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Billionaire pledges to pay off class of 2019’s student loans

Written By: - Date published: 7:57 am, May 21st, 2019 - 50 comments
Categories: education, Ethics, schools, tertiary education, us politics - Tags:

This was a graduation ceremony with a difference.

Watch the video showing the end of his speech to see why.

MSN has the details:

Billionaire investor and philanthropist Robert F. Smith was giving the commencement speech at Morehouse College in Atlanta on Sunday, when he deviated from his prepared remarks to make an announcement: ‘‘My family is going to create a grant to eliminate your student loans!’’

‘‘Everyone started crying and jumping for joy,’’ said a spokesperson for Smith, who asked not to be identified. ‘‘It was him speaking from his heart.’’

It’s hard to estimate the cost of Smith’s gift to the 2019 graduates of the all-male historically black college, but it could be in the range of $5 million to $10 million, according to estimates. There are 400 graduates in the class, and Morehouse costs about $26,000 per year, his spokesperson said.

There was celebration at Morehouse as the grads and their parents processed the news.

Tonga Releford, whose son Charles Releford III is a member of the Class of 2019, told the Atlanta Journal-Constitution that her son’s student loans are an estimated $70,000.

‘‘I feel like it’s Mother’s Day all over again,’’ she told the paper.

Graduate Elijah Dormeus, a business administration major, told the newspaper: ‘‘If I could do a backflip I would. I am deeply ecstatic.’’

Dormeus, 22, who is from Harlem, said he has $90,000 in student loans. His mother, Andrea Dormeus, who drives a school bus, came to his graduation with his five siblings.

Moorehouse College is is the alma mater of African-American community and civil leaders such as Martin Luther King Jr.  

And Smith’s request?  That his fellow graduates (he received an honorary degree that day) look after those coming after them.  From the Washington Post:

Now, I know my class will make sure they pay this forward. I want my class to look at these [alumni], these beautiful Morehouse brothers, and let’s make sure every class has the same opportunity going forward, because we are enough to take care of our own community. We are enough to ensure we have all the opportunities of the American Dream.”

This is an outstanding gesture.  But the same result could be achieved by ensuring that the wealthy pay their fair share of tax and insisting that young people receive the education they deserve no matter how poor they are.

50 comments on “Billionaire pledges to pay off class of 2019’s student loans ”

  1. Sanctuary 1

    As a general principle, socialism is actually about not having to rely on whatever cash the rich decide they have to spare in order for social mobility to work.

  2. Lucy 2

    The man is an investment banker so the probability is that some of the people whose loans he paid off have parents or relations made redundant, lost houses or died because of his investment decisions. But he gets to feel good off the misery of others.

    • Muttonbird 2.1

      +1. The lord giveth and the lord taketh away. In capitalism the wealthy are the lord.

    • Chris T 2.2

      39 minutes

      Shocking time delay before the anti-any one with money lot pipe in……actually anyone with money who isn't left, as Jacinda being rich and upping taxes on poor people doesn't count

      • higherstandard 2.2.1

        Lucy must be seething she can't call him on white privilege.

        • Lucy 2.2.1.1

          Why do I care what colour he is? I am seething about the fact that he has returned a small percentage of the money he has removed from his community. Wealth does not happen without poverty.

    • A 2.3

      I think he's made a small dent in his karma in this gesture.

    • fustercluck 2.4

      Good God! An African American defies stereotypes and becomes a billionaire and spends $40 million on students at an African American liberal arts university and this is your attitude? Churlish does not begin to describe it.

      • Lucy 2.4.1

        sigh doesn't matter what he defies. He is a man who has a billion dollars – one does not get to have that much money by being the nice guy. He could have given money to many causes to improve the lives of lots of people. Instead he gives money to upper middle class black men who already have advantage and privilege. Churlish does not begin to describe how I feel – I am angry at every billionaire, no matter what race, I can not get the drugs I need because a profit needs to be made from my disease, my children need to pay for their education so the taxes for the rich can be low, my rent is high so my landlord can make a profit.

