Here’s Why an Austin Billionaire’s Promise to Pay Off Morehouse Student Loans Matters

Philanthropy takes many forms. It can be an endowment that allows a university to conduct leading-edge research. It can be in the form of scholarships that allow first-generation students to pursue their higher-education dreams. Or it can be a gesture that frees a college graduating class from the crushing shackles of college debt.It is this last track that makes billionaire investor Robert Smith’s promise to pay off the debt of Morehouse College so consequential. While most commencement speakers offer life advice and a few jokes, Smith, the founder of Vista Equity Partners and the wealthiest African-American in the United States, according to Forbes, offered the freedom to make choices, a luxury most debt-laden college graduates don’t have.About 45 million students owe about $1.5 trillion in student loans, more than outstanding auto and credit card debt. On average, students leave school with more than $37,000 of debt.That Smith picked Morehouse, a historically black college in Atlanta, for his largesse shouldn’t be missed. While college debt is a major problem for everyone regardless of race, the repayment burden is made more difficult due to income disparities faced by black Americans, studies show.For this reason, a local visionary like Paul Quinn College President Michael Sorrell created an education and work model that draws on major donors and corporate sponsors to reduce the debt burden of higher education. Paul Quinn students work and use part of their paychecks to offset the cost of attendance, cutting tuition and fees by almost $10,000. Likewise, the Dallas County Promise has amassed a coalition of nonprofits, employers, public school districts and community colleges and universities to help more Dallas County students complete college sooner with less debt and begin careers, too. Smith has given Morehouse’s 2019 graduates the gift of a lifetime. While a college education generally is a gateway to a higher earnings over a lifetime, unpayable college debt impacts life decisions — the type of job a graduate takes and even whether they can afford to buy a car or a house or rent an apartment without roommates. Smith’s gesture allows these Morehouse students to continue to invest in themselves, and not worry about whether they can pay off their student loans.Some employers have come to recognize the negative impact of staggering student debt, and have programs to pay off a portion of college debt as a recruiting benefit. The benefit is beyond reducing stress on the finances of graduates. Federal Reserve Chairman Jerome Powell warns that students who can’t repay debt will take a hit to their credit rating, which he says “impacts the entire path of their economic life,” and ultimately could pose a major risk to overall economic growth.Hopefully, Smith has initiated a serious national conversation about the cost of higher education and given the 2019 class the best life advice ever — an easier path to make the most of their education.   Continue reading...

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