Robert F. Smith’s Student Freedom InitiativeJune 29, 2020
Robert F. Smith is the CEO and chairperson of Vista Equity Partners, founded in 2000. It is a private equity group that specializes in software companies’ investments. Currently, it manages investments worth over $46 billion and has a portfolio comprising of over 50 software firms with more than 60,000 employees worldwide. He attended Cornell for his undergraduate degree in Chemical Engineering before getting a Master of Business Administration from Colombia. Before founding his company, he worked at Kraft General Foods and Goldman Sachs.
The Student Freedom Initiative
Before the birth of the Student Freedom Initiative, Robert F. Smith pledged to pay off Morehouse College’s 2019 class student debts. It amounted to $34 million, which took care of loans for approximately 400 students, plus the education debt sustained by the families. He continued his efforts to ease the burden of student loans encountered by learners at Historically Black Colleges and Universities (HBCUs) by developing the student freedom initiative in 2020. It is a non-profit that intends to address the unbalanced loan burden encountered by black students and give them more options to further their education without incurring massive debts. Smith hopes to grow the program to reach the United States’ over 100 HBCUs and other minority learning institutions.
During Smith’s discussion with Edward Felsenthal, Time’s editor-in-chief, he spoke of how absurd it is for students to complete the college education only to use a lot of their wealth paying off their student debt. The new initiative aims to develop a more sustainable model for several students. Its launch will happen in the fall of 2021 at about 11 HBCUs, and the initiative intends to add 5000 new students yearly. The list of colleges and universities that will take part in the roll-out is yet to be finalized. It will offer senior and junior STEM students an alternative low-risk and flexible loans.
Besides the Fund II Foundation’s $50 million grant, the program aims to raise a minimum of 500 million dollars by October to be self-sufficient. The initiative’s partners include Harvard’s Hutchins Center for African and African-American Research director, Henry Louis Gates Jr., United Negro College’s CEO Michael Lomax, Education Finance Institute, and the Jain Family Institute.
The Student Debt Crisis
A report by the United Negro College Fund indicates that HBCU students have a higher chance of taking out federal student loans then apply for private loans and parent PLUS loans for more funding than non-HBCU learners. Black students usually owe more than white students after graduation, typically by an average of $7,400 and the racial wealth gap contributes to making the situation worse as time goes.
HBCUs typically have smaller endowments than other learning institutions hence interfering with the ability to provide considerable financial assistance. Furthermore, HBCU students obtain loans at higher rates, from costly sources, graduate with massive debts, and face significant obstacles when paying back. However, these institutions remain essential because they are responsible for producing 27% of African-American STEM undergraduate degree graduates.
The benefits of the Student Freedom Initiative
The program does not intend to wipe out existing sophomore and freshman year’s debt or replace every student loan; instead, it aims to offer an average of $32,000 to every student during their senior and junior years. The credits will be paid according to income upon graduation for up to 20 years. It will prevent students from dropping out of college and allow them to pick their dream careers without basing their decision on salary. For instance, it will give learners choose to make their choices freely; for example, one can decide to change jobs without the fear of failing to pay back their student loans.
The initiative comes at a time when the world continues to battle racism. Smith spoke of the systemic issues that result from systemic racism and called for corporate leaders to do more than offering donations. He believes that he has to awaken, educate, and enable others who wish to deconstruct these issues.