The Upwardly Mobile Barista

ORIGINALLY PUBLISHED BY financial bounty. Some are worse off than if low minimum wages—none matters as much they’d never enrolled at all, carrying tens of as the unequal distribution of college degrees thousands of dollars in debt, not to mention and certificates. “Income inequality started the scar tissue of regret and self-doubt. increasing in 1983,” Carnevale told me, “and 70 percent of that inequality is derived from President Obama’s recent proposal to have differences in access to higher education. It is the federal government and states pay for both a fountain of opportunity and a bastion two years of community college is elegantly of privilege. The problem has gotten worse simple, and would surely prompt more and worse and worse.” students to enroll. But community college is already close to free for most low-income Last summer, in an unusual attempt to The Upwardly ORIGINALLY PUBLISHED BY students, and still only 4 percent of all reverse this trend in his own corner of the community-college students earn a two-year service economy, Howard Schultz, the CEO degree in two years. (Yes, 4 percent.) Money of Starbucks, announced that his company Mobile Barista is just part of the problem. would team up with Arizona State University, one of the nation’s largest public universities, We like to think of college as a meritocracy, to help Starbucks employees finish college. a place where only the dedicated and smart Starbucks and Arizona State University are collaborating to help cafe workers get As long as they worked 20 hours or more survive. But it seems to be something else. per week, any of the company’s 135,000 college degrees. Is this a model for helping more Americans reach the middle class? Between 1970 and 2012, the proportion employees in the United States would be

AMANDA RIPLEY | MAY 2015 ISSUE | BUSINESS had applied for more than 15 corporate jobs, within and outside of Starbucks. Again and ARY HAMM WAS IN PAIN, though again, though, she had been passed over in it was hard to tell. She bustled favor of other candidates with more formal around the Starbucks, pouring education. This was a woman who had raised Mdrinks, restocking pastries, and greeting three children largely on her own and had customers with an unshakable gaze perfected started a nonprofit to help homeless people during 25 years of working in hospitality. Her in her area. She had experience, competence, of American 24-year-olds who came from smile said, How can I help you? Her eyes and drive. What she didn’t have—like eligible for the program. Those who’d already affluent families and had a bachelor’s degree said, I know you’re going to order a caramel three-quarters of Starbucks employees, and racked up at least two years’ worth of credits rose from 40 percent to 73 percent—quite Frappuccino, so let’s do this. an equal share of American adults—was a would be fully reimbursed for the rest of their an enlightenment period for privileged kids. bachelor’s degree. education. Those with fewer or no credits Occupying prime space in a Fredericksburg, But over the same period, the proportion would receive a 22 percent tuition discount Virginia, strip mall, beside a Dixie Bones BBQ Thirty-one years ago, Hamm told her parents of American 24-year-olds who came from from Arizona State until they reached the Post, this Starbucks pulls in about $40,000 she wanted to be a nurse. They told her to low-income families and had a bachelor’s full-reimbursement level. Without saying so, a week. Hamm, 49, had been managing get married—they had no money for college. degree rose from 6 percent to just 8 percent. Schultz was acknowledging an awkward truth Starbucks stores for 12 years. The problem By age 19, she was a wife and a mother. Then The country’s uneven public-school systems about working at Starbucks: no one wants to was her feet. After two decades in the food- came more children, a divorce, and medical cannot be blamed entirely for this state of be a barista forever. service business, they had started to wear out. bills. In 2007, she took out a loan to attend affairs. Too many people come to college She had two metal plates in the right one, the University of Phoenix, an online, for- unprepared academically, it’s true. But even Schultz shared the news in a PR blitz that installed over the course of five surgeries. profit school. But when the tuition went up, those low-income students who outperform featured tear-jerker testimonials from Now her left foot needed surgery too. She she quit. She is still paying off the loan. their affluent peers on tests are less likely to grateful employees, a cameo by the U.S. doesn’t like to complain, but when I asked graduate from college. secretary of education, and a visit to The her how often she was in pain, she smiled and When it comes to college, the central Daily Show. He explained that employees Our class-based higher-education divide said quietly, “All the time.” challenge for most Americans in the 21st could study any of the 40 majors offered century is not going; it’s finishing. Thirty-five explains more about America’s widening online by Arizona State. They’d be held to According to the Fitbit on her wrist, Hamm million Americans now have some college income gap than does any other single factor, the same standards as all of Arizona State’s had walked six miles back and forth behind experience but no degree. More Americans according to Anthony P. Carnevale, the on-campus students, and their degrees would the espresso bar during the 13 hours she had than live in Texas, in other words, have director of the Georgetown University Center look identical. Most surprising, employees been at work that day. For years, doctors had spent enough time at college to glimpse the on Education and the Workforce. Declining would be under no obligation to stay with told her she needed to get off her feet, so she promised land—but not enough to reap the union membership, frayed social services, Starbucks after finishing. “To build a great, enduring company that is so people-based, themselves to providing all enrolled When the program was initially announced, she found herself sending $320 a month to as Starbucks is,” Schultz told me, “we have to employees with individualized guidance—the on June 15, 2014, Mary Hamm read the banks, $270 of which went toward interest. bring our people along on this journey and kind of thing affluent American parents and details in a company e-mail. At first she “I’ve just been in a financial rut,” she