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Starbucks to offer online college program to workers; program replaces existing tuition plan

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NEW YORK, N.Y. - 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 enrolment 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.

Enrolment 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

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