At a time when Americans collectively hold $1.5 trillion in student loan debt, there is no better way for a billionaire to get on the country’s philanthropy radar than to offer--as Robert F. Smith has--to pay off the students loans of an entire graduating class.
Last weekend, Smith, a billionaire tech investor and founder and CEO of Visa Equity Partners, delivered the commencement speech for Morehouse College in Atlanta, Georgia, and concluded it by promising the 400 graduates that he would clear all their student loans so they would not have to live their lives buried in debt.
That means he’ll be forking over around $40 million--the estimated debt owed by the 2019 graduating class.
Not only did Smith promise to pay off student debt, but he also announced a $1.5-million gift to the school.
"On behalf of the eight generations of my family that have been in this country, we're gonna put a little fuel in your bus. This is my class, 2019. And my family is making a grant to eliminate their student loans," Smith told the nearly 400 graduating students. "I know my class will make sure they pay this forward…and let’s make sure every class has the same opportunity going forward because we are enough to take care of our own community.”
Although Morehouse College couldn't provide the exact amount owed by the current graduating class, Terrance L. Dixon, vice president of enrollment management, estimated for AP that the average debt for grad students was $30,000 to $40,000 each.
It was a shocking revelation for students who were otherwise prepared for years of starvation as they try to sort out their careers while paying off overwhelming debt that is crippling the country educationally.
“Many of my students are interested in going into teaching, for example, but leave with an amount of student debt that makes that untenable,” David A. Thomas, Morehouse College president told Time magazine, explaining the importance of this gift for students and their future. “In some ways, it was a liberation gift for these young men that just opened up their choices,” he was quoted as saying.
It’s also worth noting, however, that anyone who dropped out of Morehouse before graduating in 2019 because they couldn’t take on any more debt won’t be covered and will still have to pay their loans.
According to Student Loan Hero data, among the Class of 2018, 69 percent of college students took out student loans and graduated with an average debt of $29,800 each, including both private and federal debt. Meanwhile, 14 percent of their parents took out an average of $35,600 in federal Parent PLUS loans.
The problem of student debt recently pointed out by Democratic Senator Elizabeth Warren, who has offered up a very ambitious solution that calls for a complete reshaping of higher education, to include canceling most student loan debt and eliminating tuition at every public college.
According to the National Bureau of Economic Research, the financial implications of debt forgiveness are significant. The study found that the borrowers who had their private loans discharged increased their salaries by $4,000 over three years and carried less debt overall after they no longer had to make student loan payments.
In the meantime, as Erik Sherman points out for Forbes: “Having opportunity is great. Education can do a lot for people. One of the possibilities is to impoverish, even as it promises the opposite because that is an enormous level of debt.”
By Michael Scott for conil.me