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Disney, Starbucks, Walmart: Big companies are increasingly offering education benefits for employees

Akiko Fujita
Customers are working on laptop in a Starbucks coffee shop. In the second quarter of 2017, Starbucks opened its stores to five new cities in China. As of now, Starbucks China has 2628 stores in 127 cities. More Chinese consumers have been influenced to drink coffee or drink more coffee, so that the turnover in Starbucks has increased by 6%, and the same store revenue in China have increased by 7%. In the next years Starbucks will continue to open one new store at every 15 hours in China. (Photo by Zhang Peng/LightRocket via Getty Images)

Squeezed by a tight labor market and shrinking pool of employees, big corporations like Starbucks and Disney are increasingly turning to a new tool for recruitment: education.

Companies are partnering with universities to offer employees fully-subsidized Bachelor’s or Master’s degrees in hopes of attracting ambitious workers who want to build out their careers.

“There are so many new jobs that are either coming or that are here already. So it is shifting from an employer standpoint: How you have to differentiate yourself?” said Chris Trout, VP of learning and development at The Walt Disney Company, speaking at the recent ASU GSV Summit in San Diego. “From an employee’s not just about ‘I need a job and where can I find the highest paying job,’ it’s ‘Where can I find a job in a place that I feel like I can thrive.’”

Large employers have long provided limited education assistance, reimbursing employees the federal tax-exempt maximum, only after they successfully complete a program. But Starbucks has led a new wave of companies offering full tuition reimbursement to help hourly employees earn a college degree at four-year institutions, removing a financial hurdle stemming from the high cost of education. Launched in 2014, for U.S. employees working an average 20 hours a week, the company has enrolled more than 12,000 students so far, though just 20% have graduated.

A handful of companies have followed since.

Last May, Walmart announced it would pay for part-time and full-time employees to go back to school, with employees required to pay $1 a day during their studies, while the company will cover the cost of tuition, books, and fees.

[Read more: Walmart is expanding its education benefits for 1.4 million U.S. associates]

Disney followed by launching Disney Aspire, a $50 million education program for more than 80,000 hourly workers. The initiative offers everything from English-language learning to Master’s degrees, with the company covering 100% of tuition costs, along with fees for books and other materials.

Jon Kaplan, chief learning officer at Discover Financial Services, which launched a similar program last year, says free education has become a bigger priority for the company than standard benefits, such as dental and medical care, in part because of the tightest labor market in decades, and rapidly changing needs, prompted by technological advancements.

“This is about acquiring the best talent. This is about retaining the best talent. This is about growing their skills, and this is about infusing the company with enhanced capabilities,” Kaplan said.

Specialized curriculum

Discover and other companies have built out learning initiatives with Guild Education, a Denver-based startup that helps broker partnerships between universities and employers. While some companies offer employees access to curriculums that are already taught at institutions, others work with Guild to build out courses that are tailored specifically to their needs. Walmart’s partnership with the University of Florida, Bellevue University, and Brandman University, focuses on the retail sector, giving employees the option of working towards associate’s or bachelor’s degrees in business or supply chain management. Discover tailors its courses around cybersecurity and IT, addressing needs in fintech.

Significant discounts associated with these partnerships have made the educational benefits a worthy investment for companies. While a typical Bachelor’s degree costs more than $30,000 a year, according to the U.S. Education Department, Guild negotiates the total costs down to $4,000 to $6,000 per employee, with employers picking up the bill, according to the company. Guild also takes on a management role, advising students on behalf of the companies themselves.

“We’ve learned that that’s an important part because when we met with Chipotle, for example, they had a team of 17 trying to run this program themselves,” said Rachel Carlson, CEO of Guild Education, referring to one of the company’s corporate partners. “They were able to let that team of 17 employees success folks go work on other initiatives for their employees.”

For universities, these partnerships offer a new revenue stream at a time when the traditional student pipeline - high school students going directly to four-year institutions - is drying up. Demographic shifts point to a 15% drop off in enrollment by 2025 and 2029.

The increasing push to online learning, and the lower costs associated with it has also enabled institutions to bring more non-traditional students, into the fold.

Arizona State University, which offers courses for Starbucks employees, began building out its own online platform a decade ago, with 200 private partners. University President Michael Crow says that initial investment has allowed ASU to seek partnerships beyond Starbucks, most recently Uber.

“We can now have 40,000 more online students, 12,000 from Starbucks. It didn’t take any more energy because we built this platform,” Crow said. “What we have found is that we can project learning to any place, anywhere, any scale, any location, any language, any culture.”

The shift comes amid broader disruption in the education space, as the traditional definition of a “university degree” is challenged. With high tuition costs making four-year universities increasingly inaccessible, online education companies like Coursera, offer viable alternatives have expanded quickly.

“I think what you’re going to see now with online is you’re going to see increased assessments, increased certification, and increased skills based hiring,” Dan Rosensweig, founder of Chegg, which offers textbook rentals online and academic help. “Whether or not that’s a complete education, it can’t be debated.”

Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter at @AkikoFujita

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