Billionaire Vow to Erase Students' Debt Sows Joy

Billionaire Robert F. Smith stunned students at Morehouse College when he vowed to pay off the student loans of every member of the class of 2019.

“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,” Smith, 56, founder of Vista Equity Partners, said Sunday during his commencement speech to the Atlanta college’s graduating class. “My family is going to create a grant to eliminate your student loans,” Smith added, according to a Twitter post by Morehouse.

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Robert F. Smith@RFS_Vista

“Don’t sit around and wait for someone to anoint you ready for the next challenge. Don’t wait your turn. Bet on yourself and have the confidence to stand up and say, ‘my time is now.’”#MorehouseGrad2019

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Almost three-fourths of students use federal loans at the historically black college, which has about 2,100 male undergrads, according to Education Department data. With $1.6 trillion in outstanding student debt, the issue is often mentioned during commencements, in addresses and decorated on graduation caps.

The typical debt for the 73% of Morehouse undergraduates who take out federal loans and complete college is $26,000, according to government data. That doesn’t include private lending or federal loans made to their parents. The school told the Atlanta Journal-Constitution it will cost an estimated $40 million to retire the debt of the graduating class, which totals about 400 students.

Smith hasn’t clarified how the gift will be structured or the mechanics of how it will be used to pay off the students’ debt. A spokeswoman for the college didn’t have an immediate answer on how the payback would work, while a spokesman for Smith didn’t immediately respond to a request for comment.

One way would be for Smith to give a grant to the school, whose financial aid office keeps track of federal loans, said Ben Miller, a former Education Department staff member who is now vice president for post-secondary education at American Progress, a left-leaning think tank. It’s possible the financial aid office may not have information about private loans, he said, and warned that some debt forgiveness programs have resulted in tax bills for recipients.

“It is an amazing and generous surprise that should be applauded,” Miller said. “But instead of relying on one-off acts of generosity, Congress should raise taxes on the ultra-wealthy to fund college affordability and other key social supports.”