Billionaire investor Robert F. Smith announced in a commencement address at Morehouse College on Sunday that he would pay off the student loans of every member of the class of 2019.
“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,” Smith said during a speech to the Atlanta college’s graduating class.
“My family is going to create a grant to eliminate your student loans,” Smith added, according to a Twitter post by Morehouse College.
“This is my class, 2019. And my family is making a grant to eliminate their student loans,” he was quoted as saying.
An official at the historically-black, all-male college told a local news station that the gift was worth about $40 million. There are almost 400 graduating seniors in the class.
Federal student loans are the only consumer debt segment with continuous cumulative growth since the Great Recession. As the costs of tuition and borrowing continue to escalate, the result is a widening default crisis that’s causing concern for Fed Chairman Jerome Powell. There’s $1.6 trillion in outstanding debt through the first quarter of 2019 while delinquent U.S. student loans reached a record $166 billion at the end of 2018.
Smith, the richest black person in the U.S. with a net worth of $4.5 billion on the Bloomberg Billionaires Index, had already announced a $1.5 million gift to Morehouse.
Students cheered at the news.
“If I could do a backflip I would. I am deeply ecstatic,” Elijah Dormeus, a business administration major who’s graduating with $90,000 in student loans, told the Atlanta Journal Constitution.
Smith is the founder and chief executive officer of Vista Equity Partners, a private equity firm headquartered in Austin, Texas, with $56 billion under management. Its holdings include workflow manager Autotask and ticket marketplace Vivid Seats. Smith, 56, graduated from Cornell University and Columbia Business School.
He joined Goldman Sachs Group Inc. as a tech investment banker in 1994, working in New York and then San Francisco before leaving to start Vista in 2000, which focuses on the enterprise software sector. He’s been chairman of Carnegie Hall since 2016.
Smith signed the Giving Pledge in 2017, promising to invest half his net worth during his lifetime towards protecting the environment and supporting equality.
“Potential is no guarantee of progress,” he wrote in his 2017 letter. “We will only grasp the staggering potential of our time if we create onramps that empower ALL people to participate, regardless of background, country of origin, religious practice, gender, or color of skin.”