Billionaire pays $34 million to settle Morehouse student loan debt

A private equity billionaire who vowed to pay off the student loan debt for nearly 400 spring graduates of Morehouse College has settled up, and the bill was less than he pledged to cover, the institution said Friday.

"Robert F. Smith, the Founder, Chairman & CEO of Vista Equity Partners, and his family have donated $34 million to the new Morehouse College Student Success Program to pay off the loans that students and parents of the Class of 2019 accumulated to fund a Morehouse education," the school said in a statement.

Smith promised in May to pay as much as $40 million to cover the class of 2019's student debt at one of the crown jewels of the nation's historically black colleges and universities.

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The richest American families
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The richest American families

28. The Gallo family

Net worth:$10.7 billion

Source of wealth: E & J Gallo Winery

The Gallo family fortune is derived from a few avenues. Brothers Ernest and Julio Gallo founded the world's largest winemaker in Modesto, California. Their other brother, Joseph, assisted with the family business until he opened his first dairy and sold cheese as "Joseph Gallow Cheese." His children currently run Joseph Farms, while the descendants of Ernest and Julio run E & J Gallo Winery, which generates estimated annual revenues of $3.8 billion. The company sells more than wine these days, having added liquor to the list.

T27. The Rockefeller family

Net worth:$11 billion

Source of wealth: Standard Oil

John D. Rockefeller became America's first billionaire after founding Standard Oil in 1870, which eventually controlled a majority of the country's oil refining. He and his son, John Jr., donated more than $1 billion in philanthropic efforts. The family's fortune is split among 174 members.

T27. The Cathy family

Net worth:$11 billion

Source of wealth: Chick-fil-A

Samuel Truett Cathy founded fast-food chain Chick-fil-A in 1967. Since then, the family-owned business has remained in the hands of second- and third-generation family members. Truett's sons, Dan Cathy and Don "Bubba" Cathy, run the company as CEO and executive vice president, respectively — they each have a reported net worth of $5.5 billion, according to the Forbes 400.

T27. The Butt family

Net worth:$11 billion

Source of wealth: H.E. Butt

Florence Butt founded H-E-B grocery store in Texas in 1905, which her son Howard expanded throughout the state when he took over the company in the 1920s. His son, Charles, is the majority shareholder and currently runs the company, which has 400 stores in Texas and Mexico andgenerates $25 billion in annual sales. Charles' siblings and two nephews also have stakes in the business.

24. The Stryker family

Net worth:$11.1 billion

Source of wealth: Stryker Corp.

Homer Stryker founded medical-equipment company Stryker Corp. His grandchildren — siblings Pat, Jon, and Ronda — each inherited a stake in the company, which generated $12 billion in sales in 2017. Ronda is the only sibling to serve on the board. All three are philanthropistsand have donated at least $855 million collectively to various causes and foundations.

23. The Mellon family

Net worth:$11.5 billion

Source of wealth: Mellon Bank

The Mellon family fortune originated when Thomas Mellon invested in coal and real estate in the 1860s — he was so successful he used the investment money to foundMellon Bank. He left his fortune to his children to grow. Between his direct descendants and future generations, they did just that, investing in companies that later becameALOCOA and Gulf Oil (now Chevron) and owning companies in media and the railroad industry.

Matthew Mellon was the face of the family until his untimely death in April 2018.

22. The Marshall family

Net worth:$12 billion

Source of wealth: Investments

The Marshall family's wealth is diversified. J. Howard Marshall II traded his Great Northern Oil Company shares for an estimated 15% stake in the Koch Industries. He passed on the stock to his son, E. Pierce Marshall, which then went to his wife and children when he died. The family has spent millions of their fortune on lawyers for J. Howard II, who had a short-term marriage to Anna Nicole Smith.

21. The Brown family

Net worth:$12.3 billion

Source of wealth: Brown-Forman Corp.

