Could the Starbucks-ASU Agreement Mitigate the Cost of College Education?

The announcement by Starbucks and Arizona State University to create an inexpensive pathway for Starbucks employees to earn undergraduate degrees has been met with a wide-ranging mix of optimism and skepticism.* Some see it as a saving grace in the face of the rising cost of college education, yet others question the real value to those working for the company.

Both sides make valid points, but ultimately it just looks to be a sound business decision by two entities that will also moderately improve the tuition benefit Starbucks employees utilize while earning a degree.

Since Starbucks already had a tuition assistance plan in place, it will come down to a matter of degrees whether the agreement to exclusively work with ASU Online will be more or less effective. So why would Starbucks and ASU enter into this agreement?

Starbucks is likely betting that the cost savings for recruiting and retaining employees who will now stay with the company until they at least complete their degree will outweigh the overall tuition bill. ASU will likely see a modest return from the agreement or break even, but the marketing value of striking this deal is nearly priceless. In the future, if the plan covers other institutions as the company says it may, ASU will have been the only university when the plan was announced.

From this, they have been able to inform millions that they offer a large number of undergraduate degrees online and that it is an option for students across the country and abroad. The publicity from creating the partnership and writing a press release will be far more valuable than their yearly TV commercial ran during sporting events, brochures mailed to prospective students, and paid online advertising.

So, what is surprising about this agreement? Well, that Starbucks had a tuition reimbursement plan in the first place. Few Fortune 500 companies do, with a very small number being food service companies, and even fewer still allowing employees to pursue degrees unrelated to their professional path or to leave the company immediately after completing a degree. That’s an impressive benefit not offered by many. How many parents who used to take their coffee black are now asking teenagers to learn to make a proper mocha with steamed milk and a chocolate powder dusting?

Also surprising is that more universities haven’t created similar agreements with Fortune 500 companies, or smaller agreements with companies for niche academic programs. This is likely due to only a small number of public institutions having a density of full undergraduate degrees available online. The niche agreements do exist, but are not widespread. Bigger and smaller partnerships both seem to be a new path forward for universities that, since 1980, have seen diminishing support by states for higher education. On average, state support will run out by 2059 across the country, with many states such as Colorado reaching zero by as early as 2019.

Currently, the primary way institutions make up decreasing state support is by increasing tuition, which will have to continue at least until state support reaches zero. However, if mutually beneficial agreements similar to the one reached by Starbucks and ASU can be struck by other public universities, tuition increases could potentially become smaller and less frequent. More students paying lower tuition bills? Sounds like the line could get a little longer to grab a cup of coffee.

Do you think more agreements between companies and universities will help mitigate the cost of college education?

*Read more about the agreement:
http://chronicle.com/article/In-Deal-With-Starbucks/147181/
http://blog.credit.com/2014/06/the-truth-behind-starbucks-tuition-plan-86125/
http://www.insidehighered.com/news/2014/06/23/contract-reveals-arizona-state-u-starbucks-partnership-details#sthash.wvSDF3d8.dpbs
http://qz.com/222494/starbucks-wants-to-pay-workers-college-tuition-because-they-probably-wont-go/

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