Morehouse College recently announced that Billionaire Robert F. Smith not only fulfilled his promise to pay off the student debt of the entire graduating class of 2019 but also expanded it to include loans taken out by parents. Smith—the founder, chairman, and CEO of Vista Equity Partners—made the payments via Morehouse’s newly created Student Success Program, which includes an initiative welcoming other donors to help reduce the loan debt of Morehouse students and families.
Smith originally announced his gift to the Atlanta-based HBCU at its May 19 commencement, leaving 400-some graduates stunned and thrilled. Smith’s surprise gift raised questions about the nuts and bolts of providing debt relief to hundreds of individuals, many of whom are working with multiple lenders. Inside Higher Ed reports that, across the summer, Morehouse worked with the U.S. Department of Education and loan servicing agencies to solidify the collective payoff.
During the process, Smith decided to include debt assumed by both students and their families; ultimately, his gift totaled $34 million to repay the principal and interest on six types of loans: federal subsidized loans, federal unsubsidized loans, Georgia Student Access Loans, Perkins Loans, Parent Plus Loans, and certain private student loans processed through the college. “More of it went to paying off parent debt than student debt,” according to Morehouse spokesperson Aileen Dodd.
Inspiring more donors to help
Smith’s May announcement immediately sparked questions about the debt burdens of future classes, and The New York Times in July reported that Morehouse was creating a new program that would solicit donations earmarked exclusively for loan debt relief. Donors can direct their gifts to entire graduating classes or specifically to students pursuing much-needed but lower-paying professions, such as teaching.
Morehouse President David A. Thomas said the college has heard from many donors inspired by Smith’s gift and estimates that, if those inquiries result in donations, Morehouse “could have another eight figures” for debt relief. Such gifts “particularly for minority or economically disadvantaged families, could accelerate the growth of a more diverse and robust middle class,” Michael L. Lomax, president and CEO of the United Negro College Fund, said in a written statement. Morehouse’s program, Lomax wrote, “is a fundraising opportunity that should be studied and duplicated nationally.”
Putting a spotlight on wealth and debt gaps
In addition to the debt payoff, Smith’s gift includes $400,000 for research into how that debt relief affects graduates’ professional choices and economic trajectories. The average Morehouse student graduates with $35,000-$40,000 in debt, compared with $26,266 for the average HBCU student. Even that figure is nearly twice the average amount of debt held by non-HBCU students, according to research by the United Negro College Fund.
Writing in The Washington Post, several higher education experts recently highlighted the wealth gap between Black and white households and ways to address “the disproportionate impact student debt is having on the black community.” Debt relief figured prominently among the experts’ recommendations, with Victoria Jackson, senior policy analyst for higher education at the Education Trust, writing that “debt cancellation would go a long way toward helping black borrowers,” especially if forgiveness plans account for household wealth “to ensure that the amount forgiven is sufficient to alleviate debt burdens for black borrowers.”