IMMEDIATE RELEASE 18 June 2014
WASHINGTON MERRY-GO-ROUND
Today’s Events in Historical Perspective
America’s Longest-Running Column, Founded 1932
By Douglas Cohn and Eleanor Clift
WASHINGTON – As college costs go up, student loan debt rises, surpassing what Americans owe on their credit cards and their car loans. Repaying student loans has become a decades-long obligation for many. The default rate is high, and legislation that would have allowed students to negotiate a lower interest rate, the way people do with mortgages, was blocked in the U.S. Senate by a Republican filibuster.
President Obama confided to a college audience in 2012 that he and Michelle made their last student loan payments just eight years earlier, and he has pushed the banks to ease up on interest rates, and to grant forbearance to people in lower-paying public service positions.
On the other hand, banks argue that the debt is unsecured and made to young people who lack established credit, a combination that creates high default rates.
With the political process mired in gridlock, a breakthrough in college affordability appeared this week from Starbucks, a company whose CEO, Howard Schultz, has a social conscience along with a keen business sense. He grew up in a Brooklyn housing project, and at a press conference to launch his new program to provide Starbucks employees with a free or heavily subsidized college degree, he said, “I can go to Brooklyn today and point to a 10-year-old kid in the projects. The odds that that kid is going to college and earn a four-year degree today versus when I was a kid are much lower.”
Schultz is partnering with Michael Crow, president of Arizona State University, to expand the franchise of college to those who might not otherwise be able to afford it. The deal as outlined at their joint press conference Monday is free tuition for juniors and seniors to ASU’s online degree program, and 50 percent tuition for freshman and sophomores.
There’s no requirement that once a degree is achieved, the employee has to stay with Starbucks. The initial reaction was that Starbucks could be taking a big risk here, but Schultz is borrowing a page from the U.S. military in offering what looks a whole lot like a GI Plan for civilians.
Starbucks is doing what the Army started doing after World War II, providing educational benefits that redound to the greater good, and are win-win for everybody. Starbucks is highly rated as a good place to work, but it still has a high turnover with a fair number of employees viewing it as a stopgap job on their way to something else.
The prize of a free college degree from a respectable online program is likely to attract and keep a higher caliber of worker, and give the company more stability. Even knowing that these highly motivated employees are likely to leave once they get a degree doesn’t matter because they would have left anyway in the normal course of life.
This way, workers might stay longer as they complete their degree over time. ASU is a top-ranked research university and a pioneer in offering online degrees. Before becoming president of ASU, Crow was a top administrator at Columbia University, an elite institution that measures success by the small percentage of people it admits. At the press conference in New York, Crow called ASU a “public-purpose” university where success would be measured by “inclusion, not exclusion.”
What Starbucks is creating is a GI plan for civilians.
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© 2014 U.S. News Syndicate, Inc.
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END WASHINGTON MERRY-GO-ROUND