The best graduation present? Given the economy, it’s probably someone offering to pay off your student debt. And for students graduating from Morehouse College, a historically black college (HBCU) located in Atlanta, their commencement speaker has promised to do just that.
Robert F. Smith, the chairman and CEO of Vista Equity Partners, (who is, for the record, a billionaire) announced he’ll give the school a gift in the sum of $1.5 million. That’s fantastic. But then he made it even better for the grads in particular. He promised to pay off the student debt of the entire graduating class, which is about $40 million.
Et tu, Mike Pence?
Shocking no one, graduating students were thrilled. Their class is made up of roughly 400 people. The school has a total student population of about 2,000.
“This is my class,” Smith said, as reported by The Atlanta Journal Constitution, “and I know my class will pay this forward.” Smith received an honorary doctorate during the ceremony, which is what he meant by referring to the graduates as his “class.”
To be sure, this would be a gift for any graduating student. It’s especially important for marginalized people, though. Why? Student loan debt can be catastrophic for people who are low-income, which feels obvious. Without family money to pay for school, young people often rely on loans. Or, they find themselves in a position where they have to drop out of school without a degree.
Another layer to that, though, is that people of color take out more student debt, on average than white students.
Want to see some numbers? Let’s look at a data report from Brookings back in 2016. At first, black college grads owed, on average, $7,400 more than their white peers. And that number only grows. Graduate school debt, and differences in interest rates, can result in black graduates having more than $50,000 in student debt within four years of graduation. That’s nearly twice as much as their white peers.
That debt is a burden in itself. It also reduces flexible income in other areas; instead of being able to invest or add more to their retirement, money is funneling toward student debt. Instead of saving up for a down payment on a home, it’s going to student loans. Depending on your loan servicer, you may have a harder time negotiating payment plans or forbearance. This means that necessary expenses, like food or medications, might rack up credit card debt to keep cash flow available to make loan payments. It’s a snowball.
Perhaps this is a great time to think about Elizabeth Warren’s student debt relief plan?
This is a Creative Commons article. The original version of this article appeared here.