The Return of Tuition-Aid Programs: Will Starbucks Influence Other Organizations to Offer Tuition Benefits?

Starbucks recently announced they will offer employees who work at least 20 hours per week full tuition for four years of online schooling through Arizona State University. This program is now available to more than 140,000 Starbucks employees in the U.S. This is a strategic decision to make them an employer of choice in the competitive market for retail and fast-food workers.

This article made me wonder whether more MSEC members were offering tuition-aid programs since the recession. According to MSEC’s Miscellaneous Benefits and Pay Practices Surveys, there has been a slight decrease in the number of employers offering tuition aid programs since 2007, which was just prior to the recession.

In the chart below, each geographic area shows a slight decline in the percentage of organizations offering tuition aid. Between 2007 and 2013, there is a 4-percent decrease in Colorado employers offering tuition benefits. Wyoming had the greatest decrease with 11 percent fewer employers offering the benefit during the same period. Arizona has dropped from 49 percent of employers in the 2011 survey to 41 percent in the 2013 survey for an 8-percent decrease.

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Source: MSEC’s Miscellaneous Benefits and Pay Practices Surveys 

According to the survey data above, tuition-aid programs have not bounced back since the recession.

Why might employers consider offering a tuition-aid program like Starbucks’? A tuition-aid program can help employers attract and hire employees, develop employee loyalty, and be used as an employee-retention tool. In a tight labor market, this benefit might differentiate an employer from its competition when candidates are choosing where to work.

An employer’s tuition-aid program typically pays all or part of an employee’s costs for college-degreed courses, vocational classes, and job-related continuing education programs. Most programs cover tuition, books, and other costs, such as lab fees.

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Source: MSEC’s 2013 Miscellaneous Benefits and Pay Practices Surveys 

According to results from the 2013 survey, $2,575 was the average yearly dollar amount reported by Arizona respondents, while Colorado respondents reported an average of $2,548 and Wyoming respondents reported an average of $4,375.

MSEC will update the 2015 edition of the Miscellaneous Benefits and Pay Practices Survey in September. We’ll have to wait to see whether there is a “Starbucks” effect on the increase of employers offering a tuition aid program when we finalize results in January 2016.