to paying for college, too. Recently the company announced a “College Achievement Plan” that claims to offer its employees free college tuition. A corporation that recognizes that college has never been more central to the hopes and dreams Americans hold for their future would seem worthy of praise.  Certainly my latte-provider of choice has been receiving a lot of press for its move. But as a scholar of higher education policy who’s spent the last 15 years closely examining the lives of students struggling to afford college, I realized after reading the plan that Starbucks’ new recipe would leave a bitter aftertaste in my mouth. starbucks u

Employers should be commended for doing what they can to make higher education possible for their employees.  But as I began warning on Twitter the night word of the plan leaked, the “free college” that Starbucks offers comes with a lot of caveats. Employees can enroll in just one school, Arizona State University.  Moreover, they can only enroll in just one type of instruction, online classes. That’s right, the company that encourages you to create a “signature” drink and offers 87,000 drink combinations refuses to allow their employees any choices at all when it comes to where or how they would like to study.  Starbucks calls its employees “partners,” and calls its benefits a “special blend” – but you’ll do college the Starbucks way, or get no assistance whatsoever.

Compared to in-person learning at college, which has been developed over hundreds of years, online education is a new product indeed.  ASU’s program just began in 2010.  Instead of offering Starbucks employees access to the Sun Devil’s gold standard – ASU itself – ASU President Michael Crow is peddling the relatively untested online branch of the university, the part that has struck deals with the likes of the massive education company Pearson to build out its educational activities. (It is notable that Starbucks also considered Capella University, a publicly- traded for-profit company, that was ultimately rejected because it lacked a “long history.”)

Online education may be a good route to college for some people but it is far from clear as to whether it is a good way for the typical Starbucks worker to pursue their bachelor’s degrees.  Research indicates that not only is online education less effective than blended or in-person education for the learning of people from families with less education, fewer financial resources, and more time demands, but it may actually increase their odds of starting and then dropping out of school. In order to take advantage of this program, many employees will need to switch from face-to-face classrooms to an online setting, which may be risky move.

Unfortunately, the rules of Starbucks’ new plan further increases the odds of failure by requiring that its employees work at least 20 hours per week to maintain the benefit – a feat that even more-advantaged students struggle to accomplish. Payments for the program hardly make college “free” since they cover only a limited number of credits and will (along with their work earnings) be counted against students’ eligibility for federal and state financial aid. Starbucks largesse, in fact, will be paid out as reimbursement only after the student pays for and completes 21 credits, laying about $10,000.

In effect, this program may well entice Starbucks employees to try a single particular college, regardless of whether that college is a good match for the student (boosting ASU Online’s enrollment numbers and profits), but reducing their chances of degree completion. Since ASU Online is an expensive school, charging about $15,000 a year for tuition and fees—more than four times the price of an average community college ($3,264) and a little less than double the average in-state tuition rate at state universities ($8,893)—students who do not succeed risk ending up in significant debt.

Acknowledging this, ASU has revealed that it will put in its own resources to discount the price further for all Starbucks employees, regardless of whether they have financial need. For every 1,000 students enrolled, this will cost ASU about $24 milliona semester. This amounts to 8 percent of the university’s total financial aid budget, a significant contribution especially when considering that at ASU students from low-income families (earning less than $30,000 a year) have to pay over $9,600 per year, even after accounting for all grant aid. In fact, among ASU freshmen, the fraction taking on loans has swelled from 31 percent to 50 percent in about four years.

Had Starbucks really wanted to make college affordable for its employees, it had other options.  It could have simply expanded its existing tuition assistance program, increased the wages earned by college-going employees, and/or offered more scheduling flexibility and work opportunities that aligned with students’ schedules. If the company wanted to try an online option, it might have begun with a pilot initiative for a group of employees to ensure the college of choice matched with their needs and helped them complete degrees. But instead of an incremental approach intended to maximize the effectiveness of its investment for the human capital of its workers, Starbucks went for a one-size-fits-all corporate deal.

College is remarkably unaffordable today.  Even after all available grant aid is accounted for, the price of attendance at public institutions exceeds 25 percent of middle-class families’ take home pay.  This is a serious problem, and deserves more serious solutions than Starbucks’ newest brew.

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