said, demonstrate we are sharing the success.” elite universities provide for their students as thought about which of her young employees “feeling so hopeless.” a matter of course. Starbucks students would she could persuade to enroll. But then it Almost immediately, reporters criticized each be assigned an enrollment counselor, a dawned on her that this opportunity was Hills explained her failure to finish college as Schultz for exaggerating his beneficence. After financial-aid adviser, an academic adviser, meant for her, too—and that it might be her a result of her particular circumstances—as all, the program was going to be relatively and a “success coach”—a veritable pit crew of best and last chance to finish her degree. did every Starbucks worker I interviewed. cheap for Starbucks, given the discount helpers. Like a growing number of innovative She signed up to talk to an Arizona State But it’s hard to ignore the systemic problems provided by Arizona State. Plus, only students colleges around the country, Starbucks and enrollment counselor the next day. that are also in play. According to an analysis at the junior or senior level would be fully Arizona State were promising to prioritize the released in December by the Brookings reimbursed—and only after they’d earned 21 needs of real-life students over the traditions Institution’s Brown Center on Education new credits, proving their commitment to of academia. N THE WEEKS following the Policy, half of American college freshmen college and company. All students would be announcement, Starbucks shipped off “seriously underestimate” the amount of required to apply for federal financial aid, so Starbucks and Arizona State granted posters and information packets to its student-loan debt they have, and about a taxpayers would be covering some of the cost, The Atlantic exclusive access to the first I7,300 company-operated stores in the United quarter of students with federal loans do too. semester’s students, advisers, and detailed States. District managers gave store managers not even know they have such loans. Many suggested talking points and asked them just don’t know the loans are federal, but to spend 15 minutes with each employee to some don’t realize they have any loans at all, discuss the new benefit. perhaps because their parents filled out the forms for them. From focus groups and internal surveys, Starbucks executives knew their employees Hills’s mother had explained her loans to made up a fairly representative sample of the her, but all the paperwork had seemed very national population, educationally speaking. abstract. “I was just so excited to go to college They were disproportionately young and that I didn’t really look at it,” Hills told me. female, and the vast majority did not have Even if she had looked carefully, she would a four-year degree. Most were either taking not have seen the whole picture. Students classes on the side or hoped to do so at some have to reapply for financial aid each year, point. They were busy, cash-strapped, and which means they can’t tell how much they yearning for more. (Full disclosure: I briefly will have to pay from one year to the next. worked at a Starbucks in Washington, D.C., Hills, like many other students, had literally after graduating from college in 1996, until I no way of knowing when she started college got a much easier job in journalism and quit.) how much her whole education would cost. In theory, according to research by Robert Most baristas already have a complicated Kelchen and Sara Goldrick-Rab of the history with college. Allison Hills, an athletic University of Wisconsin at Madison, by the 23-year-old with long, straight black hair time students are in the eighth grade, the that drapes her head like a silk scarf, went to government has the ability to predict with But those objections missed the purpose of results. Despite all the hype, no one at either college straight out of high school, intending high levels of accuracy which ones will be the program, which, admittedly, Schultz had institution knew how many employees to become a physical therapist. She attended eligible for Pell grants—and it could easily glossed over in his soaring rhetoric about would sign up—or how they would fare once Arizona State on campus in Tempe, and inform them of this when it tells them that creating “access to the American dream.” enrolled. Working students attending college racked up $26,000 in debt by the end of her they qualify for free school lunches. But it The goal was not to print a pile of get-out-of- online drop out at notoriously high rates, but sophomore year. This came as a shock. “I doesn’t. tuition-free coupons. It was something less if the experiment succeeded, it might suggest really didn’t have a grasp on the finances and expensive and possibly more important: to that college, designed differently, could still how many loans I would need to take out,” Instead, each year, students under age 24 help more students finish what they’d started. become the equalizer it was meant to be. she told me, sounding embarrassed. Trying to must gather up their parents’ tax information “We’re not trying to save the world,” Arizona be practical, she decided to move back home, and fill out a 105-question form known as The most revolutionary part of the program State’s president, Michael Crow, told me. to Seattle, and attend college there. But when the Free Application for Federal Student had nothing to do with tuition and got far “We’re trying to show that the world can be she couldn’t get into the classes she wanted, Aid, or FAFSA. (A bill that would shorten less media attention. In their announcement, saved.” she figured she would work at Starbucks for the application to two questions is awaiting Starbucks and Arizona State also committed a while. Before long, her loans came due, and action in Congress.) Those who file the form career where I have to work on holidays,” she said. “I want to be able to go to my kids’ plays Half of American college freshmen and see my family. At Starbucks, you can’t do that.”

“seriously underestimate” their Thomas had always assumed she’d go back to college on a campus, with sororities and debt, and about a quarter of football games. But she also knew a bargain when she saw one. Because she had already students with federal loans do not earned two years’ worth of credits, the Starbucks program would be free for her—a savings of about $30,000. So she went online even know they have such loans. and requested more information.

