ASU’s Starbucks Deal Was Just the Beginning

Digital Learning

ASU’s Starbucks Deal Was Just the Beginning

By Jeffrey R. Young     Jun 21, 2017

ASU’s Starbucks Deal Was Just the Beginning

This article is part of the guide: Thought Leaders Discuss The College (And Classroom) Of the Future.

About two years ago Arizona State University famously inked a deal with Starbucks, allowing its baristas to get steeply discounted (in some cases free) tuition to take online courses from ASU. A cover story in The Atlantic hailed it as the future of college access.

How is the program going? And what’s next for the university’s ambitious plans to rethink higher education? To get some answers, EdSurge sat down with Philip Regier, university dean for educational initiatives and CEO of EdPlus at Arizona State University, at the ASU+GSV Summit last month.

The conversation was part of our Thought Leader Interview series on the future of education. Below is an edited and condensed version of the conversation, or watch the complete interview.

EdSurge: You have plenty of baristas taking your courses. A couple of years ago ASU made a deal with Starbucks that gives a discount to its employees to take online courses at your university. Is this the kind of arrangement you think we’ll see more of—with colleges competing for exclusive deals with various big employers?

Regier: I don’t think so. I think it’s much more interesting from the standpoint of Starbucks than it is from ASU. ASU did it to show that we could do it. Starbucks did it for a much more interesting reason, which is, Starbucks wants to be an exemplar of what a 21st-century company can be. In 1987, when they were preparing to go public, [its CEO] Howard Schultz made the commitment to provide healthcare to part-time employees. I’m sure many investment bankers said, “You’re crazy. It’s going to reduce your valuations.” But in fact, it has made them very successful. He is the type of person who believes that part of what he’s doing is contributing back to the community by insisting that the people who are assisting him make a great difference.

So there’s a great quote from Cicero that we use a lot, at ASU and at Starbucks. Cicero said, “I criticize by what I create.” So the fact is, Howard Schultz and Starbucks had, at the time that we started this program, 150,000 U.S. employees. 70,000 of them did not have university degrees. When they polled those employees about what they would want most of anything, the answer is, “I’d want the chance to complete my higher education.”

So, Howard, working with ASU, put together a plan that would allow these students to get a degree from ASU through our online program, with no out-of-pocket tuition costs. So we’ve got 6,000 in the College Achievement Plan now. A few days ago we graduated 330, and we’ll graduate over 1,000 by the end of the year. Starbucks’ goal is to have 25,000 students graduate from this program by 2025.

So what it does for us is it brings us a set of students that reflect the demographics of this country in an important way. Actually, they’re a little skewed female—62 percent—but it’s roughly the same number of minority students, roughly the same number of low-income students [as the American population]. So it reflects the diversity of this country. They bring them to us, rather than we having to go find them. So it’s a really important proposition for us. It also allows us to demonstrate what we do at scale and with quality with a terrific corporate partner.

Are we going to sit around and do 15 of these deals? No. The Starbucks one was a unique thing, though there will be other corporate partnerships. The point is, what we wanted to demonstrate is a university that wants to do something like this can do it.

So you do expect there might be other universities doing it with other big employers?

I expect other universities to do it.

There’s been a lot of talk about the recent deal that involves Purdue University buying for-profit Kaplan University, which surprised many people (and the faculty have signed a resolution opposing it). It seems like suddenly it makes Purdue a competitor of what you’re doing at ASU in this online space. What’s your reaction to the deal?

I think it’s a good deal for higher education. I also think it’s a good deal for ASU, and I’ll explain why. This is not a zero-sum game. A problem that universities have made is that everybody is going after the same type of student. Everybody’s going after the students with good SAT and the 18-year-old high-school students. They think that’s the undergraduate student population. In fact, we know that’s not the totality of the undergraduate student population. What this does is make the fight bigger. It creates awareness in all the people who are thinking about getting a degree, that there are other ways, other modalities, other than going to a local community college or a local brick-and-mortar university in order to get a degree.

Second thing I think it does for ASU is it validates our model. When you think about it, we are, along with Penn State, out there without a lot of other large public universities saying, “This is the right thing to do.” Colorado State has a global campus and they’ve had that for a number of years, as well. But there aren’t a lot of large public universities saying, “That’s the right thing to do. It’s the right thing for our community. It’s the right thing in order to increase adult degree completion and we’re going to do that.”

So having another player with a very great brand, like Purdue, come into this market and say, “In order to meet our purpose as a public land-grant university, we need to do something like this” really validates our model.

