A titillating piece of news that crossed our screens not too long ago was that Mrs. Mackenzie Bezos, the ex-wife of Amazon founder and CEO Jeff Bezos, will receive $36 billion (about Rs. 2.5 lakh crores) as part of her divorce settlement. She has now stopped the wagging tongues by signing the ‘The Giving Pledge.’ This is a commitment by the signatories to give away to charity at least half of their fortunes that was started by Bill Gates and Warren Buffett in 2010. Gates has been pursuing his philanthropic goals as assiduously as the business goals he pursued when he ran Microsoft. People like Mark Zuckerberg and Nandan Nilekani are also part of this club which has taken charity to new heights.

Education attracts many charitable donors. Our own Azim Premji of Wipro, also a signatory, has given away the bulk of his donations to education including the eponymous university and improving government run schools. Premji is probably one of the few remaining who adheres to the Gandhian standard of trusteeship, where one thinks of one’s possessions beyond one’s need as being held in trust for society. He has even referred to trusteeship as a motivating factor during random published interviews in the past.

A sensation was created recently when Robert Smith, an African-American business magnate and a pledge signatory, announced during the commencement speech at Morehouse College in Atlanta, US, that he would be paying off the student loans of the graduating class so they begin a career debt free. This announcement is expected to cost him about $ 40 million (about Rs. 276 crores). The news came as a shock to the audience who cheered him wildly. He may justifiably see it as giving back to his community. Mr. Smith is listed as the richest African-American in the US and the college largely serves that community.

What also prompted his generosity is undoubtedly the high levels of debt that US students carry when they graduate. It is a burden that lingers on for many years as it builds up while students earn and pay off in bits. The cost of higher education in the US (whether private or public universities) has over the years risen much faster than the rate of inflation. The cost per year for tuition, board and lodging at Morehouse is estimated at $40,000 (about Rs. 28 lakhs), and it is not among the more expensive institutions. Many candidates mention it as a burning issue at election time and then seem to be able to do little aside from some fringe relief. Whether higher education should be so expensive in the first place is a separate issue that seems to attract little attention.

There are many ways in which philanthropies fund education. The most common is through naming universities, buildings, classrooms and so on all of which carries varied levels of pricing. Others create foundations to fund research and the production of new knowledge.

But not all were very pleased by Mr. Smith’s dramatic contribution. Parents who took loans to pay student bills now thought they had made a mistake. Students who struggled and worked rather than taken a loan or tried to minimize their loan reflected on their decision. And most of all, those who are in the class graduating next year wondered if they will also get lucky. They probably should not change their financing strategies as yet.

It is estimated that there are over 44 million borrowers who together owe about $1.5 trillion (about Rs. 104 lakh crores). Student debt is also ranked as the second highest debt category, second only to mortgage loans and even ahead of credit card debt. Empowering people with education is widely believed to be the way to creating productive citizens. Putting a load of debt on the citizen’s back is a capitalist society’s way of keeping you working hard to repay that debt.

The writer is a professor at Suffolk University, Boston

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