A few days later, she got a call from Nicki early in the year typically receive twice as After the financial-aid application, the Nosbish, an enrollment counselor based much money as those who file later, but you next odyssey for returning students is the at Arizona State in Phoenix. (Technically, of course have to know that bit of trivia to transcript hunt. Many American adults now Nosbish works for Xerox, which is under take advantage of it. Hills didn’t know it. She have transcripts scattered near and far, at the contract to provide enrollment counseling also didn’t know that after she turned 24, her various colleges they have attended over the to people applying to Arizona State’s online parents’ income would no longer be a factor years. To get credit for their previous courses, undergraduate program. The university has in decisions about financial aid. As it was, her students must get their transcripts sent to the chosen to outsource much of its advising, parents earned too much for her to qualify new college. But getting those transcripts to a because that kind of support is unfortunately for federal grants but too little to help her pay new college’s admissions office can be an epic not a core competence of Arizona State, or for college (a common story among young process—akin to getting doctors’ offices to many other schools.) Thomas had never students I interviewed). “If I had known,” send medical records. encountered anyone like Nosbish in her she told me, “I never would’ve gone to college previous college attempts. Nosbish listened. deadline, she got in her car and drove an hour right away.” She assured Thomas that she could indeed to get it. LICEA THOMAS, who works at a walk across the stage on graduation day, If a student owes money to a college—even Several Starbucks employees I met had never Starbucks in Perris, California, not even though her classes would be online. She a nominal amount from many years ago— previously applied for college financial aid, far from Riverside, was the captain talked her through the application process. the college can hold the transcript hostage even though they probably were eligible. Aof her cheerleading squad in high school. This “I felt like I was her only student,” Thomas until the debt is paid. Thankfully, Thomas (Some 2 million low-income college students is not hard to visualize. “I like happy people, told me. “Like she was only worried about did not have any outstanding payments to who would have qualified for federal grants mad people, sad people,” she told me, smiling me.” Nosbish told her she’d check in again in make, so she figured she had completed didn’t complete the FAFSA in the 2007–08 behind glasses with pink frames—“anyone a few days. After they spoke, she left Thomas her application. Soon afterward, though, school year, according to Mark Kantrowitz, who is willing to listen to me talk.” Her voicemails reminding her to send in her Nosbish called again. The transcripts had not a financial-aid analyst and a senior vice exuberance makes her an ideal barista, but transcripts so she could get credit for previous arrived. Thomas felt her heart rate rising. president at Edvisors.com.) They were too she dreams of starting her own talk show one classes. But Nosbish did something truly radical for frightened of debt—a reasonable anxiety, but day. Failing that, she’d like to do PR in the Thomas was actually applying to other a college adviser—she set about searching for one that also kept some from receiving grants. music business. colleges that summer, but she had Thomas’s transcripts herself, and she found This past summer, Hills, like all Starbucks By the time Thomas, who is now 23, applied procrastinated and hadn’t yet sent in her them. They’d been misplaced at Arizona employees who applied to Arizona State, filled to Arizona State through Starbucks, she’d transcripts, which meant her applications State. Finally, Thomas’s application was fully out the FAFSA form. But applying to college attended California State University at Los were unfinished. She knew she was submitted, something she insists never would this time felt altogether different, because Angeles and Riverside City College. She’d sabotaging her own academic future, but she have happened without her counselor. she had the help of an enrollment counselor dropped out of Cal State after failing a was terrified of being rejected. With Nosbish’s and a financial-aid adviser. They walked her remedial math class three times and feeling help, though, she felt stronger. She made the through the forms, the costs, and her options. isolated on the commuter campus. “I had calls and sent in the forms. When Riverside’s E ASSUME THAT people drop out “It’s a lot clearer than before,” she told me. no real motivation for school,” she said. transcript didn’t come through, she sent a of college because of the cost. But “They really spelled it out. And they were She eventually got an associate’s degree at second form. When Cal State notified her that’s only part of the explanation. really patient with all my questions.” Riverside, and always intended to go back for that she had to come in person to get her WListen closely to former students, and you’ll a bachelor’s degree. “I don’t want to have a transcript in time for the Arizona State hear them tell stories about bureaucracies losing their paperwork, classes running out of Neal Raisman, a consultant who has advised spots, nonsensical tuition bills, and transcript colleges on student retention for the past 16 offices that don’t take credit cards. The years, told me. Raisman instructs colleges customer service is atrocious. to train their employees in basic customer Thomas had always assumed she’d service: say hello to students in the hallways, Simply put, many Americans fail to finish conduct exit interviews when they drop out, go back to college on a campus, college, because many colleges are not keep financial-aid offices open past 5 p.m. designed to be finished. They are designed to Most students are looking for a sense of with sororities and football games. enroll students, yes. They are built to garner community and are happy to stay put when research funds and accrue status through they find it. The same holds true for people But she also knew a bargain rankings and the scholarly articles published generally—as Starbucks and other service- by faculty. But those things have little to do oriented businesses well know. with making sure students leave prepared to when she saw one. The Starbucks thrive in the modern economy. OHN TOBIN, a serious, compact program would be free. 29-year-old with short brown hair and sideburns, likes to work the espresso Jbar at his Starbucks, just outside of Phoenix. reminding him that the deadline was two serving on