Yesterday, billionaire Robert Smith made a surprise announcement during his commencement address at Morehouse College — he promised to fully pay off the student loan debt of every student in the graduating class of 2019. This is an incredible gesture, especially from a commencement speaker — Smith was asked to motivate and inspire students to succeed after graduation, and he did that by addressing the heavy debt burden that is undoubtedly one of the greatest obstacles to success that these graduates would have had to face. I cannot imagine even the most meaningful commencement speech having a larger impact on a student’s life than suddenly being free from tens of thousands of dollars in student loans. Many articles have spoken about the immediate impact on students, how many opportunities have opened up for them and how inspired they are to pay it forward. But this donation has done more than inspire those 400-some graduates — it’s deepened a conversation about student loan debt.
The student loan crisis has risen to the forefront of the national conversation in the past few months, especially as several 2020 Democratic candidates have begun placing affordable college front and center in their campaigns. Americans currently owe almost $1.6 trillion dollars in student loan debt, more than auto loans or credit card debt. It’s an enormous figure, one that makes it clear that this is not a crisis that can be solved by the charitable donations of billionaires. Still, it’s a gesture that cements Smith’s reputation as a philanthropist and advocate.
The Morehouse College class of 2019 consists of 396 students, who have a combined estimate of $10-40 million in student loans. It’s a figure that’s close to the price Smith paid in 2015 (almost $20 mil) for his third home, a 6br/9ba Malibu mansion, but still a fraction of the amount Smith’s net worth has grown in the past few years (from $2.5 to $5 billion). In 2018, he surpassed Oprah Winfrey to become the richest black person in the US. His other notable contributions in the eight-figure range include $20 million to the Smithsonian National Museum of African American History and Culture and $50 million to his alma mater, Cornell University. Smith was the first African-American to sign the Giving Pledge, the initiative started by Bill Gates and Warren Buffett where the wealthy (primarily billionaires) commit to donating at least half of their wealth by or at the end of their lives.
Smith making this donation to a historically black college adds another layer to the conversation about student debt. Founded two years after the end of the Civil War, Morehouse College is a small, all-male college in Atlanta, Georgia. A historically black school, 95% of students at Morehouse College are African-American. Historically black colleges and universities (HBCUs) have been especially impacted by the student debt crisis, as was detailed in this Wall Street Journal article from last month. Seventy-five percent of students at private HBCUs like Morehouse take out federal loans, compared to 51% at non-HBCU private institutions. There are several factors that play into this, including that HBCUs tend to have smaller endowments. Across institution type, black students take on 85% more debt than white students and repay it more slowly—researchers point to increased attendance at predatory for-profit colleges and lower family net wealth as possible factors. Regardless, black students are uniquely impacted by the student debt crisis, and this donation has brought this issue further into the light, the first step towards real change.
During his speech, Smith quoted a notable alumnus of Morehouse College—"When Dr. King said that the 'arc of the moral universe bends toward justice,' he wasn't saying it bends on its own accord. It bends because we choose to put our shoulders into it together and push."
