Starbucks, McDonald’s Ramp Up Tuition Assistance Programs
Posted By Derek Johnson on May 11, 2015 at 9:20 am
Two major American corporations took significant steps recently to boost the college prospects of their low-wage employees.
Since June 2014, Starbucks has offered to reimburse the final two years of tuition costs for employees pursuing an online college degree at Arizona State University, provided they work an average of 20 hours a week. Earlier this month, the coffee chain announced that it would expand its program to cover tuition costs for all four years and speed up its reimbursement process.
“The unfortunate reality is that too many Americans can no longer afford a college degree, particularly disadvantaged young people, and others are saddled with burdensome education debt,” said Starbucks CEO Howard Schultz through a press release.
Meanwhile, fast-food giant McDonald’s offers similar reimbursement policies up to $700 a year for workers and $1,050 for managers. Last week, the company announced a partnership with three education non-profits to help its employees plan for college.
The programs and subsequent expansions come within the context of dramatically rising higher education costs and an economic recovery that has disproportionally relied on low-wage job growth. According to the National Center for Education Statistics, the average cost of tuition and associated fees at four-year institutions in 1980 after adjusting for inflation was $2,147 for public universities and $9,660 for private universities. By 2012-13 – the most recent year of data available – those costs have skyrocketed to $8,070 a year for public universities and $24,525 for private universities. That doesn’t include room and board, which typically tacks on an additional $9-10,000 per year.
Meanwhile, fast food and retail jobs are becoming more prevalent. A 2013 study from the UC Berkeley Labor Center found that middle-wage occupations were responsible for 60% of jobs lost during the recession, while 60% of job growth during the recovery has been comprised of low-wage jobs like those in the retail and fast food industries.
The study also found that the vast majority of low-wage workers don’t make enough to cover basic cost of living expenses, and many do not receive health care benefits. As a result, there are more Americans than ever who rely on the kind of jobs that Starbucks and McDonald’s are targeting with their program.
This led Starbucks to weather some initial blowback after rolling out the program last year, with critics contending that some of the details of the program would leave many low-wage employees with large upfront costs they couldn’t afford.
“They called it free college but students had to front a lot of the money,” said Rachel Fishman, an education policy analyst at New America in an interview with NBC News.
Among the changes to the program, Starbucks will now reimburse the more than 2,000 employees who receive tuition assistance after each semester. McDonald’s provides its tuition assistance upfront to the estimated 4 percent of their eligible workforce using the program.
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