The Brown family is behind Jack Daniel's, Woodford Reserve, and Old Forester, among other alcohol brands. An estimated 25 family members own more than half of Brown-Forman Corp., which began with pharmaceuticals salesman George Garvin Brown in 1870.

20. The Sackler family

Net worth:$13 billion

Source of wealth: Purdue Pharma

The Sackler brothers — Arthur, Mortimer, and Raymond — founded Purdue Pharma in the 1950s. The business skyrocketed when it began selling OxyContin in 1995. By 2002, Purdue was generating $1.6 billion worth of the painkiller.

The company has spent hundreds of millions settling various lawsuits over mis-branding OxyContin and generates $3 billion in annual sales today. The Sackler family still completely owns the company and the fortune is shared among some 20 family members.

19. The Goldman family

Net worth: $13.2 billion

Source of wealth: Solil Management

The Goldman family's wealth comes from real estate — they own 400-plus properties in New York City, including a 17% stake in the World Trade Center developments. Sol Goldman began Solil Management when he began buying foreclosed properties at bargain prices in the 1950s.

Today, his daughter Jane Goldman, runs the company. She and her siblings own 25% of the company, with assets worth an estimated $12 billion. Sol's nephew Lloyd Goldman runs the family's real estate firm, BLDG Management, which has another 17% stake in the World Trade Center.

18. The Bass family

Net worth:$13.3 billion

Source of wealth: Oil

In 1959, the oil tycoon Sid Richardson left his nephews Robert, Sid, Lee, and Edward $2.8 million each. They then diversified the money. The four brothers received $5.6 billion in stock after selling their oil company to ExxonMobil in 2017. They could reap payouts worth up to $1 billion.

17. The Busch family

Net worth:$13.4 billion

Source of wealth: Anheuser-Busch

The Busch family fortune's roots in beer date back to 1876 when Adolphus Busch created what is now known today asBudweiser. While the company passed through each family generation, an estimated 25% of the business was sold between 1989 and 2008, and it was fully bought out for $52 billion in 2008.

Part of the family launched back into the business with William K Busch Brewing. Roughly 30 members of the family split the fortune.

16. The Hunt family

Net worth:$13.7 billion

Source of wealth: Hunt Oil Company

H.L. Hunt laid the foundation for his family's fortune withHunt Oil Company. His many heirs (he had 14 children) command several fortunes, from Hunt Oil and Petro-Hunt to Rosewood Hotels & Resorts. His children spend their billions on real estate, like the 6-million-square-foot underground business park SubTropolis, and sports teams — they own the Kansas City Chiefs and have a minority stake in the Chicago Bulls.

15. The du Pont family

Net worth:$14.3 billion

Source of wealth: DuPont

The du Pont fortune is one of the oldest and most widely shared fortunes on this list. Chemicals giant DuPont was founded in 1802 as a gunpowder manufacturer. Over time, it evolved into producing everything from dynamite to plastics and invented nylon and Teflon. About 3,500 family members share the chunk of substantial shares in the company, although none actually run the company.

14. The Ziff family

Net worth:$14.4 billion

Source of wealth: Ziff Davis Inc.

William Ziff Jr. sold the magazine publisher his father created, Ziff Davis Inc., which published PC Magazine, for $1.4 billion in 1994. His sons, Daniel, Robert, and Dirk, grow their inheritance through Ziff Brothers Investments and reportedly invest some of their billions with managers who use to work at their hedge funds.

The brothers also own several homes in Aspen and have put their money toward philanthropic efforts.

13. The Dorrance family

Net worth:$17.1 billion

Source of wealth: Campbell's Soup

An estimated 11 members of the Dorrance family own more than 50% of Campbell's Soup, which John T. Dorrance invented the formula for in the late 1800s. Today, the company owns more than soup, including brands V8 and Pepperidge Farm, generating more than $8 billion in annual revenue. Two of Dorrance's billionaire grandchildren and one great grandchild are board members.