  3. Incognito 3

    Paying your fair share of tax doesn’t get you in the Guardian or WP. Anyway, tax is legalised theft and thus is involuntary, to some (…) wealthy folks that is. The hysterical cries and screams about CGT are still ringing in my ears.

  4. patricia bremner 4

    There are good people inside every bad system. In America money talks. This will be helpful to this years graduates, and may begin a cycle of less debt. It can not be counted on in planning the future as it depends on the kindness of others, and may not continue at a useful level.

  5. WeTheBleeple 5

    Is trickle down meant to be voluntary? Do we live at the mercy of greed's good graces?

  6. Dennis Frank 6

    "But the same result could be achieved by ensuring that the wealthy pay their fair share of tax and insisting that young people receive the education they deserve no matter how poor they are."

    I grew up here in a social system that did that effectively. Despite being a non-believer in socialism, I'm happy to acknowledge the extent to which it has been proven to work in the past, in some countries, for the good of all. Problem is, since the seventies such empirical evidence has become increasingly rare. Can't blame younger generations for having no faith in it, when they can't see a model working properly in the real world.

    So it's reasonable to concede that patronage is being revived as an exemplary model of behaviour for the wealthy. A positive alternative to the `greed is good' ethic that emerged in the eighties. Such altruism is a partial antidote to the social darwinism that market forces create.

  7. A 7

    That's awesome!!

  8. Macro 8

    Well I guess he has to find some way to pay the society in which he lives and works. Especially after Don and Mitch gave him that big beautiful tax relief Xmas present. And not just give 62 cent of every tax dollar to the military.

  9. Macro 9

    The funding of HBCU's such as Moorhouse is reaching crisis levels.

    Nearly half of African-American students who borrowed money defaulted on their loans, according to a recent study. In 2017, the U.S. Department of Education issued a report stating black students with a college degree would owe more than their original student loan balance after 12 years. The report revealed a direct correlation between race and student loans, as well as the need for a solution that addresses those disparities in future education policy. For generations, black students have had to overcome institutionalized and structural barriers to obtain a college degree, only to be sent into a marginalized economy with massive debt that sets them even further behind than their skin color or zip code.

    However Elizabeth Warren has a plan for that! laugh

    https://www.theroot.com/history-lesson-sen-elizabeth-warren-breaks-down-why-h-1834445016

    History Lesson: Sen. Elizabeth Warren Breaks Down Why Her $50 Billion Plan to Fund HBCUs Is Very Necessary

    Warren’s detailed plan addresses racial and socioeconomic disparities to improve the higher education system with five potential policy changes that would be funded by a 2% tax on families earning $50 million income or higher:

    • Create a minimum $50 billion fund for Historically Black Colleges and Universities (HBCUs) and Minority-Serving Institutions (MSIs).
    • Additional federal funding for states that demonstrate substantial improvement in enrollment and graduation rates for lower-income students and students of color.
    • Ban for-profit colleges from receiving any federal dollars while targeting lower-income students, service members, and students of color and leaving them saddled with debt.
    • Require public college audits that identify issues that create shortfalls and propose steps to improve those rates.
    • Prohibit public colleges from considering citizenship status or criminal history in admissions decisions. (Read more about her plan here.)

    In an interview with The Root, Sen. Warren said, “HBCUs have had to do way more with way less, and it is wrong. We have got to face racial discrimination in our education system head on.”

  10. RedLogix 10

    The USA has a long history of philanthropy. It's not confined to the ultra-wealthy, people of all classes are inclined to donate and contribute in whatever manner they can. When it's on this scale it attracts attention, but 99.99% of it goes largely unreported in the media.

    It's how the Americans do redistribution, they prefer to retain some right to choose who they give to, rather than the receiver have an unconstrained right to it. In practise most countries operate some mix of these two modes. NZ tilts towards the universal right to redistribution, but it's not the only way it can work.

