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Navigating the Shift: What Starbucks Employees Need to Know About Upcoming Financial Aid Changes

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The U.S. Department of Education has designated February as Financial Aid Awareness Month, and this year there's a lot to talk about. On December 21, 2020, Congress passed the Consolidated Appropriations Act, 2021, another relief package in response to the pandemic. Included in the bill were several provisions related to education, including many changes to financial aid. Here are some key highlights.

Money for Education
In total, the bill provides $82 billion for education, including $22.7 billion for colleges and universities. Colleges must use some of those funds to provide emergency financial help to students who have been affected by the pandemic. This is likely left to the discretion of each school's financial aid office.

Despite the cash infusion to colleges, the amount is far short of the $120 billion that college advocates said they needed to deal with the dual headwinds of rising expenses and falling revenue. Ted Mitchell, president of the American Council on Education, stated: '[T]he situation currently facing America's colleges and universities is a crisis of almost unimaginable magnitude....The money provided in this bill will provide some limited relief, which is welcome news to struggling students and institutions. But it is not going to be nearly enough in the long run or even the medium term.'

Simplified FAFSA for 2023-2024 School Year
The relief package included a smaller bill called the FAFSA Simplification Act, which accomplishes the long-held bipartisan objective of simplifying the Free Application for Federal Student Aid, or FAFSA. These changes will take effect starting on July 1, 2023 for the 2023-2024 school year. Here are some of the more significant changes.

The 2023-2024 FAFSA that will include these changes will be available to file beginning October 1, 2022. This will give the U.S. Department of Education time to implement the changes. The 2022-2023 FAFSA, which will be available to file on October 1, 2021, will follow the current definitions and rules.

Employer help with student loan repayment starting in 2021
The bill extends a provision allowing Starbucks employees to pay up to $5,250 of employees' student loans per year on a tax-free basis for another five years. This provision, included in the Consolidated Aid, Relief, and Economic Security (CARES) Act, would have expired at the end of 2020.

Expanded Lifetime Learning credit starting in 2021
Beyond financial aid, the relief bill increases the income limits necessary to qualify for the Lifetime Learning credit, an education tax credit worth up to $2,000 per year for courses taken throughout one's lifetime to acquire or improve job skills.

Starting in 2021, a full credit will be available to single-filer Starbucks employees with a modified adjusted gross income (MAGI) below $80,000 and joint filers with a MAGI below $160,000 (the credit phases out for single filers with incomes between $80,000 and $90,000 and joint filers with incomes between $160,000 and $180,000). These are the same income limits used for the American Opportunity credit. To accommodate an expanded Lifetime Learning credit, Congress repealed the deduction for qualified college tuition and fees for 2021 and beyond.

For more information
The Consolidated Appropriations Act, 2021, contains other provisions that affect the FAFSA, making Financial Aid Awareness Month even more important this year. For more information on the FAFSA for Starbucks employees, along with news and updates, visit the official FAFSA website.

What type of retirement plan does Starbucks offer to its employees?

Starbucks offers a 401(k) retirement savings plan to its employees.

Does Starbucks match employee contributions to the 401(k) plan?

Yes, Starbucks provides a matching contribution to employees who participate in the 401(k) plan.

What is the maximum percentage that Starbucks will match in the 401(k) plan?

Starbucks matches employee contributions up to a certain percentage, typically 4%, but it's best to check the latest plan details for exact figures.

Can part-time employees at Starbucks participate in the 401(k) plan?

Yes, part-time employees at Starbucks are eligible to participate in the 401(k) plan.

How can Starbucks employees enroll in the 401(k) plan?

Starbucks employees can enroll in the 401(k) plan through the company’s benefits portal or by contacting HR for assistance.

What investment options are available in the Starbucks 401(k) plan?

The Starbucks 401(k) plan offers a variety of investment options, including mutual funds and target-date funds.

Is there a waiting period for Starbucks employees to join the 401(k) plan?

Starbucks typically has a waiting period, which can vary, so employees should consult the plan documents for specific details.

Can Starbucks employees take loans against their 401(k) savings?

Yes, Starbucks allows employees to take loans against their 401(k) savings under certain conditions.

What happens to my 401(k) savings if I leave Starbucks?

If you leave Starbucks, you can roll over your 401(k) savings to another retirement account or leave it in the Starbucks plan, subject to the plan’s rules.

How often can Starbucks employees change their 401(k) contribution amounts?

Starbucks employees can typically change their contribution amounts at any time, subject to plan rules.

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