Student Debt Vanishes?

So the kids at Morehouse College went off to their graduation ceremony like college students everywhere in the United States, broke, but hopeful. If they’ve been on the law school treadmill they can owe perhaps $250,000. It’s like having a mortgage debt with no house. But the students at Morehouse had wisely selected Robert F. Smith as their commencement speaker. Smith founded Vista Equity Partners (see item #2) and became the richest black man in America. Right in the middle of his commencement speech Smith announced that he is going to pay off the entire debt of the graduating class no matter what their intent is and job or career they seek. Smith said: “We’re going to put a little fuel in your bus.” Student debt across the country has reached $1.5 trillion and some contenders for the White House say that it’s time to make student debt cancellation a reality. I can’t help but wonder whether Smith realizes he cannot get a tax deduction for his charitable act since it benefits individuals. Additionally, those students who have their debt canceled may find themselves with an income tax bill of one kind or another for such cancellation, unless IRS rules otherwise. Then again, it could be held as a massive nontaxable gift which stems from disinterested generosity with nothing expected in return. (I assume here Smith is not running for President, yet). It remains to be seen whether Smith makes good on his “promise.” As our Prez has found there is a real danger going “off-script.” It must have been a hell of speech. Parents who scrimped to send their kids to school and kept the kids college debt free may have learned their lesson.