    • WeTheBleeple 10.1

      Yeah some of my food I grow goes to struggling families close by. But I don't expect a parade for it.

      I'll never forget working on a U2 concert, where tens of thousands of locals shelled out close to a hundred bucks each to see them. During the concert, Bono – oh great philanthropist – entreats the crowd: "get out your cellphones, isn't that beautiful, now, text this number and donate…"

      They had a brand new set design which is apparently the norm to disguise the fact 'The edge' has played the same riff over and over for forty years.

      Philanthropy from the rich is mostly PR and flimsy atonement.

      • RedLogix 10.1.1

        But I don't expect a parade for it.

        But a thank you is appreciated is it not?

        Culturally us kiwis are always a little uncomfortable with generous donations that are too public, we're always a bit sus around the motives. On the other hand donations that are totally secret arouse questions around what strings might be attached.

        Wealthy people who don't give back to their communities are regarded as selfish and grasping, and if they do give generously they're condemned for 'flimsy atonement'.

        It's all rather inconsistent and confusing.

        • Drowsy M. Kram 10.1.1.1

          This wonderful philanthropic gesture got me thinking.

          Imagine the positive difference the wealthy could make now if they all took a vow of poverty. For example, we know that the richest 1% owned roughly half of the world's wealth in 2017. Just think of the difference that wealth could make to the lives of the poorest 4 billion people. ‘Trickle down‘ on steroids! [But not in a Trumpian way! https://www.cnbc.com/2016/10/19/clinton-trump-wants-biggest-tax-break-to-wealthy-trickle-down-on-steroids.html ]

          Best of all, we might only have to wait a decade or so to be able to do it all again!

          It would be a very Christian sacrifice, would it not?

          https://en.m.wikipedia.org/wiki/Religious_vows

          https://www.cnbc.com/2017/11/14/richest-1-percent-now-own-half-the-worlds-wealth.html

          • RedLogix 10.1.1.1.1

            Indeed enlightened

            Of course globally the top 1% globally is pretty much includes most people in NZ.

            • Andre 10.1.1.1.1.1

              Most people in NZ are part of the top 75 million people in the world? I find that very unlikely. In the top 10% or top 750 million maybe. Just add up the populations above us in income rankings:

              https://en.wikipedia.org/wiki/Median_income

              Hell, Auckland doesn't even make the list of the top 28 cities worldwide ofr numbers of USD millionaires. But places like Alexandria, Nairobi and Lagos do.

              https://en.wikipedia.org/wiki/Millionaire

            • Drowsy M. Kram 10.1.1.1.1.2

              Most people in NZ are among the world's wealthiest 1%? Would that be an example of a convenient evidence-free belief?

              "To reach the top 1 percent worldwide in terms of wealth – not just income but all you own – you’d have to possess [US] $770,000 in net worth, which includes everything from the equity in your home to the value of your investments."

              https://www.investopedia.com/articles/personal-finance/050615/are-you-top-one-percent-world.asp

              NZ is certainly a wealthy country, and the recent NZ property price boom will have propelled some home owners into the global 1%, but your provocative assertion is fanciful. However, with a little local redistribution of wealth, who knows?

              Now there’s an idea! How to redistribute personal wealth in NZ to maximise the number of NZers in the world’s wealthiest 1%. Could we get 30% of NZer over the line?

              • RedLogix

                Feel free to shift the goal posts from income distribution to asset distribution if it pleases you; don't expect me to follow.

                Still it would be fair to say that most kiwis are within the top 2% and almost all in the top 5% or so of income distribution.

                Of course the cool thing about lopping off the top 1% and sending them all to the poverty gulag is that you are now left with another fresh top 1% and you can do the same to them. Rinse and repeat until you have proper communism.

                • Drowsy M. Kram

                  RL, you're not living up to your name. The post is about a billionaire's philantrophic gesture. Does 'billionaire' refers to net wealth, or income?

