How Starbucks is Modernizing the Free Tuition Benefit for the 21st Century Worker

The announcement coming from Starbucks today that it will pay for an online degree from Arizona State University for thousands of its workers has the chance to shift the conversation around a college education as an employee benefit much like the company did with health insurance for part-timers in the last decade.

Many employers have long helped pay the tuition bills for their workers, but in recent years companies have become stingier about the benefit. Some employers are requiring workers to pay back the benefit if they bolt for another job after they graduate. Some have tightened up on the types of classes and degrees they will pay for. And even as tuition rates have risen, nearly all have declined to sweeten the maximum benefit, instead sticking with what the federal government allows them to deduct annually from taxes (up to $5,250 per employee from their revenue), an amount that has not changed in nearly three decades.

Most companies have designed their tuition benefits for a 20th Century workforce.

That’s why the announcement from Starbucks is significant. Its tuition plan is open to any U.S. employee as long as they work 20 hours a week and can gain admission to Arizona State. For those with two years of college, Starbucks will pay full tuition. For those with fewer credits, it will pay some of the cost, with university and government aid picking up the rest for many students. (In the interest of full disclosure, I'm employed part-time income at Arizona State as a professor of practice).

Most companies have designed their tuition benefits for a 20th Century workforce. The Starbucks plans designs the benefit in a way that is consistent with how the economy works in the 21st Century in four important ways:

It doesn’t hold employees hostage.

Americans switch jobs, on average, every four years. Most employees never tap tuition benefits because they’re not around long enough in a job to complete a credential or they don’t want to pay back the benefit if they leave within a specified time period. Because the Starbucks benefit allows an employee to be a full-time student, its workers can complete a degree quickly.

We all benefit from an educated society.

Some might question why a Starbucks barista needs a college degree. By giving this benefit without strings attached, Starbucks is saying that its baristas don't need to keep filling orders for tall cappuccinos once they have a degree. They are free to move on. Starbucks CEO, Howard Schultz, realizes an educated society benefits all, even if he is training his employees to launch new careers and go work somewhere else.

We allow employees to take their retirement accounts with them, so why not their education. Schultz told the Chronicle of Higher Education that his plan demonstrates "the role and responsibility of a public company" at a time when education matters and "so many people are being left behind."

Completing a degree matters.

One in five Americans between the ages of 25 and 64 attended college but never earned a credential. That’s because some 400,000 students drop out of college every year. The economic and social benefits of a college education go to those who actually complete a degree, not just have some college. Schultz recognizes that difference by completely subsidizing the credential for those at least halfway toward a bachelor’s degree.

Employees are time-pressed, and often location bound.

Fully online education is not for everyone. Research has shown that it's often best for students who are highly skilled and motivated, not for struggling students. So benefits like this that only offer online courses don't help all employees and it would be better if Starbucks workers had some choice of institutions beyond Arizona State. Still, given the hours of most Starbucks employees, partnering with an online provider makes sense since students are limited as to where and when they can go to schools. But even employees outside of retail are time-pressed and location bound. Often, fully online courses are their only choice.

The Starbucks plan has some shortcomings (need to enroll full-time, only online, only at Arizona State), but its basic design is one that recognizes the needs of the 21st Century employee. Other companies should take notice and update their policies for today's workforce.

Jeffrey Selingo is author of College (Un)Bound: The Future of Higher Education and What It Means for Students, and of the forthcoming e-book, MOOC U, an inside look at the world of massive open online courses, due out this spring from Simon & Schuster. He is a contributing editor at The Chronicle of Higher Education and a professor of practice at Arizona State University.

Follow him here by clicking the FOLLOW button above, on Twitter @jselingo, and sign up for free newsletters about the future of higher education atjeffselingo.com.

Photo: Jason Empey/Flickr

Why You Can't Win the College Tuition Battle

In this series, students and industry experts share stories and perspectives from inside the student debt crisis. Share yours here using #StudentDebt.

The price of college has skyrocketed over the past decade and so has student debt. Yet, access to higher education is essential and American families have been forced to make less than ideal choices – sacrificing quality or taking on debt. This dilemma is why so many people, including myself, have spent years trying to find solutions; trying to modernize college for the 21st century and make it reasonable.

