3 Things to Know About Starbucks' College Tuition Perk
Starbucks is making headlines this week, but it's got nothing to do with its coffee. The company has announced that it will be providing a new benefit to its 135,000 U.S. employees: subsidized or in some cases free college tuition to Arizona State University's online program.
What should small business owners know about Starbucks' new perk, called the College Achievement Plan? Here are three important facts:
- What will the plan cover, and who's eligible? As reported by Forbes, the Starbucks College Achievement Plan is open to all 135,000 U.S. employees ("partners" in Starbucks-speak) both full-time and part-time. Along with employees at Starbucks stores, the plan will also include workers at Starbucks support centers, plants and other stores owned by Starbucks such as Teavana, La Boulange, Evolution Fresh, and Seattle's Best. The plan will cover tuition at ASU's online degree program for any of the 40 available majors -- in full for employees who will be juniors or seniors, and in part for those who are freshmen and sophomores, with additional "need-based financial aid" available.
- How much is this going to cost Starbucks? According to Forbes, if even 3 percent of Starbucks' U.S. workforce takes the company up on its offer, the program could cost about $50 million a year. Starbucks says its workforce consists of up to 70 percent college students or "aspiring students," so the number of employees who take part in the program could even be higher. Tuition for a four-year degree through ASU's online program begins at roughly $50,000, according to Forbes, although Starbucks may be getting a lower rate for its employees.
- Can your business do something similar and get a tax write-off? Although Starbucks can certainly afford to pay for the College Achievement Plan outright, the company will likely be able to deduct at least some of the costs of the program from their federal taxes. Under Section 127 of the Tax Code, corporations can set up educational assistance programs and exclude up to $5,250 per employee per year from their gross income, if their program qualifies.
If you're thinking about providing educational assistance to your employees, consulting an experienced tax lawyer can help you learn more about your options.
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