NEW YORK - Starbucks is rolling out a program that would allow its workers to earn an online college degree at Arizona State University at a steeply discounted rate.
The coffee chain is partnering with the school to offer the option to 135,000 U.S. employees who work at least 20 hours a week. The Seattle-based company says it will phase out its existing tuition reimbursement program, which gave workers up to $1,000 a year for education at certain schools.
The company says the program doesn't require workers to stay at Starbucks after they earn their degrees. They can also pick from a wide range of educational programs that aren't related to their Starbucks work.
Starbucks CEO Howard Schultz is scheduled to announce the program Monday in New York City, with U.S. Education Secretary Arne Duncan and about 340 workers and their family members in attendance.
It's not clear how many workers will choose to participate in the new program or how much it will cost Starbucks Corp. The company isn't disclosing the financial terms of its agreement with Arizona State University. But the program could significantly boost the enrollment for Arizona State's online program, which charges tuition of about $10,000 a year. That's roughly the same as the school's traditional degree program.
Tuition reimbursement is a rare benefit for low-wage workers in the retail industry, but Starbucks isn't the first to offer it. In 2010, Wal-Mart Stores Inc. launched a partnership with American Public University, a for-profit, online school, to give workers and family members partial tuition grants.
The retailer, based in Bentonville, Arkansas, says more than 400 of its workers have since completed degrees through the program. Wal-Mart's program also does not require workers to stay and allows them to pursue a variety of degrees.
Starbucks' existing tuition reimbursement program, which was rolled out in 2011, gives workers up to $1,000 a year for courses at City University of Seattle or Strayer University. So far, Starbucks has paid out $6.5 million under that program, said Laurel Harper, a company spokeswoman.
Zee Lemke, a 31-year-old Starbucks employee and union organizer in Madison, Wisconsin, said she thought the program might be useful to some workers. But she noted that prospective employers also look at where a degree was earned, and that actual in-class experience matters.
As with most matters involving financial aid, the terms of the new program are somewhat complicated.
For the freshmen and sophomore years, Starbucks and Arizona State say they will put $6,500 toward the estimated $20,000 in tuition. Starbucks won't say if it's paying Arizona State for any of that amount, or if the college is simply providing a discount for Starbucks workers as part of their agreement.
To cover the remaining $13,500, workers would apply for financial aid. Since Starbucks workers don't earn a lot of money, they would likely qualify for the full Pell grant of $5,730 a year, or $11,460 over the two years, said Mark Kantrowitz, publisher of EdVisors.com, a website about paying for college. That would potentially leave workers with a bill of about $2,040 to pay out of pocket over the first two years.
The program would work similarly for the junior and senior years, except that Starbucks would reimburse any money workers end up having to pay out of pocket.
The program is eligible only for workers at Starbucks' 8,200 company-operated locations. Another 4,500 U.S. locations are operated by franchisees.
Kantrowitz said the new program at Starbucks has the potential to benefit all parties involved. Workers will get a chance to earn a degree in a relatively affordable way, and Starbucks could attract a better pool of workers. Arizona State University will also have a major employer potentially sending lots of students its way.
"It's a way to expand revenue," he said of the online programs offered by traditional, brick-and-mortar universities.
Enrollment for Arizona State University's online program already stands at around 10,000.