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Starbucks offers online college program to workers

By WTOP Staff

CANDICE CHOI
AP Food Industry Writer

NEW YORK (AP) — 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 and will vary depending on each worker’s situation.

Tuition for an online degree at ASU is about $10,000 a year, roughly the same for its traditional educational programs. For the freshmen and sophomore years, Starbucks and Arizona State say they will put around $6,500 on average toward the estimated $20,000 in total tuition.

To cover the remaining $13,500, workers would apply for financial aid. Since Starbucks workers don’t earn a lot of money, many would likely qualify for a Pell grant, said Mark Kantrowitz, publisher of EdVisors.com, a website about paying for college. If a worker qualified for a full Pell grant of $5,730 a year — or $11,460 over the two years — he or she would theoretically be left with about $2,040 to pay out of pocket.

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. Starbucks said most of its workers have already started school, so could potentially finish off their degrees at no cost if they applied for the program. The company says the program will be available to workers at its other chains as well, including Teavana tea shops and Seattle’s Best.

The program is available only to 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.

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Follow Candice Choi at www.twitter.com/candicechoi

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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