                  You started the sub-thread @10, mentioning "ultra-wealthy" and "redistribution". No mention of income though. If you meant 'income redistribution', rather than wealth redistribution, then maybe just say so.

                  @10.1.1 you mention "Wealthy people" and "donations", and how you find it "all rather inconsistent and confusing." Still no mention of income.

                  I replied to 10.1.1 @10.1.1.1 (11:52 am), and I didn't mention income either.

                  You replied briefly (@10.1.1.1.1) to me, mentioning “the top 1% globally” – still no mention of ‘income’. My reply (@10.1.1.1.1.2) is now the subject of your “shifting the goalposts” criticism.

                  IMHO it is you who is attempting to shift the goalposts, and I'm happy for others to form their own opinions.

                  • RedLogix

                    The term 'top 1%' can be defined by income or assets. Logically I had in mind income as the basis for my claim.

                    • Drowsy M. Kram

                      Was it not clear from my first reply (@10.1.1.1) that I was focussing on personal wealth? If your focus was on income, then you had ample opportunity to make that clear @10, or @10.1.1, or in your reply at @10.1.1.1.1.

                      Whichever way you play it (wealth, or annual income), your original citation-free reckon was wrong – just a genuine mistake? wink

                      As for sending the entire 1% to the 'poverty gulag', well that would be cruel – so unfair to expect the 1% to cope with median living conditions, let alone poverty. A vow of poverty, on the other hand, would be an admirable choice.

              • mike

                paper wealthy only and a shit load of debt to go with it

          • greywarshark 10.1.1.1.2

            Just tithe themselves 10% from their discretionary budget! But they could never get beyond their road block on that sort of idea and budge it.

        • WeTheBleeple 10.1.1.2

          Yeah, I should have put accent on the word mostly:

          Philanthropy from the rich is mostly PR and flimsy atonement.

    • AB 10.2

      The Americans prefer philanthropy/charity because it contains an the assumption that the original accumulation of wealth is justified – and it is then re-distributed out of 'love' (philo). The right to choose who gets charity maintains the power relationship – there is no surrender or equalising of power between giver and receiver. This lack of equalisation is in fact the opposite of love.

      If on the other hand you don't see this as re-distribution at all – but rather as repatriation of the money to where it should have gone in the first place if markets allocated wealth rationally, then charity doesn't really cut it as a solution.

      • RedLogix 10.2.1

        The right to choose who gets charity maintains the power relationship

        Right there is the problem that arises when the only political tool you have is 'power relationships' and the implicit assumption that all power is bad and can only be used for tyrannical purposes.

        If that were truly the case, why would you support a left wing party into political 'power'? Surely that would be an innately bad thing also?

        • McFlock 10.2.1.1

          Observing that a power relationship exists is not the same as endorsing it.

    • joe90 10.3

      It's how the Americans do redistribution,

      That, and military Keynesianism.

      According to an analysis by the DoD Office of Economic Adjustment (OEA), the department spent $408 billion on payroll and contracts in Fiscal Year 2015, approximately 2.3 percent of U.S. gross domestic product (GDP).

      http://www.ncsl.org/research/military-and-veterans-affairs/military-s-impact-on-state-economies.aspx

  11. AB 11

    A good thing for him to do – so well done.

    But it has no structural value whatsoever – what about last year's graduates, or next year's, or those at a different college? And the downside is that it plays into the 'billionaire capitalist saviour' delusion that attaches itself to individuals from time to time (Elon Musk, Bill Gates …) and probably holds us all back from seeking those structural solutions.

    Though it fits well with our superficial contemporary focus on individuals and the idea of celebrity – so it will get a lot of coverage.

