**UPDATE**: Billionaire Robert Smith’s surprise pledge to pay off the student loans of Morehouse College’s class of 2019 will cost $34 million and will now include educational debt amassed by parents.
Students, parents and guardians received the details in an email Friday from the Atlanta school.
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Billionaire investor Robert F. Smith was booked to do the commencement address at Morehouse College this spring 2019. Commencement addresses by business people usually have some sort of inspiration in the message mixed in with how they were able to accomplish so much through their education.
But during his remarks in front of the nearly 400 graduating seniors, the technology investor and philanthropist surprised nearly everyone by announcing that his family was providing a grant to eliminate the student debt of the entire Class of 2019.
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Graduates reacted with a bunch of cheers chanting "MVP! MVP!" after hearing the news.
“This is my class,” he said, “and I know my class will pay this forward.” The announcement came as a surprise to Smith’s staff and to the staff at Morehouse, and received the biggest cheers of the morning
Smith, who was awarded an honorary doctorate at Morehouse College’s Sunday morning graduation exercises, had already announced a $1.5 million gift to the school.
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The billionaire's commitment to pay off the student loan debt for graduates of the historically black Morehouse College covers roughly $40 million dollars, the school said.
"When you have to service debt, the choices about what you can go do in the world are constrained," Morehouse President David A. Thomas said Sunday. "(Smith's gift) gives them the liberty to follow their dreams, their passions." Thomas told CNN on Monday that the exact amount of student loan debt to be covered was still being calculated.
Smith's gesture, which Thomas called "a liberation gift," will enable graduates to have more capital to do things like start businesses and support their families.
According to recent Federal Reserve data, Americans owe $1.5 trillion in student loans. Outstanding student loan debt exceeds auto loan debt ($1.1 trillion) and credit card debt ($977 billion). The issue of a free college has emerged as a key topic on the 2020 campaign trail. Several candidates have expressed support for making sure students can graduate without debt.
Also receiving an honorary degree Sunday was Oscar-nominated actress and activist Angela Bassett, who referenced Morehouse graduate the Rev. Martin Luther King Jr. and suggested that the Class of 2019 might emulate him, but take their own path.“I want you to proudly walk in your own shoes,” she said, “and you know what it’s like when you get a new pair of shoes? I want you to be uncomfortable, I want you to be mindful, I want you to be wary.”
This gesture is huge because debt is becoming more and more of a hindrance in the Black community. American household debt hit a record $13.21 trillion in 2018. If you...
... had to write that check it would read $13,210,000,000.00.
Student loan debt disproportionally affects minorities. About 87% of blacks take out student loans at four-year colleges, while 65% of Hispanics take out student loans, according to the National Center for Education Studies.
Blacks average $7,400 more in debt than white when they graduate, and that gap widens over time due to higher default rates.
On the flip side, Forbes estimates Smith’s fortune at about $5 billion, built mainly through Vista Equity Partners, a private equity firm that focuses on buying and selling software firms. The firm has about $46 billion in assets under management, according to Forbes. It is privately held and does not publicly report its results, but it is believed to be one of the best-performing firms in the country, with annualized returns of more than 20 percent since its founding.
Thank you Mr. Smith! Thank you very much!
