Ordinarily, college commencement speeches are full of well-intentioned platitudes about how these newly minted graduates are going out into the world to embrace a future of endless possibilities and limitless growth with the power to change the world for the better.
Because there are only so many twists on the “embrace your future” theme, these moments usually devolve into bored looking grads wilting in the hot sun as they mentally implore the orator to just “get on with it,” so they can grab their degree and seek relief in the shade along with the obligatory family pictures. Indeed, no one begrudges a commencement speaker for relying on some of these trusted truisms to inspire the next generation.
This past Sunday, however, billionaire investor Robert F. Smith changed all that for the Morehouse College class of 2019 by pledging to pay off all their outstanding student loans. He truly gave them a speech they would all remember for the rest of their lives.
Robert F. Smith is the founder of Vista Equity Partners, a private equity group that focuses on investing in software companies. With approximately $46 billion of assets under management that includes more than 50 software companies, Vista is a major player in the world of software investing.
With a personal net worth of upwards of $5 billion, Robert Smith is also reputed to be the richest black person in America.
Mr. Smith’s journey started in Denver, where he grew up before attending Cornell for a degree in chemical engineering. Afterwards, he worked at Kraft Food before leaving to get his MBA at Columbia University. Following graduation Wall Street lured him into a position within the M&A department at Goldman Sachs, where he remained until the company’s IPO in 2000. At this point, much to the consternation of his colleagues, he left to found Vista and began investing in software developers.
While the gift to the Morehouse grads is believed to be worth $40 million, Smith is no stranger to philanthropy. Not only had he already given $1.5 million to Morehouse College, he also donated $20 million to the National Museum of African American History and Culture in Washington DC and $50 million to Cornell, which renamed its school of Chemical and Biomolecular Engineering in his honor.
Furthermore, he numbers among the individuals who signed the Giving Pledge, the brainchild of Bill and Melinda Gates and Warren Buffett, that asks the ultra-rich to pledge to give away at least half of their fortunes to philanthropic causes.
While Robert Smith’s unusual largess has generated history-making headlines, it also calls to mind the discrepancy between the amount of debt incurred by African Americans compared to white students.
For instance, analysis from the National Center for Education Statistics reveals that over 80% of black students took out student loans within 12 years of entering school in the 2003-2004 school year at both private and public institutions compared to approximately 60% of white and Latino students. In addition, less than half of Latino or white students took out federal loans at community colleges versus over 60% of African American students during that time frame.
To add insult to injury, the Center for American Progress reports that almost 50% of African American students defaulted on a federal student loan within a dozen years of starting college. And, more importantly, black students wound up owing over 100% of what they originally borrowed during that time.
With data like this, it is no wonder that even the most progressive educators feel as if black students remain at a competitive disadvantage throughout their scholastic careers and well into adulthood. It goes without saying that students who graduate with more debt are less free to pursue their original dreams or to transform an industry.
One could argue that college debt is merely the icing on the cake and that the cycle begins much earlier. For example, in more affluent, predominantly white areas, students have access to the kind of tutors and test prep centers that many black students simply cannot afford. Consequently, those students also qualify for more merit-based scholarships due to higher test scores and grades.
In essence, we’re seeing a vicious cycle in which those who have more money to spend at the outset can afford the extra help and assistance that many minority students desperately need. On the other hand, disadvantaged students must take out increasingly larger student loans to get the education which should provide a better life although it often limits them for years after receiving their degree.
Thus, while Robert F. Smith’s grand gesture will change the lives of approximately four hundred young men at Morehouse College, the badly-needed systemic change in which disadvantaged African American students gain access to quality education without having to incur crippling student loans remains to be seen. One of the offshoots of Mr. Smith’s headline-grabbing speech is that it could ensure that student debt becomes even more of a hot button issue as the 2020 campaigns spring into gear. More importantly, the great disparity between white and black student debt should impact how aspiring candidates approach this issue and the type of candidate they really want to be.