a Markle Foundation committee He can get into a zone that way, and the time weeks away. Tobin read the message twice. to discuss how to save the American dream goes by faster. The other workers call him “I was literally dumbfounded,” he told me. in an age when globalization and technology Blackjack, a nickname he earned more than Every day at Starbucks, he gave customers had displaced jobs and stifled social mobility. a decade ago, when he wore No. 21 as a star the kind of high-touch service the company Unofficially, Schultz and Crow, at least, were on his high-school baseball team. He’s been a promises—emptying a dozen Splenda tired of waiting for Congress, colleges, and Starbucks employee for 10 years. packets into a latte for one customer, crafting the other formal institutions of change to, elaborate, off-menu drinks for others, all well, change. After high school, Tobin received a small with a smile and a kind word for the regulars. scholarship to play baseball at Glendale Meanwhile, he’d had to put up with utterly At the first meeting of the group, the two Community College, a 40-minute drive indifferent treatment by colleges—to whom men broke away and began hatching a plan. from his hometown. Neither of his parents he was paying a lot more money for services had a college degree. This was his chance to vastly more important than anything offered “Howard and I basically holed up in the get an education without taking on a lot of to customers at Starbucks. corner,” Crow told me, “and we said, ‘Why debt. But during the first week of school, he don’t we do something other than just talk tore his rotator cuff in practice. A few days When Tobin got the counselor’s e-mail, he’d about this?’ ” later, he was cut from the team and lost his already been looking at the course catalog. Now, however, there is hope. Ever so slowly, scholarship money. But the message energized him in a way The two men had much in common. Both it’s getting harder for colleges to neglect he hadn’t expected. “I felt like there was came from working-class homes. Crow’s their students’ needs. That’s partly because Tobin’s entire life had been about sports. somebody who wanted me to succeed as mother died when he was 9, and after that he fewer students are enrolling: the economy Now, for the first time in his memory, he had much as I did,” he told me. He signed up for followed his Navy father around the country, is improving, and Americans have other nowhere to go after class, no record to break, two health-sciences classes. His current plan attending 17 different schools before finishing options. The dip in demand means recruiting no opponent to beat. He transferred the next is to finish his degree and return to sports, high school. Some of his younger siblings new students can be more expensive for semester to a community college even closer this time as a coach. never graduated. Schultz, meanwhile, grew colleges than keeping the ones they already to home. After one semester there, he told up in public housing in Brooklyn. Neither of have. Meanwhile, more colleges are facing himself he needed time to figure out what to his parents graduated from high school, embarrassing government and media scrutiny do with his life, and withdrew. No one from WO SUMMERS AGO, Howard Schultz, and he was the first in his family to get a over their students’ low graduation rates and the college reached out to ask why he’d left. the Starbucks CEO, and Michael college degree. high debt loads. For some schools, ensuring Crow, the head of Arizona State, that more students stick around is becoming This past summer, he spoke with an They both considered themselves anti- Twent to Aspen, Colorado, along with about a matter of survival. enrollment counselor at Arizona State about establishment pioneers. Schultz had built 50 other business leaders, politicians, and the Starbucks program and decided to apply. an empire that was as much about emotion luminaries, among them former Secretary of “People are starting to realize there is a A couple of weeks after he was admitted, as it was about coffee. It was important State Madeleine Albright and Senator Cory direct correlation between your customers he got an e-mail from his counselor. “I see to his brand—and his identity—that he be Booker, of New Jersey. Officially, they were all staying at your store and your bottom line,” you haven’t enrolled in classes,” she wrote, leading something bigger than a caffeinated- friendly system that provides guidance to all was the psychological one, Renick said. Many 66,000 undergraduates about which classes of Georgia State’s minority students from they must take to graduate on time, and low-income families had concluded that they then tracks their progress along the way. If were on their own in college. When they got a student falters by, for example, dropping a the micro-grants, students told him, they felt required class, eAdvisor automatically e-mails that sense of isolation lift. “We’ve heard from the student and his or her adviser. The system students,” Renick said, “that it makes them has had an immediate and impressive effect. feel like someone is on their side, that we In 2006, the year before the school began want them to succeed.” using eAdvisor, only 26 percent of on-campus students from families earning less than The old model of seeking out help on your $50,000 a year graduated within four years. own—by tracking down tutors or spending By 2009, that rate had gone up to 41 percent. hours in financial-aid offices—doesn’t work for students who have jobs and family Across the country, dozens of colleges are obligations, not to mention creeping academic starting to tap into their own data to find anxieties. “We have set up incredibly complex simple and sometimes inexpensive ways to universities with rules that most of the faculty keep their students. When officials at Georgia have trouble figuring out,” Renick said. “Then State University looked at their records, they we hand students a course catalog and say found that a surprising number of students ‘Find your way.’ ” Like Arizona State, Georgia beverage-dispensing platform. Crow was a the company’s needs. Second, Arizona State’s had quit because they’d owed the university State and other innovative schools are using college president who actively disdained the leadership seemed to have embraced online small amounts of money for fees not covered data to determine which students need which elitism and status consciousness of other learning as a central element of its entire by their loans. So the school started giving services and pushing those services to them. college presidents. “We said, ‘God, let’s do mission, not just as a shiny accessory. out micro-grants to help students who something that hasn’t been done before,’ ” were on track to graduate but had run into When I met Nicki Nosbish, the enrollment Schultz told me. They recognized their Arizona State still relies upon many standard minor cash-flow problems. During the past counselor, this winter, she was wearing an shared iconoclasm, and saw the potential college practices, and some faculty members academic year, Georgia State gave out more Arizona State Sun Devils T‑shirt. But she for inspiring other partnerships nationwide. remain more focused on winning grants and than 2,000 of these grants, mostly to seniors. had never actually finished college. She’d “Howard and I talked about ‘What if every publishing than on teaching. But over the past The average grant was just $900. Of the tried, years earlier, going from a tiny high company did this, and lots of universities decade, the university’s leadership has gotten seniors who received money, 70 percent school to a Nebraska state college, but she too?,’ ” Crow told me. “We’d take care of unusually creative about circumventing graduated successfully within two semesters. was overwhelmed. “I didn’t do so hot,” she this college-completion thing like that.” He these models and finding new ways to reach For seniors in similar financial straits whom told me. “I didn’t know how to read a course snapped his fingers. students. “We believe that the modern public the university did not have the budget to help, catalog. I didn’t know anyone.” Her adviser, university, rather than being focused around the graduation rate was less than 10 percent. who was also the college’s band director, Over the next year, Starbucks executives tradition, must be adaptive to the speed of So far, the initiative has more than paid for was of little help. Looking back on it, she vetted the idea. In November 2013, the technological advancements and the changing itself, since students who stay continue to pay acknowledged that she could have used the company surveyed a representative sample of economics and demographics of the country,” tuition after getting the micro-grant. kind of counseling she now provides. The employees about what benefits they wanted. Crow told me. Under his leadership, the irony has not escaped her. “If I would have More than 80 percent expressed interest in a school has deliberately become more diverse But the most telling part of the story is how had some support on my time management benefit that would help them finish college, a and less exclusive, and has more than doubled students reacted to this news. When the and what to expect,” she said, “I think I strong indication that a college program could the percentage of low-income students university’s vice provost, Timothy M. Renick, would have been a little more successful.” She help Starbucks attract and retain talent. Then enrolled. Nearly 40 percent of Arizona State and his colleagues first began making phone recently started the enrollment process at a the company held a “bake-off,” as Schultz students come from low-income families, calls to offer the micro-grants, they expected local community college in hopes of finishing puts it, inviting a small group of universities, twice the proportion found at many other shouts of joy. Instead, a handful of students her degree. including Arizona State, to pitch their large public universities, among them Penn hung up on them. “They thought it was a services. Arizona State won the competition State and Indiana University. Arizona State’s scam,” Renick told me. It was a sobering for two reasons, Starbucks executives say. online program, which started in 2010, now glimpse of how students perceived the Y MID-AUGUST, two months after the First, the school was committed to providing has 13,000 students, and one of the highest university and their place in it. launch of the program, the Starbucks an education to as many Americans as retention rates in the country. enrollment numbers were alarmingly Renick and his team called the students back possible, not just the academic high achievers, Blow. Days before the deadline, only 1,500 and convinced them that the grants were which appealed to Schultz’s populism and to To help students find their way, the school people—about 1 percent of Starbucks’s has developed a tool called eAdvisor—a user- real. Over time, the most surprising benefit American workforce—had completed the for the communities they serve.” He readily colleges have seen no downside to erring on acknowledges that the new benefit will help the side of accessibility and letting millions Starbucks’s bottom line. “You have to link drop out without a degree. For Starbucks “We are employing over 100,000 long-term value for shareholders,” he told and Arizona State, however, a high dropout me, “with long-term value for employees.” rate would be a PR fiasco. The right balance young people in America, and Starbucks already has its pick of employees, is elusive. “We’re learning as we’re going,” hiring just 4 percent of applicants each year. Schultz told me. the majority of them do not have Like many retail businesses, the company’s problem is turnover. In its first two decades a college degree. We can’t be a under Schultz’s leadership, Starbucks HE WEEK BEFORE classes began, attracted and retained talent partly by Alicea Thomas, the barista in Southern offering unusually generous health insurance California, had her laptop stolen. The bystander, and we can’t wait for and stock options to employees, including Tkeyboard had stopped working, so she’d given ones who worked part-time. But those it to a friend who supposedly knew someone Washington...” -Howard Schultz benefits have become less revolutionary, who knew how to fix things. Then her friend Schultz said, noting that many Americans disappeared. “He changed his cellphone have now gained access to health insurance number and blocked me out on social media,” application. And not all of them would be video featuring a handful of its employees. through the Affordable Care Act. The college she told me. She was irate. How could she be accepted, of course; they had to meet the It documented emotional phone calls in plan, in combination with a January 2015 pay an online student without a computer? The same GPA and test-score standards that which the workers told their mothers that raise for all baristas and shift supervisors, laptop, a MacBook Pro, would cost $1,500 to regular Arizona State students did. Starbucks was going to pay for college. By the was designed to keep the company attractive replace—money that Thomas didn’t have. She time the fall semester started, though, only to young employees. Starbucks pays more was earning $11.64 an hour as a Starbucks Thousands of employees, it turned out, had one of those featured employees had actually than the minimum wage in