It may seem like a mystery as to how we got into this predicament, but the reasons are actually quite simple:

State funding has plummeted.

A sharp decrease in state funding has had a profound impact on public college and universities. The average state is spending 20% less per student today than in the 2007-2008 school year. Per-student funding in Alabama, Arizona, Louisiana, Pennsylvania, and South Carolina is down by more than 35 percent since the start of the recession

When this funding is cut, colleges and universities raise tuition.

Facing a lack of state funding, public colleges and universities have been forced to raise tuition and cut services across the board. Annual published tuition at four-year public colleges has risen by $2,068, or 29 percent, since the 2007-08 school year, after adjusting for inflation. At the high end, the published tuition in Arizona is up more than 80%!

Higher tuition = higher debt loads.

This should be no surprise -- the rise in tuition leads to students borrowing more and higher student debt when they graduate. A secondary impact of students being forced to take on more debt is that it widens the gap between the middle and upper middle class. This is a terrible loss for first-generation and low-income students.

The solutions to these problems, on the other hand are not so simple. With no central federal authority to govern public colleges and universities, reforms that can be enacted at the state level take much longer than if you just had to pass a law nationally. Each state and each university may be working on solutions to these problems, but it could take a decade or more to see the effects, which is too late for current high school students.

Even as some states start to increase funding, there is still so much work to be done to get students out of debt and make schools affordable. It’s also important to note that the cost of college isn’t the only issue that we should address -- just because we can make it affordable doesn’t mean we should pack 500 students into a lecture hall.

So what can students and parents do in the interim?

Stop treating college as if it hasn’t changed.

For our parents, college was a time for endless exploration both in the educational sense and the social sense. Today, it’s more important than ever to know what you want when you enter, so that you spend your time with purpose and meaning. They should also know how to get the most out of their experience. Show up on campus with a sense of what clubs, organizations, mentors, and program can help them achieve their goals faster.

Consider new programs that exist to complement and supplement the college experience.

There is a breadth of amazing programs and opportunities out there today that our parents did not have. It’s up to parents and students to explore online courses, bootcamps, and gap years to make sure they have exposure to real-world experiences and possess the skills when they graduate that HR managers look for in new hires. (If you haven’t read about the current disconnect between grads and HR managers, read this).

Be so good university financial aid offices cannot ignore you.

Get out and develop a real portfolio before you apply to college. For example, if you enjoy graphic design, then seek out opportunities to develop marketing assets companies, participate in hackathons, and take advantage of the resources mentioned above that can me you more valuable in the real world. These kinds of portfolios can help with scholarships, getting paid internships and much more.

These extra expectations are not fair to ask of students and parents today, but they great ways to ensure success at the next level even after you graduate from college. Change is coming for higher education, but not in time for any high school or maybe even middle school student. As a young person today, you have to take responsibility for your own learning.

Because of rising tuition, college can say goodbye to students who care

In this series, students and industry experts share stories and perspectives from inside the student debt crisis. Share yours here using #StudentDebt.

Yes, say goodbye to students who actually care about a wholesome education, and say hello to those who don’t. If tuition continues to increase at its current rate, the education system will be full of students who just want to go to class and get out. When I say “wholesome education,” I mean extracurricular activities like joining clubs/organization, attending non- class related lectures, and studying/interning abroad. Basically, I mean going the extra mile to get your money’s worth.However, some students cannot get their money’s worth, because they are too busy trying to make money for survival. In all honesty, I was that student. All I could think of was getting that next paycheck to pay towards my tuition payment plan.  I attended my classes, then I went to work. That was it.  I was scared, I feared that if I messed up somehow, I would end up deep in student debt. Yes, I know it sounds like an overreaction, but hey, better than no reaction at all.

During my junior year, I had calmed down a bit.  I decided I wanted to immerse myself into all aspects of my education. In fact, I felt like I deserved it. However, in order to enjoy my education, I had to take more risks with my finances. For example, in my junior year, I studied abroad in Ecuador.  It was so exciting, and for once, I felt like I was taking charge of my own learning. But, not surprisingly, this amazing, beautiful, and fascinating trip came back to haunt me the next semester.  Because I had spent my money on the trip, I had no money saved up for my next payment plan. I received a notice explaining that I owed 3000 dollars to the school, which I had to pay in under two months. My body immediately went into panic mode. At that time, I was working at the University library, and barely making $300 bi-weekly. My options were to take out a parent loan, which I knew was not possible, get a private loan, which felt like a bad idea, or get a second job. At this time, my brother was in the mental hospital, so I knew I couldn't bother my mother (single mother of 6 kids) with these financial issues.  I was terribly stressed. This financial stress led to cluster headaches, which in the end, also costed a lot more money. There would be days where I would miss class and work, because my headaches were so bad. At times, I could not see, because my eyes were forced shut. I felt like my eyelids were paralyzed. While other days, I could not walk straight.

