Starbucks’ new college program offers employees reduced college tuition

06/16/2014 8:59 PM

06/16/2014 9:01 PM

Starbucks announced a new perk Monday for its U.S. employees: It will make an online undergraduate education from Arizona State University available at a discount.

Benefits consultants said the move, which applies to the coffee chain’s 135,000 U.S. employees who work more than 20 hours a week, is rare in the low-wage fast food industry.

“I haven’t seen anything like this,” said Bruce Elliott, manager of compensation and benefits at the Virginia-based Society for Human Resource Management, adding that he was “blown away” by the news. “It’s actually pretty distinct.”

He said his organization has seen a “slight downturn” in the number of companies offering college reimbursement. He thinks Starbucks has financial incentive for the decision – improving employee retention and productivity.

“I truly believe this is an investment and they’re expecting a return on this investment,” he says.

Seattle-based Starbucks, which operates 44 locations in Charlotte, already has a program that reimburses workers for up to $1,000 a year at City University of Seattle or at Strayer University, according to the Associated Press. The company said that will be phased out by 2015 in favor of the new program.

One Starbucks employee in Charlotte said he wasn’t surprised to learn that the company was offering yet another benefit.

The employee, who wouldn’t give his name because he didn’t have permission from the company, said Starbucks’ perks are part of the pull.

“I’m here for the benefits,” he says. He also earns a living working two other jobs.

“I get paid more at those two jobs than I get paid here,” he says of Starbucks. “Income-wise I wouldn’t need the job.”

But he sticks around for the health insurance, 401(k) and the college reimbursement program.

Workers will be able to choose from 40 educational programs, and they won't be required to stay at Starbucks after earning the degree, according to AP. For 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.

Mark Vitner, senior economist at Wells Fargo, says the Starbucks move should help the company with employee retention. “In a service-based business like Starbucks, the longer they’re kept there, the better they are at their job,” Vitner says.

But employees don’t always recognize the benefits awarded them, says Marcella Moss, president of retirement-plan services for Miles & Associates Inc. For instance, she said, McDonald’s saw few employees take advantage of its 401(k) program until enrollment became automatic.

“The hardest part of having a benefit like that is getting employees to take advantage of it,” she says.

That was the case for Stephen Quehl, who now works at Dilworth Coffee.

“I didn’t really utilize those benefits,” he said.

Quehl got his Starbucks job when he was 16 and worked at five different stores over the course of around five years.

He said he likes having more “personal freedom” at the independent Dilworth Coffee. For instance, he can create his own coffee concoctions and is not required to wear a bandage to cover the floral tattoo behind his right ear.

Still, Quehl says Starbucks’ benefits and nationwide employment opportunities make the company attractive.

“They do take care of their employees,” he says. The Associated Press contributed.

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