Robert F. Smith Creates New Initiative to Lessen the Student DebtJuly 3, 2020
According to Forbes, Robert F. Smith is the richest African-American man in the United States. He contributed $34 million in the previous year, which settled the student debt of nearly 400 Morehouse graduates, including the academic debt accrued by their families. He stated that his recent initiative was an attempt to develop a more sustainable paradigm for thousands of scholars.
The Foundation of Student Freedom Initiative
Robert F. Smith is the billionaire who vowed in a launch speech in the past year to clear the student loan accrued by the class of 2019 at Morehouse College. It is opening a new initiative to assist in easing the burden of student debt at HBCUs (Historically Black colleges and universities). The nonprofit organization known as the Student Freedom Initiative is targeted at addressing the out-of-pre proportion loan burden and developing more choices for scholars whose career choices or further academic opportunities may be limited by significant scholar debt.
Smith, the Chief Executive Officer of Vista Equity Partners, believes that the scholars graduating are being set back by their wealth commitment to offset their student loan. The Student Freedom Initiative is set to commence operations in Fall 2021at nearly 11 Historically Black colleges and universities, providing seniors and juniors with STEM (science, technology, engineering, and mathematics) majors a reliable, lower-risk option to high-interest private scholar debt. The list of Historically Black Colleges and universities participating in the first rollout is yet to be completed.
Funding a Worthy Cause
The Student Freedom Initiative, which targets to incorporate 5,000 new scholars every year, is introducing a grant worth $50 million from Fund II Foundation. It is a nonprofit organization of which Robert F. Smith is president and founding director. The Student Freedom Initiative has set a target of raising a minimum of $500 million by October to ensure that the program is sustaining itself through investments and income-based repayments from the graduates. The partners at the program include CEO of the United Negro College Fund Michael Lomax, director at the Hutchins Center for African-American and African Research at Harvard Henry Louis Gates Jr., and the Jain Family Institute and the Education Finance Institute.
All-inclusive American Program
Eventually, Robert F. Smith aspires to grow the Student Freedom Initiative to get to over 100 HBCUs in the United States and other minority-serving organizations. The program has no intention of replacing all student loans or eradicate current debt form the freshman or sophomore student years. However, it is designed to offer a substitute to fixed-payment private loans, high-interest, and Parent PLUS debts, which are non-subsidized federal loans that attract higher interest fees and rates. Students from Historically Black Colleges and universities have a higher likelihood of taking out federal student loans and later taking up Parent PLUS loans compared to their non-HBCU counterparts.
According to a report by the United Negro College Fund, HBCU scholars have a higher probability of turning to private investments for extra funding after already taking federal student loans. The Student Freedom Initiative targets to avert that and projects to provide an average of approximately $32,000 to every scholar throughout their senior and junior years. These students will be required to repay, depending on their income upon graduation.
Giving Hope to a Desperate Population
Goldberg stated that the Student Freedom Initiative would offer a better alternative to scholars who may think of dropping out when encountered with taking on additional high-interest loans to finish their degree. He is hoping it will provide more freedom to students of color to select a career without worrying about their salaries or spending time caring for a loved one without the worry of making loan payments.
According to Goldberg, the Student Freedom Initiative will provide scholars a lower interest rate in comparison to the Parent PLUS rate. It is presently 7.08% and will need scholars to make payments depending on their income for nearly 20 years following their graduation. Goldberg remarked that the legal obligation is for students to pay a part of their income. He added that those without income were exempt from this legal requirement.