Billionaire Robert Smith Paying Morehouse Student Debt to Include Parents

* Robert Smith’s pledge will amount to $34 milllion, school
says
*In May, Smith promised to cover debt for class of 2019

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 federal educational debt amassed by
parents.

Students, parents and guardians received the details in an email
Friday from the Atlanta school. Smith, the founder of private
equity firm Vista Equity Partners, first disclosed the gift in May
during the graduation ceremony.

Smith’s pledge made national headlines and focused further
attention on the soaring cost of college and the debt burden faced
by graduates. Student debt has emerged as a key issue among
Democratic presidential candidates. Earlier this week, Weill
Cornell Medicine in New York said billionaires Sanford Weill and
Maurice “Hank” Greenberg will lead a $160 million effort to curb
debt for qualifying medical students there.

“It is our hope that our graduates will use their newfound
financial freedom to pursue their career goals, to lead and serve
the community, and to remember the spirit of the gift given to them
by paying it forward to support the education of future classes of
Morehouse Men,” David Thomas, the school’s president, said in a
statement.

New Program
Smith’s gift is the first in a new Morehouse program in which the
historically black college will solicit donations made specifically
to reduce or eliminate its students’ debt, either as individuals or
a class. Smith’s net worth is estimated at about $6 billion,
according to the Bloomberg Billionaires Index.

More than 400 borrowers will be covered by the donation for loan
balances held as of Aug. 28, the school said. Six types of loans
are eligible. In addition to federal and a type of Georgia state
loan, certain private student loans processed through Morehouse
will also be paid. The school expects to complete the disbursement
to loan service providers by spring 2020.

Some 68% of Morehouse undergraduates have taken out federal
loans, in keeping with the national trend, government data show.
Morehouse said Friday that the student loan debt at graduation is
$35,000 to $40,000, which is higher than the average for students
at historically black colleges and universities.

For federal loans taken out by parents to fund a child’s college
education, the government requires little underwriting. About $94
billion is outstanding, according to federal data.

At Morehouse, Smith’s commencement speech changed the financial
lives of graduates and their parents.

“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,” he
said. “My family is going to create a grant to eliminate your
student loans.

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