 Yes it sounds terrible, but my story does get better. When I read that financial notice, I marched myself to the president's office. Of course I did not get to speak to the president of my university, but I did talk to her secretary, and she was very supportive. She spoke to financial aid for me, and they found a couple of solutions.  Financial aid granted me with a 1,000 dollar reward, and because I had moved from being a junior to a senior in the same semester, I would be able to receive an additional federal loan.

The semester had been the worse of my college experience, but also the most fulfilling. I went from not caring about wholesome education, to caring, and then regretting it, and then back to caring again. If I were to offer any advice to other students who are in the same predicament, I would say, do not be afraid to fight for yourself. Sometimes we are simply scared that our voice is not strong enough, or we assume that we will be lost in the “system.” Speaking of system, do not be afraid to fight it. You are worth it.

Also, stressing over finances is a waste of time, and it can seriously impact your health. I know it is hard to not worry, but try your best not to. I am now a college graduate- Class of 2016!  I will be moving to Los Angeles in a month. I’m expecting hard work and no play, and I am okay with that for now. To tie everything together,  I have realized that regardless of the presidential candidate or our occupation, we will always owe someone something.  There will always be car bills, health insurance, and phone and home bills. We will always owe something, so we might as well enjoy our lives in the process. Budget well, live your life, and care about your education.

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Will tuition continue to rise? A look at how business schools earn their income offers a clue

In this series, students and industry experts share stories and perspectives from inside the student debt crisis. Share yours here using #StudentDebt.

The range of tuition charges at business schools depends directly on their business model and sources of income. The nature of income determines also the availability of financial aid and scholarship schemes. My purpose here is to provide a comparative perspective on how business schools earn their revenues, and propose a typology to better understand how the nature of income determines propensity to increase or lower tuition.

The business models for business schools vary across regions, and results from cultural, societal, economic and political factors. Traditionally, a business school’s business model or income source determines its strategy, its mission, and the resources it relies on. There are, basically, three alternative models briefly described below. Actually, these models are not mutually exclusive, and most successful business schools are based on models that allow for a diverse range of income sources:

Type 1. Subsidized business schools

Typically to be found at large public universities, subsidized business schools’ income tends to come from regional or federal (national) budgets. Statistical surveys show that around 70 percent of the funding of subsidized business schools comes from government subsidies. As a result, these business schools are able to offer low, or even free, tuition fees. Typically these are large institutions with a substantial teaching staff made up of high-profile academics with a track record of research. In countries such as China, where education is still largely funded by the state, business schools receive government money based on the number of successful graduates they produce.

 The chart below projects the average distribution of income at subsidized business schools.

The survival of the subsidized model depends on the extent to which the state is prepared or able to continue funding higher education. Unfortunately, this is not the case at many US public universities where tuition fees have increased over the past decades to levels comparable sometimes with those of private institutions.

Another example is the UK, where in recent years schools are moving away from government funds and searching more revenue autonomy.

In Europe, most of the major universities are publicly funded, although many business schools were set up as independent institutions, or are funded by business organizations such as the local Chamber of Commerce in France.

Some university analysts wonder if this model will be sustainable over time, as governments increase cuts on public spending across different areas including education.

Type 2. Endowment-funded business schools

Rooted in the tradition of philanthropy and “giving back,” endowments are a characteristic feature of the US university system. The private universities of the Ivy League, for example, compete with each other in international rankings based on their endowments, which are made up of the amount of money they have accumulated through donations from individuals and organizations. Donors often subject their endowments to conditions regarding their use. Business schools with large endowments will generally have other sources of financing, like executive education or publishing, which also make a significant contribution. The graph below illustrates the average amount of income that the top business schools make from interest on endowments above 10 percent.

