Though relatively unknown outside of finance circles until recently, 57-year-old private equity billionaire Robert F. Smith made headlines last year for vowing to wipe out the student debt of the entire 2019 graduating class of Morehouse College—worth tens of millions. “On behalf of the eight generations of my family that have been in this country, we’re going to put a little fuel in your bus… This is my class, 2019. And my family is making a grant to eliminate their student loans,” Smith said at the ceremony.
Building upon that gesture, Fund II Foundation, under Smith’s leadership, went on to launch the Student Freedom Initiative with a $50 million grant, offering Black juniors and seniors majoring in STEM fields at HBCUs a flexible, lower-risk alternative to private high-interest student loans. Now comes news that he made a personal $50 million gift to the Student Freedom Initiative, matching the initial sum provided by the Fund II Foundation back in the summer. The initiative aims to serve as a catalyst for freedom in professional and life choices for students attending HBCUs and other minority serving institutions.
In recent weeks, Smith has been in the news for different reasons. He recently avoided prosecution by entering into an agreement with the Department of Justice in exchange for cooperating with the investigation of billionaire Robert Brockman, who has been indicted in the largest tax evasion case in U.S. history. Smith is not the first Wall Street donor to deal with legal trouble, but the news will likely strain the reputation he has cultivated in recent years. Public controversy can sometimes spur giving in an attempt at image rehabilitation. But to be clear, Smith had already joined the philanthropic big leagues. And as a Giving Pledge signatory, he’ll likely continue to be one of the nation’s highest-profile donors.
Beyond his Morehouse announcement, gifts from Fund II Foundation and Smith, the wealthiest Black American, have come in rapid succession. Earlier this year, I covered Smith’s work with the Prostate Cancer Foundation to tackle the disease’s disproportionate impacts on Black men, who are 76% more likely to develop prostate cancer than white men, and more than twice as likely to die from the disease compared to men of other ethnicities.
To date, the Fund II Foundation has made nearly 80 grants worth some $250 million, and combating disparities in education and health lies at the core of Smith’s escalating philanthropy.
The Student Freedom Initiative will offer a student and family-centric, income-contingent payment alternative to high-cost, fixed-payment debt. The initiative also offers paid internships in a student’s area of study, tutoring and mentorships, and targeted HBCU capacity building.
This multi-pronged approach tackles several issues in the HBCU space. As we’ve covered, the endowments and funding at HBCUs lag far behind predominantly white institutions and rely heavily on a limited number of donors. Black donors like Oprah Winfrey and baseball legend Hank Aaron have long supported these schools, serving as critical allies. Smith has now emerged as one of their most bullish supporters.
While the student debt crisis touches many communities, HBCU students face disproportionally high debt when they graduate. When the Wall Street Journal analyzed 2017 Department of Education Data, they found, among other things, that the majority of HBCU graduates hadn’t paid down even $1 of their original loan balances in the first few years out of school. HBCU alumni also have a median federal debt load of about $29,000 at graduation—32% above graduates of other public and nonprofit four-year schools.
And perhaps most staggeringly, according to the Student Freedom Initiative, 65% of the wealth of African American families is tied up in debt incurred for education.
“You think about these students graduating and then plowing so much of their wealth opportunity into supporting this student debt, that’s a travesty in and of itself,” Smith said during a TIME 100 Talks discussion. “I think it’s important that we do these things at scale and en masse because that’s how you lift up entire communities… Of course, we all like the great one story, but I want thousands of these stories. And I want thousands of Robert Smiths out there who are actually looking to do some things in fields that are exciting to them and are giving back.”
The son of two Ph.D.s, Smith convinced Bell Labs to give him an internship when he was still in high school. Holding a Cornell chemical engineering degree, Smith has long been interested in STEM education and expanding the pipeline of people of color in STEM careers. The Fund II Foundation gave $50 million to establish an endowment for the Cornell University School of Chemical and Biomolecular Engineering. The bulk of the funds were dedicated to scholarship and fellowship support for groups traditionally underrepresented in engineering and technology—particularly African American and female students.
The Student Freedom Initiative also begins with a STEM focus, starting at 11 HBCUs that will be announced before the end of November. The program will be made available incrementally to all qualifying STEM juniors and seniors at all HBCUs over the next five years, following the fall 2021 academic year. Every $10 million invested in the program will cover 100 new STEM students at HBCUs every year in perpetuity.
With board membership that includes Michael Lomax, CEO of the United Negro College Fund, Skip Gates and Bob Jain, founder and chairman of the Jain Family Institute, the Student Freedom Initiative team worked to identify systemic problems with the current student loan structure. With limited options, many students and their families have little choice but to turn to Parent PLUS loans and private loans that account for well more than half of the debt incurred to attend HBCUs.
What’s notable about Smith’s growing education giving is its focus on both predominantly white institutions and HBCUs. Upwardly mobile Black Americans often put a premium on education at prominent Ivy or liberal arts schools, believing it’s the best foundation for success in this country. It is certainly the wisdom this writer received growing up. But while the Cornell and Columbia-educated Smith has focused on diversifying historically white institutions, he’s simultaneously put a premium on empowering historically black institutions and those who attend them.