Among ASU’s experiments is something called Global Freshman Academy, designed as a low-cost way for students to go online to complete the first year of coursework at ASU before setting foot on campus. But the first year of college for traditional 18-year old is this intense time of personal/emotional development where many students are figuring out what they want to do with their lives. Are you worried at all that kind of formational activity can’t happen as easily online as it does in person, and that might short change some people doing Global Freshman Academy?

No, I’m not worried about that. The market here actually isn’t traditional 18-23-year-olds. I have a daughter. I’ll send her off to a traditional school, and most of the people at this conference probably are graduates of traditional schools. But the thing we have to remember is, what we call a “traditional” school is not the norm in this country. The way people actually get through a university is not by going for four years and then at 23 you graduate with a degree. Fifty percent of the people in the country who begin higher education don’t complete within six years. They have nothing to show for it. They have no certification. They don’t have an associate’s degree. They don’t have an undergraduate degree. They’ve got nothing.

The more typical 18-year old experience is you’re a high school senior, you take some ACT/SAT tests, you’ll apply to a university, you send your high school transcript in, you send your test scores in, and that university makes a decision about whether to accept you or not. Then, once you’re accepted, you go, and at this point you’re taking classes and your write a big check, right? Then, basically, you spin the wheel, right? You figure out, through that process, whether you’re going to be successful in a university career. The trick is to get into a major you can be successful in as quickly as possible. We know that increases your chances of completion.

But I think for a lot of students, what they do is they end up in two or three different majors, they switch around a bit, they go into debt. Then something happens to their father, or they lose a part-time job, or something happens. Life happens. Six years later, they’re 28 years old. At that point what happens to them? For many of those people, they can’t go to a traditional brick-and-mortar university, it’s out of the question. They can’t go to a calculus class on Monday/Wednesday/Friday at 7:30 in the morning. It won’t happen. So if there aren’t viable online alternatives available for those people, they will not get their degree. And as a result, this country has a tremendous loss of human capital.

So, let’s go back to Global Freshman Academy. There are literally millions of people in this position in this country—35 million people. What they’ve done is, they haven’t been successful. Or maybe they’ve never gone to a university, and they don’t know if they can be successful. So Global Freshman Academy allows them to explore for free. So maybe they think, “I think I want to be a science major, so take solar systems astronomy.” “I think I want to do something in anthropology, so take an anthropology course.” They can take those courses for free.

These courses are as rigorous, and they have the same learning outcomes as the courses we teach on campus. In fact, they are a little bit harder. The reason they’re harder and they’re more rigorous is because they’re visible to everybody in the world. The last thing we wanted was to develop a course for somebody that another school would say, “We’d never accept a credit in that course.” So these courses are very difficult freshman-level courses.

It allows the student to take the course and say, “You know what? I think I can pass this course here.” So if they think they can pass the course, they prepay $50 so we can verify their identity, and if they pass with an A, B, or C, they can purchase credit from us if they want. Now think about what that’s done for the risk equation here for a student. It’s changed it from, “I will write you a big check and then you tell me if I’ve earned credit” to, “I’m going to write you a check when I want to purchase credit. When I know I’m successful.”

[Audience question] Regarding partnerships like with Starbucks or any future partnerships, has there been any discussion or brainstorming about possible hybrid versions of what Ed Plus does? Meaning that there would be some portion where some portion would be face-to-face as a part of the online initiatives that you’ve done?

We’re known for online and we have 25,000 online students, but I’ve always felt that in the future, the dominant modality would be hybrid. You want to take the technology tools you have and either flip the classroom or use them adaptively in other ways in order to make teaching more effective. But there is a component of face-to-face learning that is important and can’t be fully captured online. Online is different, not necessarily worse, but it’s different. The reason it wouldn’t work at Starbucks, for example, is they’ve got 7,000 stores. They have a completely disperse population, and trying to set up something hybrid there just would not work.

However, if you have employers that have large concentrations of employees in a particular place, it will work. So we are working with an employer right now, we’re at the contract stage. We’re working this pilot at two different places where we have learning centers, where there are about 15,000 students and we’re going to do both Global Freshman Academy classes and ASU online classes, and they have facilitators in those centers.

The other place I hope hybrid will work, because we’re going to test it out, is international. The fact is, if you travel around the world, online, whatever degraded reputation online [learning] might have in the U.S. pales to what it is globally. People thinks it’s horrible. It reminds me of how it was viewed 15 years ago in the U.S. It’s like, “Oh, correspondence courses on steroids. Plus the quality of the programing is awful.”

I think that’s a natural place, as well, to set up learning centers potentially with companies that already have learning centers overseas in order to be able to provide a hybrid modality for the courses you teach. You would pipe in the content, and you’d have facilitators there, you could do tutoring, you could do assessment. You could also do higher-order thinking skills a little bit easier in the face-to-face world.

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