Ted Simons: Good evening, and welcome to Arizona Horizon. I'm Ted Simons. Arizona State University and Starbucks announced a first-of-its-kind program today to provide a free online education opportunity for Starbucks employees. We'll hear from the head of ASU's online degree program in a moment, but first we hear from ASU president Michael Crow and Starbucks CEO Howard Schultz, who announced the plan this morning in New York.
Michael Crow: So Starbucks is an innovative corporation, interested in the advance of human capital, interested in the success of the United States, interested in you as an individual on the assumption that you as a master learner, you as a person that's more adaptive, you as a person who has the capability of dreaming, and thinking, and realizing those dreams and advancing on those dreams, will be better for their corporation, better for the community, and better for the country. We as a University say, this is a fantastic opportunity.
Howard Schultz: We got together, with an extraordinary University in Arizona State, and an extraordinary person in Dr. Michael Crow, and we said, can we coauthor an opportunity in which we break the rules, break glass, apply the same level of disruptive innovation that we do to our respective institutions and business, and apply that innovation to the fact that we as a company want to do something that is not been done before? And that is, we want to create access to the American dream.
Ted Simons: And here now with more on the Starbucks-ASU online degree program is Phil Regier, Executive Vice President and Dean of ASU online. Good to have you, you must a busy man today.
Phil Regier: I've been pretty busy today, that's for sure.
Ted Simons: I would imagine so the Starbucks College Achievement Plan, what exactly is that?
Phil Regier: So the Starbucks college achievement plan is a plan that was announced today as you saw by President Crow and Howard Schultz in New York, and what it allows is it's really a degree completion program for Starbucks employees. So it allows Starbucks employees who can transfer 56 hours or more to ASU to complete their final two years at ASU, and end up paying no out of pocket costs for tuition. For Starbucks employees who can't employ, I’m sorry, who can’t transfer up to 56 hours, in other words, lower division students, it provides a partial Starbucks tuition scholarship.
Ted Simons: So the partial scholarship means you could get anything from needs-based financing in a variety of directions?
Phil Regier: Exactly. What we'll do for all of these partners -- There are really three criteria to participate in the program. First off you have to be a benefits eligible Starbucks employee. For most Starbucks employees that happens around month four or five, for five or six a day work. Secondly, you have to be admissible to ASU. That's a very important criteria. We didn't want to change any of the things that we normally do for these people, so all of the admissions criteria, all of the financial aid criteria, they're the same ones that we'd apply. And thirdly, you can't have already graduated from a University. If you already have an undergraduate degree right now, you aren't going to be eligible.
Ted Simons: And you have to average 20 hours a week, somewhere along those lines?
Phil Regier: Exactly. A part-time employee at Starbucks is about 20 hours a week or more.
Ted Simons: And these are all company stores.
Phil Regier: These are the company stores. So Starbucks has around -- If you counted there would be about 10,000 Starbucks in the country. About 7,000 of those are company-owned stores, meaning all of the employees in those stores are Starbucks employees. If there are licensed stores, for example, I think at the airport or inside grocery stores or those sorts of stores, those are licensed by a third party, and those employees are not Starbucks employees, and so they won't be eligible for the program.
Ted Simons: Will they in the future be eligible for the program?
Phil Regier: I'm sorry you'd have to ask the licensees. That's really a decision for them. It's a decision between them and Starbucks.
Ted Simons: And now these are U.S. employees only?
Phil Regier: These are U.S. employees only. There are about 140,000 employees of Starbucks, and that includes Teavana as well as the people at the roasting plants, the people at the headquarters, etc. About 140,000 people.
Ted Simons: Okay. Is there a plan maybe for-- You can't do all worldwide. How many people in China?
Phil Regier: I think there are over 200,000 employees worldwide. Their second largest employment base is in China. At this point let's say that we have enough to swallow with the U.S., but Starbucks really believes that there are educational needs for its employees which they term partners throughout the world.
Ted Simons: Now these- Let's talk about the degree. 40 some-odd undergrad degrees offered? Is that correct?
Phil Regier: Correct. It's the same -- One thing Starbucks was very insistent on is they didn't want to create some kind of Starbucks program at ASU. They wanted these students to be able to have the exact same educational experience that any student coming to ASU online would have. So right now we offer about 40 degrees, they range from nursing, to electrical engineering, to psychology, something in every college. And the students are going to be able to choose any one of those 40 degrees to advance their career.
Ted Simons: And again they must choose online. What if I'm a Starbucks employee and I live in Tempe and I want to go to a couple of classes? Gotta be online?
Phil Regier: Yes, right now you have to be online. If you think about Starbucks problems, Starbucks problem wasn't that they had some employees in Maricopa County who wanted to go to campus. Their problem is that they had you know 50,000 students across the country who wanted a program like this. They had to find an online alternative, an online option.
Ted Simons: Are any of these research-driven degrees? And I ask this because it sounds like it might difficult-- Electrical engineering, for example, how do you do that online and still get the same kind of quality education that hands-on gives you?