each state, and shift supervisor. “I don’t get paid well for started applications but not finished them. enrolled. Some were waiting for transcripts, the company recently revised its scheduling what I do,” she said. Enrollment counselors were reporting and others had decided the timing wasn’t software to ensure that managers can give that many students were still waiting for right. employees their schedules at least one week transcripts to arrive—or were simply nervous in advance and never ask them to work back- about the decision to return to college. So Starbucks expects more people to apply as to-back closing and opening shifts (a practice Arizona State and Starbucks decided to shift they learn that the benefit is real. “People baristas refer to as “clopening”). the deadline. Whom was it serving, exactly? If have been looking for the catch,” Lacey All, students needed more time, they could have the director of strategic talent initiatives at Half of the Starbucks students received until four weeks before the start of classes to Starbucks, told me. The company has sent out federal Pell grants, a good indicator that apply. “We realized they didn’t need another thousands of inspirational e-mails, tweets, they came from families in the bottom 40 stress point to make this life change,” Laurel and other messages to reassure employees, percent of the nation’s income distribution. Harper, the manager of global corporate but skepticism lingers. “We’ve had to do a And half took out loans—a similar proportion communications for Starbucks, told me. lot of work,” All added, “to say ‘This is our to Arizona State’s entire online student investment in you. Whether you choose to population. But largely because Arizona By October, when classes began, 5,289 stay [with the company] or go, you’re going to State was subsidizing their tuition, Starbucks employees from all 50 states had started an be better for it. And Starbucks is going to be students’ loans averaged only $4,216, an application to Arizona State, and about half better for it.’ ” amount 40 percent lower than the average of them had submitted one. Of those, 2,121 for the rest of the online student body. In had been admitted—an acceptance rate of Understandably, many Starbucks employees any case, the loans were temporary for the 85 percent, close to the 90 percent rate for wonder what’s in it for the company. Schultz 70 percent of Starbucks students who had Arizona State’s online applicants overall—and has insisted the decision was largely driven by at least two years’ worth of credits, because 1,012 had enrolled for the fall semester. They a sense of social justice. “We are employing they would be fully reimbursed through majored in all kinds of subjects, but the most over 100,000 young people in America, and their paychecks for every class they took at popular were psychology, organizational the majority of them do not have a college Arizona State. (If they left Starbucks before Many college students today have very little leadership, health sciences, and mass degree,” he said when announcing the reimbursement kicked in, they would be room for error. They don’t live on campus; communications. program. “We can’t be a bystander, and we responsible for repaying their loans.) they attend school online or at a community can’t wait for Washington, and I strongly college. They work full-time and have limited Back when Starbucks announced the believe that businesses and business leaders There is a tension between making college cash. When things go wrong, even small program, the company put out a powerful must do more for their people and more accessible and making graduation likely. Most things, a spiral of problems can ensue that ends up causing them to abandon school, the For Mary Hamm, in Virginia, the problems one part of their lives that feels optional. But came later, perhaps because she was older with a little support—just one or two people and had more life experience, and they in their corner—these same students can were harder to see. On her first quiz in “We know if you surround any prove extremely resilient. “We know if you Introduction to Organizational Leadership, surround any student with love and attention Hamm got a 7 out of 10. She felt like she’d student with love and attention and good coaching and mentorship, they will failed, even though she hadn’t. She told succeed,” Daniel Greenstein, who directs herself to work harder and not to dwell college-completion initiatives at the Bill & on it. But then she got a call from Daniel and good coaching and Melinda Gates Foundation, told me. Over Adams, her success coach at Arizona State. time, Greenstein has become more and more From his office, in Portland, Oregon, where mentorship, they will succeed.” convinced that data-driven, student-centered he works at InsideTrack, a company that university cultures can reverse the college- provides coaching services to Arizona State, dropout trends. “The research tells us that he could see on his screen that Hamm had -Daniel Greenstein, Bill & Melinda what really matters for low-income and first- transferred with a high GPA, and that she’d generation students,” he said, “is that you put been participating in her classes regularly. Gates Foundation your arms around them.” He made a throwaway self-deprecating joke, something he does on purpose in all Besides the counseling support, Arizona State his introductory calls, and then asked her also created a special one-week, noncredit how things were going. He paid very close In a subsequent conversation, Hamm as they almost always eventually do, the orientation class required for all Starbucks attention to how she responded. “I call it mentioned that she wasn’t using her notes students will trust him enough to ask for help. students. The course, which I took, involves listening between the lines,” Adams, a former in the quizzes. Adams suggested she ask her time-management exercises and inspirational middle-school science teacher, told me. “I professor whether notes were allowed. She According to Dave Jarrat, InsideTrack’s vice videos, and teaches students basic IT skills have to understand the need.” did, and she learned that the quizzes had been president of marketing, trust is crucial for to help them cope with the technical glitches open-book all along. She’d gotten a 7 out of students, like Hamm, whose parents did not that invariably accompany online learning. Hamm’s answer was upbeat but revealing. 