There were gasps followed by a standing ovation when Robert F Smith, 56, made the surprise announcement to the 2019 graduates at Morehouse College, in Atlanta, Georgia

One of the richest people in America has pledged to pay off the student loans of almost 400 graduates.

There were gasps in the audience when billionaire Robert F Smith made the announcement on Sunday during his speech at Morehouse College, in Atlanta, Georgia, where he was receiving an honorary degree.

The 56-year-old, a former chemical engineer and investment banker – who was ranked by Forbes as the 163rd richest person in America last year – will pay an estimated $40m (31m) to cover the debts.

On behalf of the eight generations of my family that have been in this country, were gonna put a little fuel in your bus, he told the graduates at the private, all-male, liberal arts, historically black college.

This is my class, 2019. And my family is making a grant to eliminate their student loans.

Robert F. Smiths amazing act of generosity left students stunned

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I know my class will make sure they pay this forwardand lets make sure every class has the same opportunity going forward because we are enough to take care of our own community.

Smiths amazing act of generosity was met with a standing ovation from the students who turned to each other in disbelief.

He had already pledged a $1.5million gift to the school.

Were looking at each other like, Is he being serious? Thats a lot of money, Robert James 21, toldCNN.

Jonathan Epps, 22, who has about $35,000 in student debt, described it as a tremendous blessing, which he called the kindest, most generous thing hed ever witnessed.

He said: Itll sink in as the years go on. I know that for a fact. I still dont really have words. It makes a great day just that much better.

Elijah Nesly Dormeus, 22, from New York, is the first of nine children to graduate from college.

His father died when he was five and his mother has worked various minimum-wage jobs to provide for him and his siblings.

In addition to his own $90,000 debt, he said his mum took out a loan to help get him through school.

All her serving, all her giving was not in vain, he admitted when asked what Smiths gift meant to his family.

Smith, a dad of three, is the founder, chairman and CEO of private equity firm Vista Equity Partners, which he created in 2000.

Forbes has estimated his net worth at $5billion and he was No. 480 in its 2018 list of the worlds billionaires.

The publication also named him as one of the 100 greatest living business minds in 2017.

He said after the ceremony: Where you live shouldnt determine whether you get educated. Where you go to school shouldnt determine whether you get textbooks.

The opportunity you access should be determined by the fierceness of your intellect, the courage in your creativity and the grit that allows you to overcome expectations that werent set high enough.

Morehouse President David A. Thomas called Smiths gesture a liberation gift.

He told CNN: When you have to service debt, the choices about what you can go do in the world are constrained.

(Smiths gift) gives them the liberty to follow their dreams, their passions.

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