Arizona State University agreement with Starbucks contributes to higher education privatization

Mukund Rathi

On June 15, Starbucks announced its College Achievement Plan in partnership with Arizona State University. Starbucks CEO Howard Schultz and many news headlines, including the company’s website, lauded Starbucks as offering “full tuition reimbursement” for Starbucks employees who are completing a bachelor’s degree at ASU. Unfortunately for these working students and us at UT, who are also facing privatization, that promotion is false.

The Starbucks plan only applies to Starbucks employees pursuing an online degree, which has consistently fallen short of goals around retention, passing, metrics of learning and degree completion.

Starbucks will bear no more than 30 percent of any student’s four-year tuition and fees. There are two parts of the Starbucks plan: a scholarship that reduces the sticker tuition amount and reimbursements for out-of-pocket payments. The scholarship is funded by ASU, not Starbucks, and reduces tuition about $6,500 from the $30,000 for freshman and sophomore years, and $12,600 from $30,000 for junior and senior years. After that, a student may have his or her tuition further reduced by federal grants, military education benefits or need-based aid. Then, juniors and seniors must pay out-of-pocket (or take out loans) for what remains. If they complete 21 credits, which costs about $10,000, within 18 months, Starbucks will issue a reimbursement for that amount. Starbucks will not reimburse any tuition for freshmen and sophomores, meaning that ASU’s scholarship for those first two years is essentially paying students to work while they are in school.

Working students consistently have higher levels of stress, lower academic outcomes and less time for extracurricular activities. These conclusions are consistent across scholarly studies of this issue, but are also obvious to most students, especially since the average student is working more than 20 hours a week. The Starbucks plan is only available for students working there 20 hours a week on average. A recent survey showed that students who work 20 or more hours a week typically have to reduce their academic course load to deal with the stress. However, Starbucks will not reimburse tuition unless a student completes 21 credits within 18 months, which puts working students in quite a precarious position.

Starbucks is not doing this for charitable reasons. It has two profit-related goals, the first of which is broad public relations. This is evident from the Starbucks press release and a variety of major news headlines falsely stating that Starbucks will fully reimburse their workers’ tuition — one headline even states that Starbucks is paying them to get a degree! Starbucks, like most retail companies, consciously attempts to remove the negative sting of profit-making and capitalism by selling an image of intimate relations to its customers and workers. The second goal is to advertise the Starbucks brand to the college. The ASU-Starbucks contract shows that ASU will be fulfilling most of the responsibilities to run the program, but it also requires ASU to assist Starbucks with marketing projects such as joint press releases, promotional “swag,” social media communications, and online advertising for anyone on Starbucks wifi. Starbucks advertising will be present even within educational spaces: ASU must work with Starbucks to develop a mandatory, one-week, non-credit course for students in the Starbucks plan, develop coursework such as “modules on retail management”, construct ASU study spaces inside Starbucks stores, and deliver coursework over Starbucks wifi. They want students who are working at a Starbucks store to also complete their college education there, with a few tasty beverages to get through the boring videos and all-nighters.

Starbucks is a company in a capitalist economy; its bottom line is the profit-motive, and its plan for ASU students is privatization, which has been hitting universities across the nation, including UT Austin. In reaction to the undemocratic attempt by the UT System Board of Regents to fire UT President William Powers Jr., there were outpourings of support for Powers from the Texan and other papers. All of these evaluated his record incredibly positively, but without any mention of the waves of privatization over which he has presided. Most recently, Powers has begun pushing for a privatization overhaul of student services, staff jobs and faculty recruitment as part of the “Smarter Systems” plan. UT hired the consulting company Accenture to develop this plan, despite its notorious failures with the state of Texas. After a 2005-2006 privatization contract with the Texas Health and Human Services Commission, Accenture was denounced by the Texas Comptroller for forcing unnecessary “massive state worker layoffs.” Smarter Systems advocates UT implementing “Shared Services,” a controversial administrative centralization plan which UT students, staff and faculty have opposed due to staff layoffs. Smarter Systems advocates restricting faculty recruitment and research to “corporate leaders” and areas with greatest “commercial success” — essentially, applying the profit motive to education. Like the Starbucks plan, Smarter Systems seeks to profit from students: it advocates privatizing student dorms, food and parking.

This would mean that Jester, other dorms, and all of the subsidized UT cafeterias and parking lots would be run by private companies, and thus also have higher costs, euphemized in Smarter Systems as “market rates.” Under Powers, UT has already implemented the in-store study spaces part of the Starbucks plan — the Student Activity Center and Texas Union are food-monopolized by private companies (with a Starbucks in each).

The current capitalist era is one with Gilded Age levels of inequality. This comparison also holds in terms of higher education and affordability. Industrialist  Andrew Carnegie was one of the wealthiest individuals in the world, with annual earnings thousands of times greater than those of his company’s steelworkers, and yet he maintained his image with philanthropic endeavors in higher education, as well as in other areas. Similarly, Starbucks has one of the highest CEO-to-worker pay ratios in the country, with CEO Howard Schultz making $28.9 million annually while the average full-time barista makes $17,580 — that’s 1,644 to 1. The robber barons are not interested in lessening the affordability gap, and it’s not just a problem at ASU. Half of UT Austin students graduate with debt, the average amount being $26,097, and are entering a job market that is still unfriendly to the idea of paying off that debt. The Texan, to its credit, recently published a series on student debt and affordability. However, we have to start talking about the cause of these problems: an unequal economy which forces students to work while they study, take out loans and pay more with each privatization scheme.

Rathi is a computer science honors junior from Austin.