Below are excerpts from an in-depth article on the partnership between Starbucks and Arizona State University in providing Starbucks employees access to higher education. Interviews with students and coaches illustrated the depth of the student support this partnership offered.
Starbucks and Arizona State University are collaborating to help cafe workers get college degrees. Is this a model for helping more Americans reach the middle class?
Mary Hamm was in pain, though it was hard to tell. She bustled around the Starbucks, pouring drinks, restocking pastries, and greeting customers with an unshakable gaze perfected during 25 years of working in hospitality. Her smile said, How can I help you? Her eyes said, I know you’re going to order a caramel Frappuccino, so let’s do this.
Occupying prime space in a Fredericksburg, Virginia, strip mall, beside a Dixie Bones BBQ Post, this Starbucks pulls in about $40,000 a week. Hamm, 49, had been managing Starbucks stores for 12 years. The problem was her feet. After two decades in the food-service business, they had started to wear out. She had two metal plates in the right one, installed over the course of five surgeries. Now her left foot needed surgery too. She doesn’t like to complain, but when I asked her how often she was in pain, she smiled and said quietly, “All the time.”
According to the Fitbit on her wrist, Hamm had walked six miles back and forth behind the espresso bar during the 13 hours she had been at work that day. For years, doctors had told her she needed to get off her feet, so she had applied for more than 15 corporate jobs, within and outside of Starbucks. Again and again, though, she had been passed over in favor of other candidates with more formal education. This was a woman who had raised three children largely on her own and had started a nonprofit to help homeless people in her area. She had experience, competence, and drive. What she didn’t have—like three-quarters of Starbucks employees, and an equal share of American adults—was a bachelor’s degree.
Thirty-one years ago, Hamm told her parents she wanted to be a nurse. They told her to get married—they had no money for college. By age 19, she was a wife and a mother. Then came more children, a divorce, and medical bills. In 2007, she took out a loan to attend the University of Phoenix, an online, for-profit school. But when the tuition went up, she quit. She is still paying off the loan.
When it comes to college, the central challenge for most Americans in the 21st century is not going; it’s finishing.
Thirty-five million Americans now have some college experience but no degree. More Americans than live in Texas, in other words, have spent enough time at college to glimpse the promised land—but not enough to reap the financial bounty. Some are worse off than if they’d never enrolled at all, carrying tens of thousands of dollars in debt, not to mention the scar tissue of regret and self-doubt.
President Obama’s recent proposal to have the federal government and states pay for two years of community college is elegantly simple, and would surely prompt more students to enroll. But community college is already close to free for most low-income students, and still only 4 percent of all community-college students earn a two-year degree in two years. (Yes, 4 percent.) Money is just part of the problem.
We like to think of college as a meritocracy, a place where only the dedicated and smart survive. But it seems to be something else. Between 1970 and 2012, the proportion of American 24-year-olds who came from affluent families and had a bachelor’s degree rose from 40 percent to 73 percent—quite an enlightenment period for privileged kids. But over the same period, the proportion of American 24-year-olds who came from low-income families and had a bachelor’s degree rose from 6 percent to just 8 percent. The country’s uneven public-school systems cannot be blamed entirely for this state of affairs.
Too many people come to college unprepared academically, it’s true. But even those low-income students who outperform their affluent peers on tests are less likely to graduate from college.
Our class-based higher-education divide explains more about America’s widening income gap than does any other single factor, according to Anthony P. Carnevale, the director of the Georgetown University Center on Education and the Workforce. Declining union membership, frayed social services, low minimum wages—none matters as much as the unequal distribution of college degrees and certificates. “Income inequality started increasing in 1983,” Carnevale told me, “and 70 percent of that inequality is derived from differences in access to higher education. It is both a fountain of opportunity and a bastion of privilege. The problem has gotten worse and worse and worse.”
Last summer, in an unusual attempt to reverse this trend in his own corner of the service economy, Howard Schultz, the CEO of Starbucks, announced that his company would team up with Arizona State University, one of the nation’s largest public universities, to help Starbucks employees finish college. As long as they worked 20 hours or more per week, any of the company’s 135,000 employees in the United States would be eligible for the program. Those who’d already racked up at least two years’ worth of credits would be fully reimbursed for the rest of their education. Those with fewer or no credits would receive a 22 percent tuition discount from Arizona State until they reached the full-reimbursement level. Without saying so, Schultz was acknowledging an awkward truth about working at Starbucks: no one wants to be a barista forever.
