Morehouse College's class of 2019 was stunned on Sunday when their commencement speaker, Robert F. Smith, promised to eliminate all of the graduates' student debt. But the generous pledge also highlights the distinct wealth gap for recent African American graduates. Amna Nawaz talks with Scott Jaschik of Inside Higher Ed and Mehrsa Baradaran of the University of Georgia School of Law.
The growth in student debt for students now in college has finally started slowing down. But, for many, the burden remains high, since debt had been soaring for over two decades.
Roughly two in three seniors who graduate from public and private nonprofit colleges had an average debt of more than $28,000 in 2017. That compares with about $13,000 in 1996.
The challenges of all that debt were cast back into the national conversation this week by a surprising announcement.
It's all part of our special series Rethinking College.
And Amna Nawaz is here with more.
You remember that billionaire investor and philanthropist Robert F. Smith. He stunned the graduating class of Morehouse College during his commencement address on Sunday. He promised to eliminate the student debt of all 396 members of the class of 2019.
But his generous pledge also highlighted the distinct wealth gap for recent African-American graduates. They carry nearly $7,500 more debt than their white counterparts.
Smith, who is the wealthiest African-American in the U.S., said he intended his gift to help, but also to inspire.
Robert F. Smith:
We're going to put a little fuel in your bus. Now, I have got the alumni over there. And this is a challenge to you, alumni. This is my class, 2019.
(CHEERING AND APPLAUSE)
And my family is making a grant to eliminate their student loans.
For a deeper look at that Morehouse gift and some of the broader questions it raises, I'm joined by Mehrsa Baradaran. She's professor at the University of Georgia School of Law and author of "The Color of Money: Black Banks and the Racial Wealth Gap." And Scott Jaschik, the editor of Inside Higher Ed.
Welcome to you both.
Mehrsa Baradaran, to you first.
Big picture for the average student, what is the impact of a gift like this? What does it change for them?
This is not just this — you know, their lives, but this will have intergenerational effects. I mean, this will change their entire trajectory. Maybe they can go get a mortgage now. Maybe they can, you know, start their lives, have children.
That psychological debt load that they have been carrying can be wiped out. And so they can then push their children out into the world. So, for this group of, you know, 400 Morehouse graduates who got their debt wiped out, I mean, they won the life lottery. And it really is — does show how effective that, you know, student debt is in sort of, you know, determining your life outcomes.
The life lottery this one class has won, it's significant not just because of the way that Smith made the gift, but also the fact that it's at Morehouse. Right?
It's an HBCU. It's a historically black college. Talk to me a little bit about the debt for these students, as compared to the larger student debt landscape.
So, debt is a struggle for many graduates of all races and ethnicities. But the reality is, a black student is less likely than a white student to have had a family that could contribute a lot of money to education.
Now, my parents paid for my sisters and I to go to expensive private colleges. Many black families love their children just as much, but they don't have the kind of money to set aside to do that.
On average, there are — about 30 percent of black students graduate with $100,000 in debt. That's three times the level of a white student. These are very large numbers, and they influence what they can do.
So, a gift like this is really going to make a difference.
But, Mehrsa, we heard there Robert Smith challenge other alumni to do something similar, right? It's a massive difference for these 400 students. But is this way of giving sustainable? Is this the answer?
I mean, I think we commend Robert Smith. It's wonderful. It's so generous of a billionaire to give so generously of his wealth. But there just aren't enough billionaires to deal with this problem. I mean, we're talking about two-thirds of white students, 80-something percent of black students. This is a lot of debt. This is a structural problem.
It's a whole generation. And there aren't enough billionaires who are committed, capable and willing to do it. And, also, we shouldn't — democracy shouldn't rely on the charity and the generosity of a few people to really solve systemic problems.
So, we really, I think, do need to look at this as a social problem. It's not just the debt. It is all of the effects psychologically, again, of life outcomes. It is a servicing of the debt. It is what they can and can't do going forward.
And so I think it's really time to look forward to policy changes that will help these students, this whole generation to deal with that debt.
Speaking of policies, I want to mention some of the students who were not affected by this. This gift, we should point out, only applies to the 396 students who graduated, many of whom were tweeting their thanks and celebrating online.
But there was one account I wanted to share. It was by a student named Jordan Long, who's 22 years old. He was featured in The New York Times.
He tweeted after learning about that gift. And he tweeted this: "I left Morehouse class of 2019 to avoid debt. And this billionaire just paid the graduating class' debt off. Kill me," he wrote.
Clearly, a lot of regret there. But, Scott, it gets to the larger structural issue, which is that there were students who knew there was going to be a lot of debt. That debt was crippling and didn't even allow them to graduate in the first place.
And you have to remember, next year's class, their debt isn't paid for. Last year's isn't paid for. You have to look at policy questions. The value of the Pell Grant, the largest federal effort to help low-income students, is not keeping up with the cost of college.
State support for higher education is going up in some states, not in others. Programs that help low-income students get ahead are not adequately supported. That's why you see all the talk about free college. Many people feel the system right now just is not working.
Mehrsa, we want to mention — of course, we don't want to undersell this incredible gift, the generosity behind what Robert Smith did here.
But I will go back to what you said earlier in the conversation, which is that this will change their lives and the lives of many people these students may come into contact with. At the same time, this is not just about student debt. This is about larger inequalities in our society right now.
Put that into context for me. What do we need to do?
So white families have something like 12 times the wealth of black families. And this is a result of past generations, so, your father and your grandfather getting an FHA mortgage or a G.I. Bill, and having those costs and their debts reduced by public programs.
So they were able to get good jobs. They were able to build wealth. And then they were able to help you out, so give you a place to stay, provide that buffer.
And so a lot of black families don't have that. And due to the effects of segregation, they're also part of a social system that is low wealth. So they can't reach out to aunts and uncles and grandfathers and grandmothers to get that help either.
In fact, a lot low-income students, especially black and brown students, end up helping families while they're in college, OK? So in the white wealthy world or the middle class, that help comes down, right? So parents help their kids.
But a lot of times, in low-income communities of color, the kids are helping the parents just as much. And so this really allows for this generation to help out. And you're right. I mean, this is — we shouldn't diminish the absolute generosity of this gift. It was really quite stunning.
Stunning, indeed. A lot of people are still talking about it.
Thank you to you both, Mehrsa Baradaran and Scott Jaschik, for being here today.
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