  12. Adrian Thornton 12

    Excellent last sentence there MS, here is a very good conversation on KPFA with author of ' No Such Thing as a Free Gift' Linsey McGoey, well worth a listen to anyone interested in the politics of philanthropy going forward.

    https://kpfa.org/episode/against-the-grain-october-5-2016/

    " In an era of massive cuts to social services, the largesse of the wealthy seems a blessing. But what do the rich get in return for their philanthropy? Linsey McGoey argues that they receive both financial benefits and great influence over policy. She traces the history of philanthropy in the United States and discusses the Gates Foundation’s role in shaping primary and secondary school education, pharmaceutical patents, and more — with very little media scrutiny.

    • Siobhan 12.1

      No I have to disagree with you there Adrian, its not a excellent sentence.

      "This is an outstanding gesture. But the same result could be achieved by ensuring that the wealthy pay their fair share of tax"

      If tax was paid properly it would not be THE SAME RESULT, ie one small group benefiting, it would be all students every year.

      An entirely different kettle of fish.

  13. Dennis Frank 13

    Geoff Robinson is a political historian and lecturer in History and Politics at Deakin University, in Geelong, Australia. "He is currently completing a book on the fate of the Australian left since the fall of European communism." https://theconversation.com/profiles/geoffrey-robinson-7303

    He's had a go at explaining their election result: https://thespinoff.co.nz/politics/20-05-2019/labors-loss-reveals-its-trouble-convincing-australians-it-can-improve-their-lives/

    "Labor’s failure lay in its inability to convince enough voters that its policies could actually improve their material conditions. Labor state governments can provide material things like schools, hospitals and solar panels, and voters delight in these. Federal Labor, meanwhile, claimed that the election was a referendum on wages. This mobilised the left’s mass support base: the unions, public-sector heartland and its remaining private sector outposts. The left created the simulacrum of a social movement: rallies, rallies and rallies, and electoral door-knocking. Outside of the left’s world, however, this appeal failed to strike much of a chord."

    Preaching to the converted is never good electoral politics. Traditional political wisdom always specifies that, where left/right tribal loyalties fail to provide a majority for one or the other, centrists or non-aligned voters create the outcome. Labour has known this in the past – the mystery lies in evaporation of that gnosis on the left. I usually diagnose delusional thinking, but I'd prefer an explanation for why that happens – using deep psychology.

    "Bill Shorten is a “true believer”, one who grounded his politics in Labor traditions and history, rather than an explicit ideology. The left often flees to history, even if for most of its members the history of labour is passé compared to the more exciting fields of culture and identity."

    Maybe he's onto it here. Re-interpreting this, could be traditional gnosis got dispelled by a shift into culture-warfare attitudes. Blaming identity politics doesn't get us understanding – we must go deeper into what drives tribal polarisation.

    • RedLogix 13.1

      we must go deeper into what drives tribal polarisation.

      It's only 18 minutes:

      https://www.youtube.com/watch?v=8SOQduoLgRw

      • Dennis Frank 13.1.1

        Thanks, that was good. I wasn't very impressed when I read his book about the righteous mind several years ago, but he did better illuminating the psychology of morality in that talk.

    • greywarshark 13.2

      This has good points and on similar line with Open Mike 2.1.1, me and Adrian T is going to add more when he has time.

    • Adrian Thornton 13.3

      What exactly does he mean when he says.." Bill Shorten is a “true believer”, one who grounded his politics in Labor traditions and history, rather than an explicit ideology"

      The traditional and historical Left Labour is an ideology, you can't supposedly submerge yourself it it's traditions and history without believing and advocating for it's core ideologies.

      If you only appear on the surface as labour but do not promote those beliefs in your manifesto, thereby rejecting it's ideology, then you are only left with the likes of New Labour UK (now defunct), Labour NZ amongst others, parties now struggling (struggled) to find a coherent political voice. Whereas Labour parties and leaders that advocate those old ideologies and have it at the centre of their manifestos are doing just fine..Jeremy Corbyn and Bernie Sanders of course come to mind.

      Now back to work…again.

      • Dennis Frank 13.3.1

        Could be he means Shorten is a tribal loyalist rather than a leftist ideologue. Not many people remaining nowadays who cling to the old class-warfare notion, eh?

