Billionaires are a good thing.

Robert F. Smith, keynote speaker for Morehouse College’s commencement ceremony, said he would pay off the college debt of the class of 2019, approximately $40 million. 

Morehouse College’s Class of 2019 graduates react after hearing Mr. Smith, a billionaire, say during their commencement ceremony in Atlanta on Sunday that his family will provide a grant to wipe out their student debt.

Wall Street Journal - A Gift to Morehouse Class of 2019: Your Student Loans Are Gone

Billionaire Robert F. Smith made announcement during his keynote speech at commencement

By Cameron McWhirter and Jake Holland

Updated May 19, 2019 10:02 p.m. ET

ATLANTA—The keynote speaker for Morehouse College’s commencement ceremony on Sunday caused elation when he made a stunning announcement: The billionaire would pay off the college debt of every graduate in the class.

The college said the value of the gift from Robert F. Smith is about $40 million, though the exact figure is being negotiated, according to a Morehouse spokeswoman. That donation covers the student loans for about 400 graduates. Terrance Dixon, vice president of enrollment management, said the average Morehouse graduate leaves with about $35,000 to $40,000 in debt.

“My family is making a grant to eliminate their student loans,” Mr. Smith, the chief executive of Austin, Texas-based private-equity firm Vista Equity Partners, said at the commencement.

Morehouse President David A. Thomas, in an interview, said he had no idea Mr. Smith would make the gift until the commencement. About 7,500 people attended the event at the historically black male college, according to the college.

“It’s a liberation gift,” said Mr. Thomas, adding that it was a challenge to other wealthy African-Americans to help historically black colleges and universities and other black institutions.

Students and parents were also stunned by the news.

“I’m still in disbelief,” said Shawn Swinton, 22, of Kingstree, S.C., who just graduated with a political science degree.

He wasn’t sure he had heard Mr. Smith correctly at first. Everyone in his row was whispering, and students and parents were texting each other to confirm it, he said. When he finally got up to the stage to accept his degree, Mr. Swinton shook Mr. Smith’s hand and asked him directly if he meant he would pay all college loans.

“He told me, ‘Go out into the world and do things. Don’t worry about your debts,’” Mr. Swinton said.

Mr. Swinton, who said he has a substantial amount of debt, though he would not say the amount, is a first-generation college graduate raised by a single mother. He called Mr. Smith’s gift “a tremendous blessing.”

Carney Burns, 52, of New Rochelle, N.Y., was thrilled to hear that Mr. Smith would pay for his son John’s college debt of $35,000. The father of five said that finding money for all of them to go to college was “a faith journey.”

“I didn’t believe it. I kept asking people for reassurance that he just said what he said,” Mr. Burns recalled. “A Morehouse education, you can’t put a price on it, but the bills are real.”

A Wall Street Journal analysis published last month found that students of historically black colleges and universities graduate with disproportionately high loans compared with their peers at other schools.

Mr. Smith, the son of two high school principals, grew up in Denver and studied chemical engineering at Cornell University. Before attending Columbia Business School, Mr. Smith worked as a chemical engineer for several companies, including Kraft General Foods.

Mr. Smith later joined Goldman Sachs to work in tech investment banking.

He is one of the country’s wealthiest African-Americans and is known for his philanthropy. In 2017, he signed the Giving Pledge, a commitment for the world’s wealthiest individuals to commit more than half of their wealth to philanthropy.

He donated $20 million in 2016 to the National Museum of African-American History and Culture in Washington, D.C., one of the largest donations to the museum by an individual. In 2018, he gave $2.5 million to the Prostate Cancer Foundation to focus on research and care for African-American men and veterans with prostate cancer.

Mr. Smith also is founding director and president of the Fund II Foundation, an organization aimed at promoting human rights and preserving the “historical culture of the African-American experience,” among other initiatives.

In 2016, Mr. Smith and his foundation gave $50 million to Cornell University’s College of Engineering to support African-American and female engineers within the school’s chemical and biomolecular engineering programs.

Write to Cameron McWhirter at cameron.mcwhirter@wsj.com

Appeared in the May 20, 2019, print edition as 'Billionaire to Pay Off Graduates’ Debt.'