Morehouse College, the private, all-male, historically black college in Atlanta that counts Martin Luther King among its alumni, expects its attendees to aspire to greatness. Soon, many in the graduating class of 2019 can start doing so, no matter the cost.

Tech billionaire Robert Smith’s surprise pledge during his commencement speech last weekend to pay off 396 graduates’ college loan debts is a potentially $40-million US game changer for a generation of African-American grads. It removes an economic millstone that might have otherwise limited their possibilities, or at least slowed their progress.

The Morehouse class of 2019 has been spared what might have amounted to decades of monthly payments — the kind of relief that can pay dividends for a de-stressed cohort of young professionals. Social psychology research suggests it could inspire a positive contagion effect, with generosity trickling downstream from past grads to new students.

A living example could be Nathaniel Goulbourne, one of only five Canadians to have graduated from Morehouse when he did in 2013. Goulbourne grew up in Toronto’s Jane and Finch neighbourhood before meeting and impressing former Bay Street trader Michael Wekerle, who agreed to finance Goulbourne’s dreams to attend Morehouse.

Nathaniel Goulbourne, 29, graduated from Morehouse College in 2013 and is due to graduate with his MBA from Harvard Business School later this month. The investment banker from Toronto’s Jane and Finch neighbourhood says he hopes to give back once he’s achieved business success and started a business internship program for kids from Jane and Finch. (Submitted by Nathaniel Goulbourne)

Now a 29-year-old investment banker about to graduate from Harvard Business School, Goulbourne said he plans to invest in his Jane-Finch community to send another African-Canadian to Morehouse.

“Robert Smith beat me to it,” he said. “But the more the merrier.”

Investing in students, particularly civic-minded graduates keen to make an impact on society, and particularly black Americans from low-income families, is a gesture that can change entire generations, said Marybeth Gasman, who studies historically black colleges and universities, as well as philanthropy, at the University of Pennsylvania.

“Imagine being able to put your efforts, your worries, your dreams into something completely different than how to pay back your student loans,” she said. “It’s going to lower stress levels, it’s going to lead to more creativity, more imagination. Because when you don’t have stress, you can be your best.”

With high-profile Democratic presidential candidates, including Elizabeth Warren, Bernie Sanders, Julian Castro, Kamala Harris, Cory Booker and Kirsten Gillibrand calling for some type of reduced educational expense, Smith’s gesture underscores how prohibitively expensive higher education has become in the United States.

“I don’t think it’s radical at all anymore to talk about free college,” Gasman said.

Billionaire technology investor and philanthropist Robert F. Smith announces he will provide grants to wipe out the student debt of the entire 2019 graduating class at Morehouse College in Atlanta on Sunday, May 19, 2019. (Steve Schaefer/Associated Press)

The average student at Morehouse graduates with $26,000 US in debt, according to College Scorecard, a U.S. Department of Education tool.

Before she became a tenured professor at an Ivy League school, Gasman, who grew up in a low-income family, graduated with $24,000 in student loans in 1990. She was 22 years old. Her monthly payment plan had her on track to finally clear her debts in 2033 — when she would be 65 years old.

Lucrative sales from her first book helped clear her debts by 2008.

“That felt like a whole new day,” she said. “I can’t even imagine what these students feel. It might be like Christmas every day of the year.”

Jan-Michael Coke, another Canadian who graduated from Morehouse, can only imagine the feeling. Coke, 28 and a manager at a fitness centre in Atlanta, graduated with $13,000 in debt he’s still paying off. He intends to go back to school to get his doctorate in physical therapy.

Canadians Jan-Michael Coke, left, and Nathaniel Goulbourne, right, walk through the campus of Morehouse College in Atlanta, Ga., in this 2013 file photo. Six years after graduating from the historically black college, Coke and Goulbourne say they hope a billionaire philanthropist’s pledge to cover the student debts of the entire class of 2019 will inspire others to ‘pay it forward.’ (Matt Kwong/CBC)

Extended family back in Bolton, Ont., chipped in so Coke could afford his tuition, which was also aided by a football scholarship. But he also became saddled with medical bills from an injury and illness in his family, and experienced a home invasion and vehicle break-in.

“I was carrying all this on my back, and the main thing that loomed over my head was student loans.”

Yet when he heard about Smith’s gift, Coke said he felt elated for his Morehouse brothers.

Entrepreneurship more possible

“These young men were given a fresh and clean slate. A fresh start. They can start up their careers, they can start their entrepreneurship. What they’re making can go towards savings,” he said.

“Part of me was joking, like, ‘Man, I graduated from the wrong class!’ But it was so heartwarming.”

Most American college students (69 per cent) took out student loans in the class of 2018, according to Student Loan Hero, a company that helps students manage their debt.

The average debt balance in 2017 for graduates of public, four-year schools was $26,900, according to the College Board, a nonprofit education organization. Average debts were $32,600 for private, four-year colleges or universities.

Robert F. Smith stunned the graduating class at Morehouse College in Atlanta by announcing at their commencement Sunday that he would pay off their student loans — estimated at up to $40 million US. 1:21

All that might help explain why, in announcing his surprise gift to the Morehouse students on Sunday, Smith couched his pledge in reciprocal terms.

“Pay it forward,” he implored the students.

Quinton McArthur, a college admissions professional who graduated from Morehouse in 2002, anticipates they will.

“It’s part of the ethos,” he said.

McArthur wasn’t just astonished by the amount Smith was pledging, but also by how Smith intends to spend it. Rather than bolstering an endowment or paying for a new building, Smith’s funds will go straight to the students.

Financial gain not sole motivation for working

“That’s absolutely remarkable,” McArthur said. “They can begin investing right now, as soon as they begin their first employment opportunity. They have the luxury of thinking about employment, not just from an immediate financial gratification perspective, but what kind of good can they do in the world?”

McArthur’s former Morehouse classmate Chinua Lambie co-created Mo Hundred, a scholarship program in Seattle that has raised closed to $300,000 since 2016.

“I have no concerns about any of the brothers in the class of 2019 paying it forward,” Lambie said.

Goulbourne, the graduate from Jane-Finch, wants to start a Canadian wing of a U.S. nonprofit that will connect young black Canadians with business leaders.

Graduates react after hearing billionaire technology investor and philanthropist Robert F. Smith say he will provide grants to wipe out the student debt of the entire 2019 graduating class at Morehouse College in Atlanta on Sunday, May 19, 2019. (Steve Schaefer/Atlanta Journal-Constitution via Associated Press)

What Smith started with his debt-erasing gift might be a one-off, but it also has the potential to trigger a positive social “contagion effect,” said Michael Macy, a Cornell University professor who studies how behaviours spread on social networks.

Evidence from psychology and social psychology shows a downstream effect from such actions.

“Once they use that diploma to advance their own careers and go to Wall Street, a law firm, and make a good salary and remember to pay it forward …you get the third generation, the fourth generation, and it all compounds the benefit of the original gift,” Macy said.

Macy and a co-researcher studied the science of paying it forward by using a most Canadian example — a Tim Hortons drive-through window in Winnipeg in 2012. They noted that a chain of generosity started when one customer picked up the tab for the stranger in the car behind her, who then went on to do the same for the following customer in line, and so on for the next 226 customers in a chain that lasted three hours.

While a double-double is no $40-million gift, Macy said, “paying it forward is a very Canadian idea.”