12. The SC Johnson family

Net worth:$18.2 billion

Source of wealth: SC Johnson

The Johnson family is behind SC Johnson, which produces cleaning products such as Pledge, Glade, and Windex. The company was founded by its namesake in 1882 and was eventually taken over by son Herbert Fisk Johnson. Herbert died in 1928 without a will, and the family reportedly feuded over the inheritance until it was eventually divided between his two children, Herbert Fisk Jr. and Henrietta Johnson Louis. Fifth-generation Herbert Fisk Johnson III acts as the current CEO and chairman of the company.

11. The Newhouse family

Net worth:$18.5 billion

Source of wealth: Advance Publications

The Newhouse family's wealth derives from the publishing giant Sam Newhouse created. Advance Publications owns Condé Nast Publications and more than 25 newspapers in America, as well as Reddit and a stake in Discovery Communications. In April 2016, Sam's sons sold cable TV company Bright House Networks for $11.4 billion in cash and stock.

10. The Lauder family

Net worth:$22.4 billion

Source of wealth: Estée Lauder

In 1947, Estée Lauder received her first major order for $800 of skincare products from Saks Fifth Avenue. Today,the company, which includes 30 brands of makeup including MAC and Clinique, generates $12 billion in revenue from the sale of cosmetics and fragrances.

The Lauders are active philanthropists, and sons Leonard and Ronald are major art collectors. Leonard donated $1 billion worth of paintings and sculptures to the Met. The family also owns a lot of real estate.

9. The Hearst family

Net worth:$24.5 billion

Source of wealth: Hearst Corporation

About 67 family members share the fortune that William Randolph Hearst created when he took over the San Francisco Examiner in the late 1800s. Soon after, Hearstacquired other newspapers and forayed into radio and TV, creating the foundation for today's media giant, Hearst Corporation, which owns several newspapers, nearly 300 magazines, TV and radio stations, and stakes in cable TV channels.

Hearst used to own what is now one of the most expensive homes in America.

8. The Duncan family

Net worth:$24.8 billion

Source of wealth: Enterprise Products Partners

Dan L. Duncan founded gas and oil company Enterprise Products Partners in 1968 with just $10,000. After he died in 2010, the company remained under family control and his four children inherited a $10 billion estate. The family fortune has since more than doubled.

7. The Pritzker family

Net worth: $26.5 billion

Source of wealth: Hyatt Hotels

A.N. Pritzker and sons Jay, Donald, and Robert created the family's wealth by founding the Hyatt Hotel chain and investing in holdings, such as Marmon Group. Today, the fortune is split among 13 family members, 11 of whom are billionaires. They reportedly spent much of the 2000's arguing over trusts, ultimately dividing up the fortune at the end.

Members of the Pritzker family have also been involved in politics. Penny Pritzker, Donald's daughter, is the former US Secretary of Commerce. Her brother, J.B. Pritzker was the national co-chairman of Hillary Clinton's 2008 presidential campaign and the Democratic candidate in the 2018 Illinois gubernatorial election.

6. The Cox family

Net worth:$37.2 billion

Source of wealth: Cox Enterprises

Cox Enterprises has touched a number of industries — cable and broadband (Cox Communications), newspapers and radio stations (Cox Media Group), and automotive. It generates about $20 billion in revenue.

Founder James Cox's five grandchildren share the family fortune.

5. The (Edward) Johnson family

Net worth:$38.7 billion

Source of wealth: Fidelity

Edward C. Johnson founded the world's second-largest mutual fund company, Fidelity, in 1946, which has been run at the hands of three Johnson generations since. It's currently helmed by his granddaughter, Abigail Johnson. The family owns 49% of the company, which is shared among four members.

4. The Cargill-MacMillan family

Net worth:$38.8 billion

Source of wealth: Cargill Inc.