10 on the first one because she hadn’t used go to college. “They often have doubts about Much of the content was taken from other “I’m going to have to overcome my own her notes—a realization she might never have themselves being college-ready,” he told me. places. Like a lot of college classes, it could insecurities,” she told him. “The first quiz made without Adams’s prodding. “That manifests itself when they get into have been faster-paced and more engaging, defeated me just a little bit.” Adams talked college, take a quiz, and get a C and say ‘See? but courses like this have been shown to help with her about her confidence level, and he When Adams had first started contacting I’m not college material.’ Then they drop students succeed in college, and most of the asked her whether it would be okay if they Hamm, she’d been skeptical. “I was like, ‘Why out.” To disrupt the pattern, InsideTrack Starbucks students gave it positive reviews in checked back in on her confidence each time is this guy calling me every week?’ ” she told trains its coaches to talk with students before the post-class survey. he called in the future. She said that would be me. But by the third call, he’d won her over. things go wrong, and to warn them about fine. Then he asked how she was approaching “Knowing that he’s watching out to make sure what to expect. The warning, Jarrat said, goes After Thomas’s computer was stolen, she her reading assignments. When she said she’d I do succeed has been very important,” she something like this: “College is hard. You dropped out of her orientation class. But then struggled to absorb the material, he suggested continued. “He kind of keeps me level. He’s will struggle. I just want you to know, it’s not she did something crucial. She reached out to that she read the chapter summary and almost a member of my family now.” you. Everybody struggles. Even people whose her academic adviser at Arizona State, who discussion questions first, so her brain would parents and grandparents went to college.” got her signed up for another orientation class have some scaffolding in place to make sense At the Gates Foundation, Greenstein happening later that month and encouraged of what was to come. They spoke for half an calls this approach the “reintroduction of Unlike so many other education reforms, her to find a way to get online. hour. intimacy”—a return to what worked in the coaching has been shown to have significant, Middle Ages, when university meant not a measurable effects on student results. That’s when Thomas began taking her classes During another call, Adams asked about physical place but a collection of dons and In a 2011 study, two Stanford University on her iPhone. She was amazed at how much Hamm’s confidence level. She said it had students unified by a collaborative sense of researchers conducted a randomized, she could do on the device. After work, she’d risen. The reading strategies were helping. educational mission. Ironically, high-tech controlled study of the performance of 13,555 take it to Applebee’s, get a margarita, and And she loved making connections between online programs like Arizona State are finding students in eight colleges of varying degrees start doing her reading and tapping out her what she was reading in her business classes that they can get better results by creating of selectivity. One group of students received discussion posts. Problems arose only when and what she was doing on the floor of very human connections via coaches like coaching from InsideTrack, and a second she needed a webcam to take the remotely Starbucks, managing her employees. “I have Adams. He spends most of his time building group did not. After six months, the students proctored quizzes. In those cases, she usually names for things now!” she told him. relationships with students when things are in the coached group were five percentage borrowed a computer from a relative. going fine—listening to their stories, making points more likely to still be enrolled. The suggestions. That way, when things go wrong, effects lingered for at least a year after the button on Arizona State’s Web site, fighting Even with the initial, more limited scheme, back tears. “I usually don’t give up on things,” the mid-semester class-drop rate for she said. After that, she would try not to Starbucks students was less than 9 percent, wince when customers would come in and slightly lower than the drop rate for Arizona say, “This is incredible! Starbucks is paying State online students overall. The Starbucks for college!” Her reaction: “Well, yes and no.” students who stuck it out for that first semester took 1,480 courses in all and passed At Starbucks headquarters, in Seattle, 79 percent of them, a pass rate similar to that meanwhile, executives had been hearing of all new online students at the school. similar stories. To get employees’ feedback, the company surveyed 1,000 workers who By the last day of classes in December, Alicea had begun the application process but not Thomas knew her final grades. “I got two A’s completed it. The top reasons workers cited on my iPhone!” she reported to me, bursting for not moving forward were that Arizona with pride. Shortly before Christmas, she got State didn’t offer their desired major, or that a text from her academic adviser, reminding the program was still too expensive. Even her to register for the next semester’s classes the steep discount was not enough to make before they filled up. She mentioned this the program manageable for them. Early while I was interviewing her at her home, this year, therefore, Starbucks renegotiated and before I left she picked up her phone and the contract with Arizona State. Since started selecting classes, right then and there. March, the company has offered full tuition She seemed to be as interested in pleasing her coaching ended. Five percentage points might Y NOVEMBER, halfway through the reimbursement to all employees, regardless of adviser as she was in taking the classes. seem small, but compared with the results first semester of the Starbucks program, how many credits they’ve accrued. Starbucks of other, more expensive efforts to increase the students who had developed a has also committed to reimbursing employees As of early January, 87 percent of the first retention, it is impressive. Other studies Bregular study routine were generally doing immediately after they complete a class, class of Starbucks students had registered have found that every $1,000 increase in well. But plenty of others were struggling. rather than waiting for them to rack up 21 for the spring semester at Arizona State, financial aid per student leads to about a Starbucks students dropped 53 classes in credits. Finally, Starbucks students will get including every employee named in this story. three-percentage-point increase in retention; October, and another 172 before the semester even more of the kind of coaching that they In the turbulent world of online learning, that InsideTrack was charging schools $500 a ended, in December. About a dozen quit their found so valuable in the first semester. “We is considered a good success rate. (It’s three semester and getting better results. When jobs at Starbucks, meaning they will not be needed to learn,” said Lacey All, of Starbucks, percentage points higher than Arizona State’s Arizona State started using the company to reimbursed for any tuition payments they explaining the changes. “We’re deeply overall online retention rate during the same provide coaching for its online students, its made. committed to understanding the experience. period.) In addition, another 585 Starbucks semester-to-semester online retention rate It’s not just about ‘Send me to college.’ It’s employees had enrolled, bringing the current rose seven percentage points, from 75 percent One student who dropped out, an older about providing support along the way, at class to 1,500. in the spring of 2011 to 82 percent in the woman who works at an East Coast Starbucks every step. We’re listening.” Those numbers are still lower than Starbucks spring of 2014. and asked that her name not be printed, out of concern for her job, told me the experience This concept of listening to students—and and Arizona State officials initially had “Everybody spends all their time talking had been painful. When she’d first heard then making structural changes based on projected. When they announced the about money and cost,” Michael Crow, about the benefit, she’d been thrilled. She’d their feedback—remains unheard-of at most program, they’d boasted that as many Arizona State’s president, told me. “That’s a enrolled in the program full of hope. She’d colleges. By moving quickly to improve, as 10,000 employees might enroll in the variable. That’s not the determining factor. always wanted to earn a degree. But because Starbucks and Arizona State are showing first year. These days, they’re predicting The determining factor is creating the culture she had no previous credits, she would have that it is possible for large, publicly traded something more modest: 3,000 to 5,000 for success.” He’s delighted, of course, that to take out $10,000 in loans to cover the first companies and unwieldy public universities student employees in the first couple of years Starbucks has teamed up with the university two years, and spend about $2,000 of her to provide better service for large numbers of and 25,000 graduates over the next decade. to help students pay for college. But that’s just own money. As the semester progressed, she nonelite students. Making those changes, All Eventually, Schultz expects the benefit to the beginning of the story. He believes that got more anxious every day. “At this point admitted, is not easy. “It requires a new way cost tens of millions of dollars a year. But the Arizona State needs to do even more coaching in my life,” she said, “I just really had a hard of doing business. It requires partnerships. program remains cheap for Starbucks. By and advising than it already does. “With the time taking on more debt. This was making It requires a lot of unsexy work.” But it isn’t comparison, the company’s health benefits financial barrier eliminated, now we’re into me miserable. I couldn’t even focus.” impossible, and the changes will continue, cost about $250 million a year. It’s hard to the sociology, the psychology. Those are hard- she told me. “We’re not done yet.” imagine the college benefit ever approaching slogging problems.” On the last day she could withdraw and still get a full refund, she clicked the “Drop” that level. “It doesn’t take a billion dollars, About the Starbucks but it does take an entrepreneurial College Achievement Plan spirit and a real commitment.” The Starbucks College Achievement Plan is a first-of-its-kind Since Starbucks announced the program in revisit their efforts in order to do better. partnership that creates an opportunity for all eligible Starbucks June, 20,000 people who have applied online “These kinds of best practices, these kinds employees to earn their bachelor’s degree through ASU Online. for jobs at the company have cited the college of cultures, need to be the norm,” he said. benefit as a reason for their interest. One “It doesn’t take a billion dollars, but it does barista I interviewed had quit her office job take an entrepreneurial spirit and a real This program is made possible by ASU and Starbucks employees, or partners, thrive in a in Dallas and taken a $4-an-hour pay cut to commitment.” Starbucks, by working together to help students customized, personalized environment within attend college for free through Starbucks. The overcome any life hurdles that keep them from ASU Online degree programs - choosing from company does not have data yet on whether In December, in hopes of getting off her pursuing their college degree. more than 70+ undergraduate degrees. employee retention has increased, but so far, feet, Mary Hamm applied for yet another it has spent very little and received significant corporate job, this time in the Starbucks PR and HR returns. recruitment division. The response came swiftly, in an e-mail, just before the holidays: The Starbucks experiment is unfinished. a “more qualified” candidate had been chosen. To help students find more support, the Hamm read the note without surprise. A few company and Arizona State are launching a days later, she got another e-mail: she’d made new community platform, so students can the dean’s list at Arizona State. connect with one another online. To make sure employees know their options, the She has enrolled for the spring semester and company sent out 135,000 mailers about the plans to travel to Tempe next year to walk in college program to their homes this past fall, the graduation ceremony. ▪ and it’s planning another big promotion effort this spring. “We’re trying to show that this is not as hard as you think,” All said.

Half a dozen other companies have reached out to Starbucks to learn more about the program. As the job market tightens, more companies may begin investing in a college education for their employees. Meanwhile, Interested in learning more about the Starbucks College the Obama administration has vowed to rate Achievement Plan? Visit these websites for even more information. colleges based on completion rates, cost, and graduates’ earnings, despite widespread objections from colleges. (The first ratings • starbucks.asu.edu are due from the Department of Education • edplus.asu.edu/what-we-do/starbucks-college-achievement-plan this summer.) “We want people to vote with their feet,” Arne Duncan, the secretary of education, told me. “It’s not just about your kids going to college; it’s about going to the right colleges.” He praised Arizona State and other colleges that focus on student services and results but also continually edplus.asu.edu