Report: Starbucks relying on taxpayers for its employee tuition program

Starbucks’ College Achievement Plan may not be free after all, at least for taxpayers.

Starbucks has been praised for its plan to have 25,000 employees obtain degrees through Arizona State University by 2025. Starbucks CEO Howard Schultz has said that through an exclusive partnership with the university, employees working 20 hours a week qualify for tuition-free education.

But someone has to pay for that education and as Daily Caller reporter Blake Neff points out, it’s mostly being paid for by taxpayers.

“The company is paying for some of it, but when you look at the numbers, the vast majority is coming from some kind of taxpayer source,” Neff told KIRO Radio’s Dori Monson.

Arizona State is offering a steep discount rate for each Starbucks employee at the tune of 42 percent. Though it’s been said the school is footing the bill, it’s actually the Arizona taxpayers paying for the discount because it’s a public school, Neff explained.

On top of the generous discount, every student is asked to apply for state and federal grants and scholarships. Most employees qualify for the maximum Pell Grant, another tax subsidy.

“When you combine all this, it shows far more money is coming from federal or state government than Starbucks,” Neff said.

The cost of a four-year degree through Arizona State’s online program is approximately $60,000, according to Neff. That will probably increase as tuition rises between now and 2025. That means the $250 million Starbucks budgeted for the program over the next decade isn’t coming close to the total cost.

Related: Did you see what someone placed on top of a Starbucks sign?

Starbucks told the Dori Monson Show, “the vast majority of the Starbucks College Achievement Plan is funded by ASU Online and Starbucks.” It broke out the numbers:

-Partners enrolled in the program receive a scholarship funded by ASU Online, which is equal to 42% of their tuition.

-On average, partners receive federal scholarship funding covering 10% of their tuition. This is equal to about $1,450 in need-based federal scholarships per year, which is less than half the national average.

-Additionally, partners receive an average of 5% of their tuition from need-based scholarships from ASU Online. This is not funded by Arizona taxpayers. This is funded by ASU Online, a revenue supported operation that does not rely on state funds. The revenue it generates is reinvested in degree programs.

-Starbucks reimburses partners the remaining amount (average of 43% and up to 58%), even if they don’t receive federal or ASU scholarships. This gives them 100% tuition coverage to start and finish their bachelor’s degree through ASU Online.

If the company truly paid for 25,000 to attend four years of college, it would pay about $1.5 billion based on current tuition rates, according to Neff’s Daily Caller article.

Schultz has been shaky with the numbers since the program was first announced in early April, Dori said. The CEO never provided specific numbers during interviews.

“I think Starbucks has gotten off relatively easy,” Dori said. However, he is glad more people will have access to a four-year college degree.