Billionaire Robert F. Smith, who made headlines last spring when he pledged to pay the student debt of Morehouse College’s graduating class, has launched another effort to assist Black students with postsecondary education.
The nonprofit Student Freedom Initiative, spearheaded by Smith, will provide low-interest loans for juniors and seniors studying science, technology, engineering and mathematics at historically Black colleges and universities (HBCUs).
Eleven not-yet-named HBCUs will pilot the program slated to launch fall 2021. The initiative seeks to address the burden of student loan debt many Black graduates face after college.
“You think about these students graduating and then plowing so much of their wealth opportunity into supporting this student debt, that’s a travesty in and of itself,” Smith, chairman and CEO of Vista Equity Partners, said during a discussion with Time Editor-in-Chief Edward Felsenthal.
Time reports that the Student Freedom Initiative is launching with a $50 million grant from Fund II Foundation, a charitable organization of which Smith is founding director and president.
The initiative aims to include 5,000 new students each year and raise at least $500 million by October to make the program self-sustaining through investments and graduates’ income-based repayments.
“I think it’s important that we do these things at scale and en masse because that’s how you lift up entire communities,” Smith said. “Of course, we all like the great one story, but I want thousands of these stories. And I want thousands of Robert Smiths out there who are actually looking to do some things in fields that are exciting to them and are giving back.”
Smith, reportedly one of the wealthiest Black men in the world, put up $34 million to clear the debt of roughly 400 Morehouse graduates including the educational debt incurred by their families.
The discussion around the burden of student loans in the U.S. especially for Black students isn’t new, but recent studies have shown a new trend — a rise in parent borrowing.
A Lending Tree study conducted with data from the National Center of Education Statistics and Federal Student Aid found that over the past five years, parent borrowing has increased by 27 percent.
Four HBCUs were among the top 10 schools where parents take on the most debt for their children, and eight were in the top 50.
Rebecca Safier, one of the study analysts, wrote that 47 percent of students at prestigious women’s school Spelman College in Atlanta have parents borrowing PLUS loans on their behalf.
“Spelman came in at No. 2 on the list, with an average parent PLUS loan origination of $16,227 per student,” Safier wrote. “Clark Atlanta University came in at No. 4 on the list, with an average parent PLUS loan of $13,066 per student, closely followed by Morehouse College, also in Atlanta, with an average of $12,759.”
The reasons behind this pattern of parent borrowing at HBCUs include financial challenges faced by the schools and families and the overall disproportionate racial wealth gap, the study said.
HBCUs tend to have smaller endowments than other colleges, which can lead to less financial aid and fewer scholarship opportunities, Safier pointed out.
“Given this reality, combined with the racial wealth gap in the U.S., it’s unfortunate but not surprising that parents have to take on greater debt to send their children to these schools,” she wrote.
While parents often borrow significant amounts for private HBCUs, they tend to take out less for public ones, according to the study.
“The average amount of parent PLUS borrowed for full-time students was a far more modest $2,758 at the public Norfolk State University in Virginia, and was $3,407 at North Carolina Central University, also a state school,” the study’s authors wrote.