On Sunday, 397 students at Morehouse College arrived for their commencement ceremonies prepared to enter the workforce, many with significant loads of student debt. But after the commencement speech by Robert Smith, the billionaire founder of Vista Equity Partners, the students were debt free.
For the generation that is more saddled with student loan debt than any previous generation, Smith’s decision to eliminate the graduating class' student debt struck a powerful chord. Throughout the country, the gesture received praise but also shone a light on the grim reality of the burden of student debt in the United States.
During an interview with Boston Public Radio on Tuesday, Nancy Koehn, a historian at the Harvard Business School where she holds the James E. Robison chair of Business Administration, said that while it underscores the increasing costs of higher education, Smith deserves credit for eliminating the students’ debt burden.
“It’s going to change, undoubtedly, the lives of 397 graduates, and those lives will have more freedom," Koehn said. "Many of them may have a deeper sense of obligation having had this helping hand.”
Some were quick to pounce on the fact that while Smith’s offer was generous, it shouldn’t mask the fact that the billionaire has also supported lower tax breaks for the wealthy. More tax breaks for the wealthy would reduce the government’s ability to do implement debt forgiveness programs on the scale that presidential candidate Sen. Elizabeth Warren has proposed.
“Amid the worthy praise for Robert Smith’s gift, a bitter truth: Smith has opposed closing the carried-interest loophole, which enriches his industry and may cost the government $18 billion a year,” Anand Giridharadas, an editor at large for Time Magazine wrote on Twitter. “Closing it would raise enough to do 450 such gifts a year.”
Koehn feels similarly. According to her, Smith’s gift is part of a long history of wealthy elites who often had limited tax burdens donating large amounts of their wealth to charities, universities and museums.
“This argument is not new, and it is important,” Koehn said. “These gifts open up the conversation. I don’t want us to lose sight of something that in this toxic time is so easy to fall out of our vision.”
In the midst of the debate, however, Koehn does believe Smith’s gift was genuine.
“He’s trying to do something that’s more than a publicity gig by a long shot, and we don’t want to miss that piece either while [having] a legitimate debate about why philanthropy is filling in the gaps of a dysfunctional national government,” Koehn said.