        Throughout my life I've seen Labour present itself as a vehicle for both working class and middle class simultaneously. Everyone knows labourers aren't middle class. So brand authenticity got ditched long before I was born, and I'll be 70 soon.

        The organised attempt to represent two social classes simultaneously is ambitious, but flawed. It presumes the two share a common-interest view. However proof that middle-class professionals acknowledge solidarity with unionists has never been validated by social science research, as far as I know. Neoliberalism has proved the middle class are aspiring capitalists. The CGT outcome, for instance, shows they feel more of a common-interest view with the upper class than the lower…

        • Adrian Thornton 13.3.1.1

          Tribal loyalist..that's a new one to me, tell me what do you think a Labour 'tribal loyalist' actually believes in?

          I think that the CGT analogy is a bit unfair, as if is plainly obvious that Labour never had their heart in it, it was a non starter from the word go with this lot of centerists.

          As far as the middle class goes, I don't think Liberalism proved the middle class to be "aspiring capitalists", but what it did do was unwittingly unleash that most unpleasant and often destructive of human conditions..greed, and therein lays Liberalisms secret power…well IMO anyway.

  14. greywarshark 14

    This is one good educational idea set up by a black man from the States and it will be ongoing as there is a Trust. Perhaps we could support it. He has gone back to the states to see if he could replicate it there.

    https://inzoneeducation.org.nz/

    The InZone Education Foundation is a New Zealand registered charitable trust that aims to inspire and support Māori and Pasifika youth to take their place in the cultural, economic and civic leadership of Aotearoa New Zealand.

    We do this by providing kāinga (hostels) which are “InZone” for high performing schools and we partner with the schools to ensure students achieve top educational outcomes. Our kāinga enable our students to live and learn in a supportive whānau environment with a Māori and Christian kaupapa. In this environment, we aim to support, inspire and empower our rangatahi to achieve to their full potential.

  15. Andre 15

    Interesting observation here that this gift sets up a natural economics experiment.

    https://www.vox.com/future-perfect/2019/5/20/18632520/morehouse-college-graduation-class-size-robert-f-smith-billionaire

    And it exposes a bit of detail about Smith's efforts to ensure his personal taxes stay much lower than other people's.

  16. patricia bremner 16

    Bill Shorten should have done an Andrew Little. He hung on as an albatross.

    He was a good but uninspiring man. He made Scomo look the better Leader. Along with horrible false ads on facebook etc, about policies, which were drowning the true position.

    Australians turn off any criticism of Trump the war machine or oil and mining. They believe in charities like the Foundation behind Life Flight helicopter service, which is getting less funding as people in Queensland and elsewhere in Australia feel the down turn.
    What people forget is this works in good times but falls over when truly needed.

    While farmers struggle with a drought which is now severely impacting the wheat yield to the point of raising bread prices, the summer fires will be worse and many NZers may decide to return, putting strain on our infrastructure
    and charities.
    Their unemployment rate is increasing and property prices have plummeted, leaving those who leveraged their homes to invest in the stock market teetering on the brink.

    The banking sector has been shown to be lying greedy fecks during the inquiry. That will not change as they foreclose on homes, as they did on farms previously in the last downturn in values caused by drought conditions.

    The gaming of the electoral system to the advantage of the wealthy corporate and lobby interests is almost considered reasonable. "It is their money after all" Nah, it is often taxes they like Trump have gained by gaming the system.

    Further those who vote say it is hard to know who you will get in a close run election as preferences can alter outcomes. Just as here we can get false parties given a safe seat to game numbers, Palmer did that with his $50 million "investment" and gift of preferences to the winning group.

    All this will make life harder for the struggling and the post Feb 1 visa holding New Zealanders resident there.

    Bridges was thrilled when Scomo won and said "Lessons could be learned here"…. so those dirty tactics have started. He has publicly aligned his party with the USA. and guns?…lobbying?…foreign money?….false advertising? ..Charities? The whole nine yards I would think!!

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