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Robert Smith's

Billionaire and Philanthropist ROBERT SMITH'S Largese Shines Light on Diaspora Graduate Student Loan Debt

By JOHN K. SMARTH

When philanthropist billionaire, Robert E. Smith, announced that he would pay off student loans for the graduating class of Morehouse College in March 2019, it didn't just receive there sounding chants of “MVP” and a standing ovation from the crowd, instead, it also painted a stark portrait of how stressful and crushing the obligation of repaying the outlandish amount of $1.6 trillion in student debt can be daunting to those graduates that weren't so lucky.

It is astounding how student loan has more than tripled over the decades, reaching $1.52 trillion in the first quarter of 2018. According to the U.S. Federal Reserve, student loan is now next to mortgage debt in the country. It has even made the goal of“college-for-all” a difficult task to attain. In the current environment of rising tuition, stagnated grant aid, and strapped family budgets which are progressively eroding the sacred belief that a college education is indeed a path to expanded career opportunities and the creation of a permanent increase in income, pursuing a college degree has become a challenge.

The Downside of Educational Debt Debt is indeed a useful and unique resource for making an investment, especially educational investment that supports college completion. However, taking too much debt could push students to less desirable borrowing alternatives that undercut the attainment. The downside of educational debt is that it must be repaid and sometimes, under the shadow of increasing vulnerabilities and limited options.

Since there is no discharging of student loan debt, no filing of bankruptcy and the repayment of the taxed portion of a “forgiven loan” must be fulfilled, it makes the process more problematic. Graduating seniors of the Historically Black College of Morehouse in Atlanta, Georgia would forever be appreciative of the three sentences in billionaire investor Smith's “Surprise-Sunday pronouncement," that have helped transform their lives for the better. “On behalf of the eight generations of my family that have been in this country, we're gonna put a little fuel in your bus. This is my class, 2019.

And my family is making a grant to eliminate their student loans.” Although some of the students and their parents are still grappling with the magnitude of the generosity that has set them free from the crippling clutches of student debt and the stress associated with it. However, the overwhelming impact of Smith's words will linger in their memories for the rest of their precious lives. Smith's act of kindness might have helped rekindle a seemingly bright future of 400 fortunate students at Morehouse College but the majority of those that weren't so lucky will continue to face the full impact of their hefty student loans. Debts that were obtained by students and their parents to develop their human capital and enhance career options are now becoming a hindrance to building a brighter future.

Drop in Household Saving According to the Oxford Journal, the United States, once a nation of savers, has transitioned into a country of borrowers with household savings rate dropping from 10% in 1980 to less than 1% by 2006. With such a dramatic decline, family borrowing has replaced savings. As a result, median income families currently spend about 18% of their total earnings on servicing debt.

Families use of credit to replace lost income due to stagnated and decreasing wages have placed most Americans in increasingly vulnerable and unforeseen events such as unemployment, divorce, and illness.

Whether the scholastic investment is good or not, student loan debt is generating ripple effects later in life for both graduates and their parents. Kathy, a Ghanaian, and a mother of three university daughters can attest to the challenges associated with the repayment of student loans. “Being a co-signer to two of my girl's multiple loans, my dream of becoming a registered nurse has become a mere fantasy. My meager salary as a cashier and inabilities of my kids to find jobs that would assist them in the repayment of their high-interest loans keeps me awake at night. The situation is not only affecting my retirement plan, monthly expenses, but my health as well," she lamented.

Income-based Repayment Plan Dee is a 35-year old African American lady who is a shift coordinator at one of Philadelphia's public service departments with two undergraduate degrees from Pierce College. Though her case is not as severe as Kathy's due to her income-based repayment plan, she still worries about the security of her job. “Though I'm not under any particular stress at the moment because of my repayment plan, the eventualities of tomorrow sometimes scare me," she pointed out.

Research findings from Wharton Business School at the University of Pennsylvania and the Department of Family Science at the University of Maryland on Student Debt Crisis, indicate that the impacts of student loan debt are not limited to everyday challenges in the lives of graduates who are trying to pay off their debt are far more endemic. It's delaying marriage, bearing of children, homeownership, probability of going to graduate school or other professional degree programs, and retirement plans.