If you’re a billionaire looking to get some major attention, paying off an entire graduating class’s student loan debt may be the answer.
Last weekend, Robert F. Smith, a billionaire tech investor and founder and CEO of Visa Equity Partners, provided the commencement speech for Morehouse College in Atlanta, Georgia, and concluded it by promising the 400 graduates that he would clear all their student loans so they would not need to live their lives engrossed in debt.
That indicates he’ll be shelling out around $40 million–— the predicted financial obligation owed by the 2019 graduating class.
Not only did Smith pledge to pay off student debt, but he likewise announced a $1.5-million donation to the school.
“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. This is my class, 2019. And my family is making a grant to eliminate their student loans,” Smith told the nearly 400 graduating students. “I know my class will make sure they pay this forward…and let’s make sure every class has the same opportunity going forward because we are enough to take care of our own community.”
Although Morehouse College couldn’t name the specific amount owed by the current graduating class, Terrance L. Dixon, vice president of enrollment management, estimated that the typical debt for a college student was $30,000 to $40,000.
It was a shocking revelation for students who had already prepared for years of struggle as they attempt to figure out their professions while paying off frustrating debt that is crippling the country’s educational system.
“Many of my students are interested in going into teaching, for example, but leave with an amount of student debt that makes that untenable,” David A. Thomas, Morehouse College president told Time magazine, explaining the importance of this gift for students and their future. “In some ways, it was a liberation gift for these young men that just opened up their choices,” he was quoted as saying.
It’s also worth keeping in mind that anybody who dropped out of Morehouse prior to graduating in 2019 because they could not take on any more debt won’t be covered and will still need to pay their loans.
According to Trainee Loan Hero information, among the Class of 2018, 69 percent of university student secured student loans and graduated with a typical financial obligation of $29,800 each, including both private and federal debts. On the other hand, 14 percent of their parents secured an average of $35,600 in federal Parent PLUS loans.
The issue of student debt just recently mentioned by Democratic Senator Elizabeth Warren, who has provided a very enthusiastic solution that requires a complete reshaping of higher education, to include canceling most student loan debt and eliminating tuition at every public college. The move could have mixed impact on the economy, as it would increase the tax burden paid by citizens but also allow students to receive an education for free.
According to the National Bureau of Economic Research, the financial ramifications of debt forgiveness are significant. The study discovered that the customers who had their private loans released increased their wages by $4,000 over three years and brought less financial obligation overall after they no longer needed to make trainee loan payments.
In the meantime, as Erik Sherman points out for Forbes: “Having opportunity is great. Education can do a lot for people. One of the possibilities is to impoverish, even as it promises the opposite because that is an enormous level of debt.”