Commencement Speaker's Surprise Announcement - Will Pay Off Class of 2019's Loans!

[wisteria100]

Perhaps the $40M projection includes the interest on those loans. I don’t think he intends to pay off all the loans at once, but rather in installments over time

[hebegebe]

^^^

Regarding this, paying in installments would allow Smith to avoid gift taxes, because a gift to each person is limited to $15000 per year before incurring taxes.

[TomSrOfBoston]

@drdj Doubtful if this will hold true while the women are struggling to pay off their college loans.

[jym626]

Smith set up a grant, and per this article https://beta.washingtonpost.com/business/2019/05/21/robert-smith-will-pay-morehouse-graduates-student-loans-who-will-pay-tax-bill/?outputType=amp

As of this year, donors are allowed to give up to $15,000 annually to an individual without triggering the reporting of the gift to the IRS. If you go over this amount, you are generally required to file a gift tax return (Form 709). But that doesn’t mean you’ll owe taxes on the gift. This is because the lifetime gift allowance right now is $11.4 million per individual. Double that for married couples…

The tax code does provide an exception to the gift rule for money paid directly to a qualifying educational institution for tuition, said Tyler Mickey, a certified public accountant and member of the American Institute of CPAs.
But “generally, the actual loan amounts for prior periods would not qualify for the exception,” Mickey said.

[jym626]

continuing…

So would graduates incur taxes for the debt they won’t end up paying?
In general, if your debt is forgiven or discharged for less than what you owe, the amount of the canceled debt is treated as ordinary income and is taxable, according to the IRS.

“With respect to Mr. Smith’s gift, I don’t believe the students will need to pick up the amounts as income, since the lender didn’t actually forgive the debt,” said Michael Landsberg, a CPA and also an AICPA member.
Because Smith surprised the students and the school with his generosity, the specifics of how his gift will be handled, including any tax implications, are still being worked out, according to a statement from Morehouse.

[OHMomof2]

I’m happy for the grads and sad that it takes an individual billionaire’s gift to do it.

[Waiting2exhale]

TomSrOfBoston: @drdj Doubtful if this will hold true while the women are struggling to pay off their college loans.

Those women woke up each morning after taking out their loans knowing they would have to pay them off over time, prudently, responsibly, ungrudging of their sister-peers who took out no loans or loans of different amounts

Will they now walk with the knowledge that someone has aided a cohort of Black men in a way they were not, too, aided? Absolutely. Will they feel robbed, cheated, handled unfairly? That is silly; no of course not.

[younghoss]

I so strongly agree w/ doschicos, post 14. Some here seem to think it’s a bad thing he did, because he didn’t gift to other group A, B, or C. Seriously? A man that has earned a billion dollars chooses to give a generous gift, and that’s a bad thing? I don’t see his gift as racist, bigoted, or misogynistic because he chose Morehouse.

[younghoss]

Let me add that yes, I get there are other possibilities. He could have selected a women’s group or a transgender group, or college grads more representative of our nation’s population, or homeless, or Veterans, or struggling legal immigrants, or illegal immigrants. He could have chosen any of those groups or others. But he picked who he picked for a gift and has asked them to give back as well, when they are in a position to do so. I am in no way a beneficiary of his gift but I am happy for those that are, and hope they will honor his request to give back to others.