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Why Starbucks is offering workers a college education, hold the debt

May 6, 2015 at 6:25 PM EDT
More than ever, the challenge for low-income students is not getting into college, but finishing. Last year, employees of the coffee chain Starbucks were given the chance to benefit from a unique financial aid: if they work at least 20 hours a week, they are eligible for a four-year free education. Judy Woodruff reports as part of a collaboration between The Atlantic and the PBS NewsHour.

Correction: This video includes narration reporting that U.S. student debt totals $1.3 billion. The correct figure is 1.3 trillion. This has been corrected in the transcript. The PBS NewsHour regrets the error.

JUDY WOODRUFF: Now from coffee to college.

In our latest story in partnership with The Atlantic magazine, we look at unusual push by Starbucks to give their employees access to higher education.

It’s 6:00 a.m., and 23 year-old Markelle Collum-Herbison is already at the computer, getting in a little studying before she’s off to her full-time job.

WOMAN: I’m so proud of her.

MARKELLE COLLUM-HERBISON: I knew that the only way out was to have an education.

JUDY WOODRUFF: The plan had always been that mom and dad would help Markelle pay for some of that education.

MARKELLE COLLUM-HERBISON: They lived in a five-bedroom home, three bathrooms, two-story. It was beautiful.

JUDY WOODRUFF: That all changed overnight in 2008, when the economic crash hit Markelle’s family brutally.

MARKELLE COLLUM-HERBISON: I remember signing up for food stamps. It was that bad.

JUDY WOODRUFF: Today, Markelle is still living at home to help make ends meet. She is one of 21 million people enrolled in U.S. colleges this year. Now, more than ever, the challenge for low-income students and others is not getting into college, but finishing.

AMANDA RIPLEY, “The Atlantic”: American colleges are not really historically designed to make sure students finish. They are designed to enroll students.

JUDY WOODRUFF: Writer and author Amanda Ripley has specialized in higher education.

AMANDA RIPLEY: We have one of the highest college dropout rates in the developed world. We have 35 million people now who have started college and not gotten a degree.

JUDY WOODRUFF: For Markelle, a scholarship to community college got her through two years, but she had no idea how to afford the two more years it would take to earn a degree while working 40-hour weeks at Starbucks.

She is one of the first Starbucks employees to benefit from a unique financial aid program started last year by an unusual duo, the man who introduced Americans to the grande latte. Starbucks CEO Howard Schultz,  and the president of Arizona State University, Michael Crow, announced the expansion of a program that will have the company pay for the college education of its employees.

Now, if they work at least 20 hours a week, all 140,000 Starbucks employees are eligible for a four-year tuition-free online education at Arizona State University.

HOWARD SCHULTZ, CEO, Starbucks: The role and responsibility of a for-profit public company can’t be just about making money. It has to be about giving back, and it has to be about achieving the balance between profit and social impact.

JUDY WOODRUFF: The very existence of the college achievement plan suggests few want to make a career of being a barista. Schultz says he wants employees to get the education that will equip them to move up to higher-level jobs at Starbucks.

MICHAEL CROW, President, Arizona State University: Our republic is built around the notion that the key to our democracy will ultimately be the education of our people and the advancement of our democracy will depend upon their education. Well, it’s not working now.

JUDY WOODRUFF: The average college grad now leaves school with $30,000 of debt. At four-year private colleges, it goes as high as $100,000; 40 million Americans have at least one student loan, with most juggling as many as four.

HOWARD SCHULTZ: What I noticed early on is people had a lot of shame about their personal debt. And you have to peel the onion back, and finally someone has enough courage to say, I’m so embarrassed, but I have $5,000 in debt and I haven’t been able to pay it off.

JUDY WOODRUFF: Since the 2008 recession, student debt has jumped 84 percent to a record $1.3 trillion, surpassing even credit card debt in America. The personal consequences of not succeeding to finish or to pay it off can put a student in debt for decades. There is also a hidden emotional cost.

HOWARD SCHULTZ: People, I think, their self-esteem was crushed as a result of failing the first time and then being saddled with that debt.

JUDY WOODRUFF: If Schultz and Crow understand so well the stigma that failure can be for a student, how easy it is to lose hope, it’s because it goes back to their own roots.

HOWARD SCHULTZ: I think when I sat in a room with these young kids and felt hopelessness from them, it took me back to a different time in my life, living in the projects of Brooklyn, New York. I can remember as if it was right now. And I still have the scars and the shame of what it meant to be a poor kid.

MICHAEL CROW: What they need was a warm, welcoming, safe place where they could advance their personal development, and so we created that.

AMANDA RIPLEY: Every Starbucks student gets an enrollment counselor, a financial aid adviser, an academic adviser to help pick out classes, and then and ongoing success coach, as they call it, to help them deal with the inevitable problems that come up.

MARKELLE COLLUM-HERBISON: There was a lot of pressure on me, and it was scary to have to make those adult decisions and those grown-up decisions without having all of that life experience.

JUDY WOODRUFF: That’s a real challenge. Too many colleges are good at everything, it seems, but customer service.

AMANDA RIPLEY: I think American colleges are confused places. They are trying to enroll students, and they are very good at that. They are trying to garner research funds, and they are good at that. Many are trying to gain status, and they are good at that.

But those things often are at odds actually with helping students finish efficiently and thrive in the modern economy.

JUDY WOODRUFF: Mario Matus is Markelle’s personal adviser. And that has been the key to success so far.

MARIO MATUS, Arizona State University Student Adviser: There’s that fear of I’m falling behind, or this isn’t what I expected, or maybe this isn’t the right major for me. We want them to know that that’s OK. That’s part of the process. It’s not just you on a computer on an island. You are part of a community.

MARKELLE COLLUM-HERBISON: And it’s really nice to have someone there through those hard times and there to celebrate all of your accomplishments.

AMANDA RIPLEY: Having someone in your court like that who texts you and calls you and checks in and is there to give you a little advice or a little support turns out to be hugely important.

JUDY WOODRUFF: Nationally, students who enroll in online courses are more likely to fail or withdraw. Low-performing students or those who have previously struggled in college tend to fall further behind in online work. This is another reason Starbucks and ASU provide the advisers, although most are unable to meet face-to-face like Markelle, who lives near the ASU campus.

The goal here, though, Howard Schultz, is to move the baristas, the people who work for you, on and up out of the company.

HOWARD SCHULTZ: The goal of the company is not move them out of the company. The goal of the company is to give them new tools, new resources and obviously a broader comprehensive education to do many other things within Starbucks.

JUDY WOODRUFF: Even though tuition comes at a discount, if students don’t finish a course, they will be even deeper in debt. Perhaps that’s why sign-ups for the program started slow. In addition, initially, only students who already had two years of college credit were eligible to participate. Now any employee working 20 hours a week is eligible.

And you wouldn’t be doing this if you didn’t think it would help your bottom line.

HOWARD SCHULTZ: That’s exactly right. But I also — I’m doing it because I recognize that, more than ever, that not only do we have to exceed the expectations of our customers, but we have to exceed the expectations of our people to succeed.

JUDY WOODRUFF: This can benefit ASU at a time when universities face decreasing enrollment.

AMANDA RIPLEY: I do think that, in this case, their business interest and their social justice interests are aligned.

MARKELLE COLLUM-HERBISON: The American dream is opportunity. That is what we stand for here. We are a culture where anything is possible. We are setting new standards. It truly is the American dream, and we are bringing that back.

JUDY WOODRUFF: Hundreds of other workers like Markelle will determine if that dream is achievable online while working part-time.