Schultz shared the news in a PR blitz that featured tear-jerker testimonials from grateful employees, a cameo by the U.S. secretary of education, and a visit to The Daily Show. He explained that employees could study any of the 40 majors offered online by Arizona State. They’d be held to the same standards as all of Arizona State’s on-campus students, and their degrees would look identical. Most surprising, employees would be under no obligation to stay with Starbucks after finishing. “To build a great, enduring company that is so people-based, as Starbucks is,” Schultz told me, “we have to bring our people along on this journey and demonstrate we are sharing the success.”
Almost immediately, reporters criticized Schultz for exaggerating his beneficence. After all, the program was going to be relatively cheap for Starbucks, given the discount provided by Arizona State. Plus, only students at the junior or senior level would be fully reimbursed—and only after they’d earned 21 new credits, proving their commitment to college and company. All students would be required to apply for federal financial aid, so taxpayers would be covering some of the cost, too.
But those objections missed the purpose of the program, which, admittedly, Schultz had glossed over in his soaring rhetoric about creating “access to the American dream.”
The goal was not to print a pile of get-out-of-tuition-free coupons. It was something less expensive and possibly more important: to help more students finish what they’d started.
The most revolutionary part of the program had nothing to do with tuition and got far less media attention. In their announcement, Starbucks and Arizona State also committed themselves to providing all enrolled employees with individualized guidance—the kind of thing affluent American parents and elite universities provide for their students as a matter of course. Starbucks students would each be assigned an enrollment counselor, a financial-aid adviser, an academic adviser, and a “success coach”—a veritable pit crew of helpers. Like a growing number of innovative colleges around the country, Starbucks and Arizona State were promising to prioritize the needs of real-life students over the traditions of academia.
For Mary Hamm, in Virginia, the problems came later, perhaps because she was older and had more life experience, and they were harder to see. On her first quiz in Introduction to Organizational Leadership, Hamm got a 7 out of 10. She felt like she’d failed, even though she hadn’t. She told herself to work harder and not to dwell on it. But then she got a call from Daniel Adams, her success coach at Arizona State. From his office, in Portland, Oregon, where he works at InsideTrack, a company that provides coaching services to Arizona State, he could see on his screen that Hamm had transferred with a high GPA, and that she’d been participating in her classes regularly. He made a throwaway self-deprecating joke, something he does on purpose in all his introductory calls, and then asked her how things were going. He paid very close attention to how she responded. “I call it listening between the lines,” Adams, a former middle-school science teacher, told me. “I have to understand the need.”
Hamm’s answer was upbeat but revealing. “I’m going to have to overcome my own insecurities,” she told him. “The first quiz defeated me just a little bit.” Adams talked with her about her confidence level, and he asked her whether it would be okay if they checked back in on her confidence each time he called in the future. She said that would be fine. Then he asked how she was approaching her reading assignments. When she said she’d struggled to absorb the material, he suggested that she read the chapter summary and discussion questions first, so her brain would have some scaffolding in place to make sense of what was to come. They spoke for half an hour.
During another call, Adams asked about Hamm’s confidence level. She said it had risen. The reading strategies were helping. And she loved making connections between what she was reading in her business classes and what she was doing on the floor of Starbucks, managing her employees. “I have names for things now!” she told him.
In a subsequent conversation, Hamm mentioned that she wasn’t using her notes in the quizzes. Adams suggested she ask her professor whether notes were allowed. She did, and she learned that the quizzes had been open-book all along. She’d gotten a 7 out of 10 on the first one because she hadn’t used her notes—a realization she might never have made without Adams’s prodding.
When Adams had first started contacting Hamm, she’d been skeptical. “I was like, ‘Why is this guy calling me every week?’ ” she told me. But by the third call, he’d won her over. “Knowing that he’s watching out to make sure I do succeed has been very important,” she continued. “He kind of keeps me level. He’s almost a member of my family now.”
At the Gates Foundation, Greenstein calls this approach the “reintroduction of intimacy”—a return to what worked in the Middle Ages, when university meant not a physical place but a collection of dons and students unified by a collaborative sense of educational mission. Ironically, high-tech online programs like Arizona State are finding that they can get better results by creating very human connections via coaches like Adams. He spends most of his time building relationships with students when things are going fine—listening to their stories, making suggestions. That way, when things go wrong, as they almost always eventually do, the students will trust him enough to ask for help.
According to Dave Jarrat, InsideTrack’s vice president of marketing, trust is crucial for students, like Hamm, whose parents did not go to college. “They often have doubts about themselves being college-ready,” he told me. “That manifests itself when they get into college, take a quiz, and get a C and say ‘See? I’m not college material.’ Then they drop out.” To disrupt the pattern, InsideTrack trains its coaches to talk with students before things go wrong, and to warn them about what to expect. The warning, Jarrat said, goes something like this: “College is hard. You will struggle. I just want you to know, it’s not you. Everybody struggles. Even people whose parents and grandparents went to college.”