Phil Regier: Well I'm glad you asked the question, because I think there are a lot of misperceptions about online education. They stem from its origins, you know it really grew out of correspondence schools, and it was a degraded form of education for a lot of people. But the fact is, the research shows that online is equivalent or better in terms of learning outcomes to what you can get in face-to-face classes. The other thing is, face-to-face has had hundreds of years to develop, it's as good as it's ever going to get. We're just scratching the surface of what we can begin to do with technology around online learning. So our objective at ASU is to take every digital product, every digital tool, we'll partner with anyone who can help us advance student learning in an online age. We want to take a faculty member and surround the faculty member with technology. So that instead of impacting 80 students or 120 students a year, they can impact 800 or 1200 students a year. And you can do that in almost any discipline, there are some disciplines we haven't cracked yet. The hard sciences are notoriously hard. We don't have a mechanical engineering degree. But you know, you can do electrical engineering. It's circuitry, it’s buildings things, it’s circuitry, it's digital, and we have in our first engineering course we have teams work from across the country online in small teams to build musical instruments.
Ted Simons: And I understand, you can toot your own horn here I guess if you want, the online education program at ASU seems to be much more advanced than at other universities in the country. First of all, is that true, and secondly, how did it get that way?
Phil Regier: We like to think it is. It's certainly one of the largest programs that is delivered by what I call a discovery or research-based institution in the country. I think it got that way because we had a belief early on that you could deliver to online students -- It was an important public -- Part of our public -- As part of our public stature. We want to affect as many students as possible and advance as many students as possible. So we decided early on that we were going to get into the online business and really figure out if we could build a degree that was as good or better than what's delivered face-to-face. What we found is that it is possible to do, and we're doing it increasingly and we're adding seven or eight degree as year.
Ted Simons: You mentioned how correspondence schools and for-profits were the first along these lines, and now here come the nonprofits. And yet this is a good deal for the University in the sense that you don't have some of those structural costs. I mean this -- talk about the costs to ASU, the costs to Starbucks. Talk about the dynamics there.
Phil Regier: So the dynamics are pretty straightforward. First of off, in regard to online education in general, it is the case that you have fixed cost components, but once those are built out, you can deliver them, the variable costs are a bit lower than delivering to the face-to-face student population. But we still require real faculty interaction in those online classes. In terms of the arrangement between Starbucks and ASU, what we decided is that ASU would have a commitment to this program, Starbucks has a commitment to this program, every student is going to be treated differently. There's one other requirement -- Students all have to fill out the federal financial aid form, it's called a FAFSA. And every student is going to have to fill that out, and ASU is going to do what it always does with students who fill out a FASA, which is evaluate it, create a financial aid package for that student, it may include Starbucks tuition scholarships, it may include Pell grants, it may include student loans, and it may require the students to pay some out of pocket. The difference is, after 21 hours, Starbucks will remit any loan amount, any amounts that the student had to pay out of pocket or any loans the student had to take out for tuition.
Ted Simons: As far as the genesis of this idea, I know there’s the Markle Economic Future Initiative, this is Markle Foundation, this group of folks that get together, it sounds like Michael Crow and Howard Schultz got together somehow through this. What is that initiative and was that the genesis of all this? The spark?
Phil Regier: To tell you the truth I don't know that much about the Markle Foundation, but it is a nonprofit foundation that looks at ways to increase civic engagement. Based in New York, Zoey Baird is the CEO and I know that Howard Schultz and President Crow were at a meeting at the Markle Foundation I think last summer in July and I think they started talking. But certainly it wasn't the case that ASU was the only school that Starbucks looked at. As Howard said this morning when he was discussing it, they looked at a lot of other Universities and evaluating this, and they just thought there was a lot of separation between ASU and the other universities they looked at.
Ted Simons: With that in mind, will there be other firms with similar type deals? First of all, will ASU go into partnership with other firms?
Phil Regier: We'll continue to evaluate other firms, and if we find something where we think that it's consistent with our values, and our brand, and we can move forward and they're cooperative, we will certainly evaluate that in an ongoing basis. I think that it's important to understand that I think both for President Crow and for Howard Schultz, they don't want this to be a one-of-a-kind deal. They think that there's an important problem in this country around adult degree completion. We have flat-lined in terms of our adult degree completion attainment rates, at precisely the time that the return to a University degree is so much higher than the return to somebody who doesn't have a University degree. So they think that if you want to move that needle, if you want to start increasing the number of adults with degrees, you have to do much more innovative things and industry needs to step into the vacuum that's really created right now.
Ted Simons: And this particular program now, do online classes run the same kind of semester, fall and spring semesters that regular classes do?
Phil Regier: Almost all of our classes run into compressed time format class, so they're 7 1/2 weeks, so they -- The reason for that is, it's easier for an online student who is typically managing work, they've got a mortgage, they've got kids, to manage two classes at a time over 7 1/2 weeks, than four classes over a 15 or 16 week period. By the way, the learning outcomes are better too.
Ted Simons: So they start, when fall?
Phil Regier: These students are going to start -- The first group will be what we call fall B, which starts in middle of October.
Ted Simons: Interesting, all right. Well again I thank you so much for being here. I know you've had a very busy day. Congratulations and good luck.
Phil Regier: Thank you very much.