The federal government has some programs for loan forgiveness, but they are tailored for particular categories of students — those who take jobs in public service, for example, or those who were misled by for-profit institutions — or they take effect only after many years of faithful repayment. Some of the forgiveness programs have stalled or have raised doubts about whether the government will make good on them.
Some institutions have responded to the student debt crisis by reducing or eliminating tuition. The New York University School of Medicine recently announced that it would be free for all students, citing the “overwhelming financial debt” facing graduates. That was made possible in part by a large gift from Kenneth Langone, the founder of Home Depot, and his wife, Elaine, for whom the medical school is named.
Loan cancellation generally has not come straight from the pockets of billionaires, however, despite the many calls in recent years for them to provide it. Ms. Warren’s plan, for instance, would tax ultra-wealthy citizens like Mr. Smith to relieve much of the nation’s $1.5 trillion in student loan debt.
For the Morehouse graduates, debt relief will be immediate, sparing them what could be a decade or more of monthly payments that can be particularly hard to shoulder in the unsettled years just after graduation. The standard repayment plan for federal student loans is up to 10 years, but research indicates that most students take far longer than that to pay off their balances. The average debt for students with federal loans is $32,000, according to government data.
Forbes estimates Mr. Smith’s fortune at about $5 billion, built mainly through Vista Equity Partners, a private equity firm that focuses on buying and selling software firms. The firm has about $46 billion in assets under management, according to Forbes. It is privately held and does not publicly report its results, but it is believed to be one of the best-performing firms in the country, with annualized returns of more than 20 percent since its founding.
Mr. Smith, who was among the largest donors to the Smithsonian Institution’s National Museum of African-American History and Culture, has long been an active philanthropist. The Morehouse grant is his latest effort in Atlanta to support causes directly related to African-American history, culture and education.
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