Unlike so many other education reforms, coaching has been shown to have significant, measurable effects on student results.
In a 2011 study, two Stanford University researchers conducted a randomized, controlled study of the performance of 13,555 students in eight colleges of varying degrees of selectivity. One group of students received coaching from InsideTrack, and a second group did not. After six months, the students in the coached group were five percentage points more likely to still be enrolled. The effects lingered for at least a year after the coaching ended. Five percentage points might seem small, but compared with the results of other, more expensive efforts to increase retention, it is impressive. Other studies have found that every $1,000 increase in financial aid per student leads to about a three-percentage-point increase in retention; InsideTrack was charging schools $500 a semester and getting better results. When Arizona State started using the company to provide coaching for its online students, its semester-to-semester online retention rate rose seven percentage points, from 75 percent in the spring of 2011 to 82 percent in the spring of 2014.
“Everybody spends all their time talking about money and cost,” Michael Crow, Arizona State’s president, told me. “That’s a variable. That’s not the determining factor. The determining factor is creating the culture for success.” He’s delighted, of course, that Starbucks has teamed up with the university to help students pay for college. But that’s just the beginning of the story. He believes that Arizona State needs to do even more coaching and advising than it already does. “With the financial barrier eliminated, now we’re into the sociology, the psychology. Those are hard-slogging problems.”
By November, halfway through the first semester of the Starbucks program, the students who had developed a regular study routine were generally doing well. But plenty of others were struggling. Starbucks students dropped 53 classes in October, and another 172 before the semester ended, in December. About a dozen quit their jobs at Starbucks, meaning they will not be reimbursed for any tuition payments they made.
As of early January, 87 percent of the first class of Starbucks students had registered for the spring semester at Arizona State, including every employee named in this story. In the turbulent world of online learning, that is considered a good success rate. (It’s three percentage points higher than Arizona State’s overall online retention rate during the same period.) In addition, another 585 Starbucks employees had enrolled, bringing the current class to 1,500.
Those numbers are still lower than Starbucks and Arizona State officials initially had projected. When they announced the program, they’d boasted that as many as 10,000 employees might enroll in the first year. These days, they’re predicting something more modest: 3,000 to 5,000 student employees in the first couple of years and 25,000 graduates over the next decade.
Eventually, Schultz expects the benefit to cost tens of millions of dollars a year. But the program remains cheap for Starbucks. By comparison, the company’s health benefits cost about $250 million a year. It’s hard to imagine the college benefit ever approaching that level.
Since Starbucks announced the program in June, 20,000 people who have applied online for jobs at the company have cited the college benefit as a reason for their interest. One barista I interviewed had quit her office job in Dallas and taken a $4-an-hour pay cut to attend college for free through Starbucks. The company does not have data yet on whether employee retention has increased, but so far, it has spent very little and received significant PR and HR returns.
The Starbucks experiment is unfinished. To help students find more support, the company and Arizona State are launching a new community platform, so students can connect with one another online. To make sure employees know their options, the company sent out 135,000 mailers about the college program to their homes this past fall, and it’s planning another big promotion effort this spring. “We’re trying to show that this is not as hard as you think,” All said.
Half a dozen other companies have reached out to Starbucks to learn more about the program. As the job market tightens, more companies may begin investing in a college education for their employees. Meanwhile, the Obama administration has vowed to rate colleges based on completion rates, cost, and graduates’ earnings, despite widespread objections from colleges. (The first ratings are due from the Department of Education this summer.) “We want people to vote with their feet,” Arne Duncan, the secretary of education, told me. “It’s not just about your kids going to college; it’s about going to the right colleges.” He praised Arizona State and other colleges that focus on student services and results but also continually revisit their efforts in order to do better. “These kinds of best practices, these kinds of cultures, need to be the norm,” he said. “It doesn’t take a billion dollars, but it does take an entrepreneurial spirit and a real commitment.”
In December, in hopes of getting off her feet, Mary Hamm applied for yet another corporate job, this time in the Starbucks recruitment division. The response came swiftly, in an e-mail, just before the holidays: a “more qualified” candidate had been chosen. Hamm read the note without surprise. A few days later, she got another e-mail: she’d made the dean’s list at Arizona State.
She has enrolled for the spring semester and plans to travel to Tempe next year to walk in the graduation ceremony.
Article originally published in The Atlantic, May 2015.