Howard Schultz is Giving His Employees Free College Educations — And is Ready for Critics (Again)

Today, Starbucks unveiled a massive expansion to its program granting free college educations to part- and full-time U.S. employees. Called the College Achievement Plan, the $200 million initiative allows employees who don’t have a degree to earn one through Arizona State University’s online coursework.

In a wide-ranging discussion from Starbucks’ offices overlooking the Seattle skyline, CEO Howard Schultz said he expects to see 25,000 employees earn their degrees —for many, they will be the first in their family to do so — through CAP in the next 10 years. And that’s being conservative. “We have a long history of under-promising and over-delivering,” he says. “We think we'll do the same there."

Schultz has long believed that Starbucks should play a lead in fixing problems that politicians or the private sector can’t (or won’t). Early in his tenure building what would become the $70 billion-in-market-cap coffee giant, he offered health care to all employees, bucking conventional corporate wisdom that benefits equaled bloat. He granted stock to workers. And he pushed his stores into the kind of debate that most people would prefer to avoid: from endless gridlock in D.C. to, this winter, the fatal state of race relations. “I've never tried to preach to other business leaders about what they should or should not do,” he says. “But I do feel strongly that the rules of engagement for a public company's responsibility have changed dramatically.”

In Schultz’s view, the bully pulpit belongs in the corner office. But taking stands also makes you a target. A few weeks ago, John Oliver joyously sent up Schultz for Starbucks' “Race Together” program, which had baristas, in part, writing that phrase on coffee cups as a way to stoke conversations. “I think it’s pretty clear that no one has said 'No' to this guy in 25 years,” said Oliver.

When I asked Schultz his reaction to Oliver and the legions of online critics, he gave a pained smile. Then he launched an impassioned take on why he’s not giving up. “We expected that there would be a blowback,” he says. “I don't think we expected the social media and the Twitter thing to get this loud, but that's not going to deter me or the company from what we believe is our responsibility to try and make the country better and to try and heal.”

Race Together came from a top-down decision by Schultz that Starbucks had to be a healing force. The college program came from bottom-up demand. When Starbucks asked its employees for the one benefit they’d like to add, 70% named access to college.

It’s not surprising that Schultz would see this as a perk worth accommodating — and not just with vouchers. Going big on education could start a shockwave, not just boosting employee engagement scores. Offering education to everyone would solve workplace issues (making Starbucks a more in-demand employer); political ones (Starbucks could fix the growing student loan crisis in a way that Washington couldn’t); business ones (making customers proud to buy there) — and even societal ones.

“My mother drilled into me that ‘you are going to college,’” says Schultz, who grew up working-poor in the projects of Brooklyn’s Canarsie neighborhood. “So there was no way I wasn't going to college in some way. Second, she instilled in all of us this level of self-esteem that our station in life was not going to define us. That’s the promise of America and the American dream was and is real. And I believe that today. That's why I fight so hard for the things that I believe threaten it. That the American promise, the American dream has to be available to everybody.”

Of course, the details matter. Otherwise CAP is just a marketing campaign. An earlier, more stringent version of the program launched last summer met some criticism for being tied to only one university, for delayed payments to attendees and for being available only to juniors and seniors.

The new CAP is now available to all U.S. employees and the payments come faster. Like the earlier program, there’s no strings attached: Someone could get their degree and quit Starbucks the next day.

As for forcing students to take all of their classes at ASU, Schultz says that’s all about quality control. “We interviewed Blue Chip universities before we selected ASU, all of whom wanted to do this partnership with Starbucks,” he says. “And the difference between ASU and all these other schools is that the online education was not a bolt-on. This was a fully integrated comprehensive program. And there was no differentiation whatsoever between a in-class student and an online program.”

He’s no stranger to the criticism of these online courses: that they have high attrition, that they offer stunted versions of the college experience, that they’re run for profit rather than for scholarship. “Online education has not gotten the best of reviews,” he says. But he thinks that if ASU can live up to what he’s seen already and as 25,000 green aprons graduate and go on to tell their tale, other businesses will start copying Starbucks — and increasing demand and expectations.

“This is an investment. This is not an expense,” he says. “But I would also say that not everything is an economic bottom-line decision. I'm fond of saying — and I've said it a thousand times over the years — we're not in a coffee business serving people. We're in a people business serving coffee.”

And those people are about to get skills that will take them even farther.

Read the second part of the interview: Howard Schultz Isn't Giving Up on Race Together

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