The CARES Act, which was signed into law on March 27, 2020, continues to help students at Historically Black Colleges and Universities (HBCUs). Through this bill, the U.S. Department of Education disbursed approximately $1.6 billion to 45 HBCUs to go toward relieving debt, so that the schools can focus their resources on supporting students and staff. For example, Florida A&M University used the funds appropriated from the CARES Act to clear the loan balances of more than 7,500 students.
Debt Disparity Among Students of Color
This funding is critically important considering the ever increasing student debt disparity that exists between white students and students of color. An analysis of data gathered by the Wall Street Journal found that over 84% of Black college graduates in their 30s owe student debt, compared to 53% of their white peers. Students often pursue higher education to move up the socio-economic ladder, but the disproportionate amount of debt that students of color take on has widened the pre-existing racial wealth gap in the U.S. This is evident as the same Wall Street Journal report stated that the median net worth for Black college graduate households plummeted to $8,200 as of 2019 from $50,400 three decades ago. At the same time, the median net worth of white college graduates increased from $118,000 to $138,000.
HBCUs play an important role in the lives of Black students and their families. According to United Nations Framework Classification for Resources (UNFC), these schools “enroll approximately 10% of all African American students and produce almost 20% of all African American graduates.” Relieving student loan debt for HBCU students can help break the cycle of debt that has helped marginalize families in the Black community for generations. When students are relieved of the constant worry about paying off their loans, they are able to prioritize savings for the future, pursue better job opportunities and potentially even further their education.
Forgiving the debt not only helps the students, but it can be beneficial to universities as well. Walter M. Kimbrough, president of Dillard University, an HBCU in New Orleans, explained to NPR that students are more likely to drop out when they can’t pay their debts, which lowers the graduation rate. “So for us, it makes a lot of sense because you can eliminate that debt so that the student can continue with their education and graduate,” Kimbrough said. “It’s a win for everybody in this situation.”
Robert F. Smith is working toward solutions to help relieve student loan debt and close the racial wealth gap. “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,” he said in an interview with TIME Magazine. In 2019, Smith surprised the graduating class of Morehouse College, an HBCU, by pledging to pay off the student loan debt of the entire class — a gift that helped nearly 400 graduates.
Additionally, Smith is Chairman of Student Freedom Initiative, a single purpose nonprofit organization, created with the intention to free students attending Minority Serving Institutions (MSIs) from student loan debt so they are able to achieve their true potential. The program was initially funded through a $50 million donation from Fund II Foundation, an organization for which Smith is founding director and President. Smith also made an additional $50 million personal contribution to the launch of Student Freedom initiative in October 2020.
Learn more about how Student Freedom Initiative is raising millions of dollars for STEM students attending MSIs and what its programs support on a growing number of HBCU campuses.