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Starbucks is giving its baristas a bargain on an online college degree

Starbucks latest offer is about a deep discount for online college at Arizona State University that becomes more like a much deeper discount in the last two years of your university work, not as much in your freshman and sophomore years, according to the June 16, 2014 New York Times article, "Starbucks to Provide Free College Education to Thousands of Workers." It's not free college tuition or a full-scholarship. What Starbucks is doing is partnering with Arizona State University to make an undergraduate education available at a steep discount to 135,000 U.S. employees who work at least 20 hours a week (or more). Workers will be able to choose from 40 educational programs, and they won't be required to stay at Starbucks after earning the degree, says a Newsday article, "Starbucks clears college degree path for employees."

Starbucks is giving its baristas a bargain on an online college degree.
Photo by Andrew Burton/Getty Images

How deep is the discount? During the first two years of a four-year college, those freshman and sophomore years, students would pay a greatly reduced tuition after factoring in a scholarship from Starbucks, ASU and financial aid, such as Pell grants. For the junior and senior years, Starbucks would reimburse any money that workers pay out of pocket. That means students on the wages Starbucks pays would have to pay for their college, but at the reduced rate.

If the students took other, additional types of financial aid, they'd have to pay back any loans they took from financial aid not related to the deep discounts. This keeps the students working at Starbucks for years, since they'll be working part time, and who can pay rent working "at least 20 hours a week"? There's no guarantee they'd get full time hours or high enough wages to become independent, pay rent or mortgages, or start families. It's only in the last two years of college that the students working at least 20 hours a week (or more) at Starbucks would get to finish the last two years of their college work at no cost to them. But at least the students know they won't have to keep working at Starbucks after graduation, unless they want to, and unless Starbucks has a job for them that is a good fit after all those years of college.

So they'd have to both finish two years of college and keep working at Starbucks just during those freshman and sophomore years before they get to the free school. And if the students took out separate loans for financial aid purposes, they'd still have to pay back all those college loans on their Starbucks salary. On the other hand, the advantage is employees who already have two years of college under their belts would be able to finish school at no cost. CEO Howard Schultz made the announcement June 16, 2014 at the Times Center in New York City, where Education Secretary Arne Duncan is in attendance today (June 16) along with 340 Starbucks employees and their families.

Tuition reimbursement is a rare benefit for low-wage workers in the retail industry

In 2010, Wal-Mart Stores Inc. started offering partial tuition grants for workers at American Public University, a for-profit, online school, says the Newsday article, "Starbucks clears college degree path for employees."

Starbucks already has program that reimburses workers for up to $1,000 a year at City University of Seattle or at Strayer University. But that program will be phased out by 2015 in favor of the new program, which is far more generous.

Tuition for an online degree at ASU is about $10,000 a year, although it can vary depending on the program. Many Starbucks workers would likely qualify for a Pell grant, which can be worth as much as $5,730. You have students working at Starbucks that have more than one job. Some work up to 75 hours a week at different places of work and also find time to go to a community college part time.

A lot of the people who work at Starbucks are students. And some work part time. There are students who would like fewer hours and more time to finish college. At some colleges there are wavers for those with lower incomes. Many students who work in retail are looking for financial assistance for furthering their education. Starbucks plans to look at expanding the educational perks to workers overseas, says the Newday article.

Who's eligible for now?

It's workers at Starbucks' 8,200 company-operated stores. Another 4,500 Starbucks locations are operated by franchisees. But the program also is available to Starbucks' other chains, including Teavana tea shops and Seattle's Best. If you worked at Starbucks, would you take advantage of the discount and further your education at a four-year college? Or do you think a two-year college would be enough, if you wanted to continue working in retail or the food industry?

The issue for some people is having to pay whatever the school requires in addition to the discount, for the first two years of college before the last two years of college get the deepest discount to you, if you're an employee of the company-operated stores. And how do the employees react who work for the franchises? They're at Starbucks, but the stores are owned by franchisees, and the discount for college goes to employees of stores owned by Starbucks, not by franchisees who own and operate Starbucks stores? How would you feel if you weren't working for company-operated stores but were doing the same type of barista or similar job in a store with a Starbucks sign outside? Do those workers feel shut out of the educational offerings?

Luckily, students won't have to commute on the road to sit in classrooms at the college because the coursework can be taken online, which gives students flexibility. And what type of majors do Starbucks employees take in college, leading to which transferable career skills? What if students want to go to graduate school? How many will go from barista to barrister? There's comfort in knowing you can come home from work, turn on the computer, get your college education, and after you get a degree, you can work anywhere you want.

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