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The Atlantic
What Happens When a Billionaire Swoops In
to Solve the Student-Debt Crisis
Adam Harris
May 19, 2019
Commencement speakers have a routine: a few words of encouragement, a
good—or maybe not so good—joke, and a bit of advice. But this year,
Robert F. Smith, the billionaire founder of the private equity firm
Vista Equity Partners, who delivered the commencement address on Sunday
morning at Morehouse College, a historically black college in Atlanta,
took a different approach.
“You great Morehouse men are bound only by the limits of your own
conviction and creativity,” Smith told the soon-to-be graduates of the
venerated HBCU (historically black college or university). Smith then
did something astonishing: He did what he could to make that actually
true, telling the class that his family would be eliminating the
graduates’ student debt. The crowd, as expected, went wild.
The gift, estimated at about $40 million, is expected to clear the
debts of nearly 400 graduates in this class—and is the single largest
donation from a living donor to an HBCU in history. The gift is, of
course, significant in a political sense, coming at a time when
candidates for president and other politicians are seriously mulling
debt cancellation; but it is also significant for these black men at
Morehouse in particular.
According to a report from the Center for American Progress, black
students are more likely to take out student loans than their white
peers, and nearly half of black borrowers default on their student
loans. One Morehouse graduate told the Associated Press that he had
$200,000 in student debt, and that when Smith announced the gift, “we
all cried. In the moment it was like a burden had been taken off.” By
eliminating these graduates’ debt, Smith is very directly changing
their future.
The thing about generosity, though, is that it is not a salve for
systemic problems. Smith, who has a net worth of $4.5 billion, could
eliminate debt for thousands more—and some parents hope that he will.
(“Maybe he’ll come back next year,” the father of one Morehouse
graduate, who has another son who is currently a junior, told The
Atlanta Journal-Constitution.) But one billionaire can only help so
many, and more than 40 million people in the United States have student
loans. And no graduation gift can help the millions of young people who
never complete their degree.
It's for this reason that several Democratic presidential candidates
believe that the problem of mass student debt requires a systemic
approach and have proposed various “free college” policies. Senator
Bernie Sanders, for example, has pushed to make public four-year
colleges, community colleges, and trade schools tuition-free. Senators
Kamala Harris and Cory Booker have signed on to debt-free college
legislation. Elizabeth Warren has called for a fund of at least $50
billion to help historically black colleges in particular, as well as
other minority-serving institutions, known as MSIs. And in addition to
making public colleges tuition-free, her plan would also allow private
historically black colleges, such as Morehouse, Howard University in
Washington D.C., or Spelman College, to opt in to the federal
tuition-free college program. Republicans argue, however, that
injecting more federal money into colleges would simply encourage them
to drive their tuition up more.
“This is my class,” Smith told the graduates and their families, “and I
know my class will pay this forward.” Perhaps this is the start of a
new trend; HBCUs are not used to receiving such large donations from
living donors, and now the record—first a $30 million gift to Spelman
back in December, now $40 million to Morehouse—has been broken twice in
the past six months. Smith said he hopes that “every class has the same
opportunity going forward.” But what are the chances? How many Smiths
are out there, ready to swoop in?
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