- The nonprofit Student Freedom Initiative announced a partnership with Cisco to help HBCU students.
- Cisco's $150 million investment would go toward modernizing technology and lessening student debt.
- Student of color owe 100% more in student debt than white borrowers four years after graduating.
- See more stories on Insider's business page.
Students of color bear a significant burden of the country's $1.7 trillion student debt crisis, and today, a major technology company announced an investment to help lift the burden off of those students.
The Student Freedom Initiative – a nonprofit dedicated to helping students at minority serving institutions (MSIs) – announced a partnership with Cisco and AVC Technologies on Thursday, with Cisco investing $150 million to help strengthen Historically Black Colleges and Universities (HBCUs). Specifically, the multinational technology company is investing $100 million in modern technology for HBCUs, along with $50 million to help lessen student debt for HBCU students.
"Their expertise and generosity will ensure that HBCUs are secure and robust institutions that empower Black students," Robert F. Smith, Chairman of SFI, said in a statement. "And Cisco's added financial commitment to students, making them the first anchor corporate partner of SFI, will help liberate students from crushing debt and allow them to make their own life choices."
SFI's press release added that Cisco's $50 million investment is the first step to helping SFI reach its goal of a $450 million endowment supporting 4,500 students in perpetuity.
To help students financially at HBCUs and MSIs, the Student Freedom Initiative offers an "income-contingent funding option" for education costs, meaning that in exchange for funding, students agree to make payments to SFI based on what they earn after leaving college.
According to its website, the program, called the Student Freedom Agreement, is available to cover a student's remaining costs after federal aid is taken into account, and it could serve as an alternative to private student loans. Funding for each student is capped at $20,000 a year, and there is no obligation to pay back the full amount of funding received.
Cisco's $50 million will go toward this program, ensuring students do not have to borrow more student debt than they can pay off.
Insider reported last month that Black borrowers typically owe 50% more student debt than white borrowers, and four years later, Black borrowers owe 100% more. That's why 36 civil rights organizations called on President Joe Biden to cancel $50,000 in student debt per borrower to help close racial disparities that have put those borrowers "on the brink of financial devastation."
"Student debt cancellation will help Black and brown borrowers build wealth and enable our economy to move forward as millions of Americans are able to start families, buy homes, and set up small businesses," the organizations, including the National Association for the Advancement of Colored People (NAACP), said.
Biden has not yet committed to canceling $50,000 in student debt - he is having the Education and Justice Departments review his authority to do so - but in his $4 trillion infrastructure proposal, he did include a $39 billion program that provides two years of subsidized tuition for those earning less than $125,000 enrolled in a four-year HBCU or MSI.
SFI is planning to launch its programs in the fall, and Cisco's investment is critical in furthering the initiative's goal of ensuring success for students at HBCUs and MSIs.
"This partnership is an investment in our future workforce, empowering AA/Black STEM students and equipping them with the financial and technology tools to be resilient and successful long term," Maria Martinez, Cisco's chief operating officer, said in a statement. "We remain committed to this community - to be seen, heard, valued, and invested in."