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Generosity Alone Won’t Fix the Student Debt Crisis

It’s graduation season – an exciting (and sometimes daunting) time for graduates and their families. On the one hand, they are celebrating the wonderful accomplishments of attaining a degree. On the other, the lack of uncertainty about the future can be cause for anxiety.

This past weekend, I was enjoying a friend’s commencement exercises when my phone began to vibrate with incredulous messages from my Spelman sisters, Morehouse brothers, and other HBCU alum. During his remarks at Morehouse College’s commencement ceremony, billionaire Robert F. Smith pledged to pay off the student loans of everyone in the 2019 graduation class.

Smith’s grand gesture is happening against the backdrop of a national conversation on student debt and college affordability. Today, over 44 million Americans have student loans, totaling more than $1.5 trillion. And of course, student debt disproportionally affects black students. In 2016, for example, 42 percent of black students had student debt compared to 34 percent of white families, and black students hold $7,400 more debt than their white counterparts. With the college admissions scandal still fresh in people’s memories, it is certainly heartwarming to see a wealthy person using their resources for good.

The roughly 400 students in Morehouse’s class of 2019 has about $40 million in debt combined. That’s an average of about $100,000 of loans each student had to take out. And – judging from the faces and reactions among the students and their parents – leaving college without the burden of student loans was nothing short of a miracle.

While I am happy for Morehouse’s 2019 graduates, I can’t help but think of the rest of the graduates in the country who didn’t have a billionaire philanthropist at their commencement ceremony. For me, Smith’s action highlights the importance of leaving college without a heavy burden of student debt. It’s a reminder that we need a college degree to be affordable for everyone and it emphasizes why manageable loan repayments and loan forgiveness programs are essential for so many people.

As a Wall Street Journal article recently pointed out, young people are continuing to fall behind their parents’ generation financially, and may never catch up. So we know that in today’s economy, a college degree is no longer a nice-to-have, but a must-have. But as our Financial Health of Young America report shows, although a college degree is still one of the best pathways to financial security, students leaving college with debt are not reaping all the benefits of having a degree. For example, college graduates with student debt have lower net wealth than those with only a high school education.

This is why Smith’s pledge to eliminate the debt of every 2019 graduate at this all-male, historically black college is literally life-changing. Without the burden of student debt, these students are leaving school with a financial advantage over many of their peers. They can help support their families while also saving for their own futures. Or they won’t need to put off other important milestones, like buying a house or having children, because of high student loan payments they have to make every month. Smith’s generosity will have an impact not just on these graduates and their families. They will, as he said, “pay this forward” to their communities and to future generations.

But those under the crushing burden of student debt should not have to rely on a billionaire’s bailout to have a financially stable life after college. Today’s students are more diverse than previous generations and they are going to school within a higher education system that was not built to work for them. Many are first-generation college students, students of color, and immigrants. Nearly half are financially independent of their parents and nearly 1 in 5 are raising children themselves. Additionally, over two-thirds are also balancing a job with their studies.

Today’s students need policy solutions that work for everyone, like encouraging states to reinvest in higher education and increasing Pell grants and other types of need-based aid so that more students, especially those with low-incomes, can afford to attend college. Or making sure students have access to resources that would help them complete their degree, like on-campus childcare. Or income-based student loan repayment options so that they never have to make a difficult choice between paying rent or putting food on the table and making a student loan payment. And of course, we need student loan forgiveness programs so that those who choose to pursue careers serving the greater good, like public servants and teachers, can do so without worrying about how they’re going to pay back their student loans. As Congress prepares to reauthorize the Higher Education Act, we have the opportunity to do just that.

So, let’s give credit where it’s due – Robert Smith has done something remarkable for these Morehouse graduates. We urge our elected officials to take action on behalf of all the graduates around the country who aren’t lucky enough to have a generous benefactor and make sure our higher education system works for them, too.