William W. Cargill founded agribusiness giant Cargill Inc.in 1865. Today, 23 members of the Cargill-MacMillan familyown 88% of the company, which generates $108 billion in annual revenues. Of this clan, 14 are billionaires. The family reportedly keeps 80% of Cargill Inc.'s net income inside the company for reinvestment annually.

3. The Mars family

Net worth:$72 billion

Source of wealth: Mars Inc.

Jacqueline and John Mars inherited a stake in the candy empire Mars Inc., which invented M&Ms, Milky Way, and Mars Bars, when their father passed away in 1999. Jacquelyn's son, Stephen Badger, is the current chairman of Mars Inc., which brings in more than $35 billion in annual revenue.

The siblings run the Mars Foundation, which donates to educational, environmental, cultural, and health-related causes.

2. The Koch family

Net worth:$107 billion

Source of wealth: Koch Industries

Brothers Charles and David Koch expanded their father's oil refinery firm into conglomerate Koch Industries after their other brothers, Frederick and William, left the business following a failed takeover. Today, Koch Industries generates roughly $100 billion in revenue annually.

David Koch, who stepped down from a leadership position in the company in 2018, has pledged to contribute more than $1.2 billion to cancer research, hospitals, education, and cultural institutions through the David H. Koch Charitable Foundation. Both brothers reportedly secretly funded some of the biggest summer movies of 2017, including "Wonder Woman."

1. The Walton family

Net worth:$169.7 billion

Source of wealth: Walmart

Sam and Bud Walton founded Walmart in 1962. Following its success, they founded Sam's Club in 1983. Today, Walmart reports sales of $500 billion, making it the largest retailer by revenue in the world.

The Walton family fortune is dispersed among seven family members, including co-founder Sam Walton's three children, Rob, Jim, and Alice, who is the richest woman in the world with a $43.7 billion fortune.

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"You great Morehouse men are bound only by the limits of your own conviction and creativity," Smith said in a surprise announcement during his commencement address at the men's liberal arts college in Atlanta.

The grant is a welcome respite from the nation's student loan debt crisis, $1.6 trillion of personal red ink that experts say disproportionately impacts people of color, aspirants from low-income backgrounds and students of for-profit institutions.

"This liberation gift from Robert Smith — the first of its kind to be announced at a graduation in higher education — will be life-changing for our new Morehouse Men and their families," Morehouse president David A. Thomas said in a statement Friday.

Mark Kantrowitz, publisher of SavingForCollege.com, said, "This gift is well-targeted at the need, since Morehouse College students are forced to borrow an above-average amount of debt."

But advocates of student loan reform hope the extraordinary gift will not take attention away from a student debt crisis that can stifle dreams of advanced degrees and create a drag on the economy. The Brookings Institution said in a report last year that nearly 40 percent of student loan borrowers could default by 2023.

Sandy Baum, senior fellow for the Center on Education Data and Policy at the Urban Institute, said the gift is a ray of light, but not the kind of long-term solution the crisis demands.

"You don’t want to criticize anyone who gives a lot of money to help those who need it," she said. "It was very generous."

Morehouse says the average graduate carries between $35,000 and $40,000 in student loan debt, more than the average student at historically black colleges and universities, by commencement day.

Baum said the student debt crisis needs a collective, selective response that targets students who most need the help.

"We don’t actually need to forgive debt for those who can afford it," she said. "We need to think about how to carefully design policies that are targeted at people at the bottom, not people who will do quite well in the long run."

Kantrowitz said if all the nation's billionaires made pledges similar to Smith's, it still wouldn't wipe out student debt.

Effective fixes, he said, would be to allow those carrying student debt to declare personal bankruptcy, triple the amount of Pell Grant awards to low-income students and end taxes on private scholarships.

Sara Goldrick-Rab, a professor of higher education policy at Temple University in Philadelphia, said the student debt crisis is in the hands of voters.

"Students need philanthropy, they need policy change, and they need people to show up and vote next fall," she said by email. "If you think college costs too much and student debt is doing harm, then your single most effective action is to vote."

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