For 2019 Morehouse College graduates, the commencement ceremony held on Sunday was a day of liberation from student loans, as Robert F. Smith, a billionaire and founder of Vista Equity Partners, announced that he will pay off the debt of the entire class.
Smith, who was giving a speech in front of 400 Morehouse graduates, said his family will create a grant to eliminate the students’ loans. According to CBS News, a Morehouse College representative has valued the total amount of the loans at $40 million.
The announcement drew cheers and applause from students, faculty, and staff who couldn’t believe the news.
“People were stunned. If you look at any other film footage, you will see the students turning to each other. What did he say? Did he say what I think he said,” Morehouse President David Thomas told CBS News. “This will allow them to pursue their dreams … As opposed to serving the debt.”
— Morehouse College (@Morehouse) May 19, 2019
With a net worth of $4.4 billion, Smith was named the 163rd richest person in the U.S. and the wealthiest African-American by Forbes in 2018.
Earlier this year Smith also donated $1.6 million to the school to create a new outdoor study area and endowed scholarships for those who lack the resources to attend Morehouse.
Not only did i graduate from Morehouse Colleged debt free, my job is paying for my masters degree.. leaving me with NO loans but two degrees. God is good!!!
— jerron anthony (@whyrontaylor) May 20, 2019
Collective U.S. student loan debt topped $1.5 trillion in 2018, officially surpassing the debt levels of both credit cards and auto loans. It now claims second place for the highest debt category throughout the country, second only to mortgage debt.
Studies have also shown that debt has a profound effect on minority students, especially among black and Hispanic adults. Last year, a study conducted by the University of Illinois and the University of Michigan found that black and Hispanic adults who graduate college with debt burdens have a significantly lower net worth at the age of 30 than students who don’t borrow to pay for college.
Students belonging to these two races owed an average of $14,670 when they graduated, compared to $2,946 for students of other races in the full sample of 1,455 young adults.
“Black and Hispanic adults in the study who reported having outstanding student loans when they graduated college had $36,000 less in net worth than their peers at age 30,” the researchers found.
Student loan debt is also one of the major causes of stress among working adults. Currently, seven out of 10 working adults with student debt identify their finances as their major source of stress. Most of them are also pessimistic about making good progress when it comes to paying off their student debt.