During the financial crisis of 2008, the value of endowments was hit hard, reducing their income-generating capacity. The business school expert John Byrne says: “Stanford saw a decline in endowment income in 2010 to $52 million from $58.8 million a year earlier. The school largely offset the decline by rising tuition and fees from students, which brought in $70.9 million last year, up from $64.5 million in 2009. The result: Student tuition and fees now account for 46% of Stanford’s annual operating budget, up from 42% in 2009”. [1]

However, philanthropy is embedded in the US culture and the practice of donations has continued steady after the financial crisis.

What is less clear is whether the model of endowed business schools is exportable to other latitudes outside the US. The fund raising efforts at European universities, for example, have resulted in uneven results to date.

At the same time, it is discussable whether the endowed schools are more active in granting scholarships to their students than the subsidized or the tuition based schools.

 Type 3. Tuition-based business schools

The defining model for most of Europe’s top business schools is tuition-based, with most funds coming from matriculation fees for their assorted programs, as well as from executive education and fund raising.

European business schools have long been envious of the generous endowments bestowed on the big US schools. The plus side of this is that, as a result of being financially needy, European schools have had to become more responsive to the requirements of the market.

The unresolved question is which of the above three business models of business schools is the fairest one, in terms of granting access to its students in reasonable and affordable economic conditions, offering bearable loan schemes and enough scholarship opportunities. There are a number of pilot initiatives in different countries worth following, which I will analyze in a subsequent post.    

 Notes

This post is adapted from a passage of my book "The Learning Curve: How Business Schools Are Reinventing Education" (London: Palsgrave Macmillan, 2011).

[1] J.A. Byrne, ‘The Financials Behind the Harvard-Stanford’, Poets & Quants, 4/12/2010

Math Enrichment-Why Attend Math Enrichment Classes Singapore

A lot of people these days can be seen to be flocking towards math enrichment classes Singapore as they have a lot to offer in terms of learning and so much more. There is absolutely no harm in attending classes for the subject since they provide individuals with all the guidance they need in order to do well in the subject later on in their lives. Even though these classes may not seem to be the best at first but they have been proven to allow students to get the best results and that too, in a very short period of time. Therefore, they definitely should be given a chance.

Mathematical Concepts & Fundamentals

A major reason for attending mathenrichment classes Singapore is the fact that they allow people to understand all there is about the subject. From mathematical concepts to fundamentals and so much more, everything can be taken care by actually attending these classes as they are provided by high end and experienced teachers who have a lot of knowledge regarding the subject. As time passes, individuals are going to learn much more about the subject than they ever have as this will help them do well in it later on.

Confidence & Motivation

Moreover, these classes help people achieve the high level of confidence they need in order to score well in their final exams as well as tests on a day to day basis. The knowledge people are likely to acquire from these classes will help them understand everything there is about the subject and that would eventually make them successful in the long run. As far as learning the subject is concerned, it does get difficult but it is not impossible and for actually getting a lot of motivation and confidence, attending these classes have been highly recommended to all students out there.

Reasonably Priced

An essential thing for people to be aware of is the fact that these classes are entirely affordable. As all the packages are reasonably priced, students can go on and join math enrichment classes Singapore for all long as they want or prefer since it tends to allow them to remain in their budget. Saving money is something that everyone wants to do these days and through attending these classes, it can be done along with achieving a good amount of information about the subject that so many do not understand properly these days.

Best Grades

The major reason for actually attending these classes is to improve grades by a long shot. There are many people these days who are struggling to improve their grades by attending these classes in the present times. While a lot of people are good at the subject, there are many who are average and also a lot who are weak. All of such individuals are free to join these classes as they truly have many short and long term benefits to offer, especially in terms of getting top notch grades in a short period of time. Getting proper attention within these classes is what improves the knowledge of people and that eventually leads them to scoring better.

Joining Math Enrichment Classes Singapore – Is it worth it?

While a lot of people may think that these classes are not for everyone, these are currently being provided widely in all parts of the world for the convenience of students and basically for anyone who wishes to enhance his/her understanding of the subject instantly. Therefore, no time must be wasted in the process of joining such classes as they are what help people in knowing what maths is all about. As the study of maths has become compulsory for everyone these days, joining these classes has been highly suggested to all. 

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