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Smith made the announcement during his Sunday commencement address at Morehouse College in Georgia, where he also pledged an additional $1.5 million gift to the school and received an honorary degree.
"My family is going to create a grant to eliminate your student loans," Smith said to the graduating seniors of Morehouse, which is an all-male, historically black college. "You great Morehouse men are bound only by the limits of your own conviction and creativity."
As a high schooler, Smith convinced Bell Labs to give him an internship even though they were reserved for college students. He went on to study at Cornell and Columbia universities, and he worked at Goldman Sachs before starting his own investment firm.
Here's a look at Smith's life and career.
Jonathan Marino contributed to an earlier version of this story.
Robert F. Smith, the billionaire CEO of Vista Equity Partners, was interested in working in Silicon Valley from the time he was in high school.
Smith gave a commencement speech at American University's 2015 graduation, where he spoke about his earliest attempts to get work in Silicon Valley while he was still in high school.
"I dug up the phone number for Bell Labs to ask about summer internships," Smith said. "They said I could apply if I were a junior or senior in college. I said that was fantastic, because, while I was only a junior in high school, I was getting A's in computer science and my advanced math courses, so it was like I was in college. Much to my dismay, they disagreed."
But Smith said he kept calling back "every day for two weeks straight," and after an intern from MIT didn't show up, he was accepted as an intern.
Smith spent years working as an intern at Bell Labs and went on to study chemical engineering at Cornell University.
Smith attended Cornell for undergrad but never lost touch with Bell Labs. He continued to work there as an intern during his summer and winter breaks before graduating Cornell with a chemical engineering degree.
After Cornell, Smith got his MBA from Columbia University in New York City and then went on to work on Wall Street, taking a job at Goldman Sachs.
"When I finished business school and decided to join the tumultuous world of investment banking, my family and friends spoke up with concerns about my sanity," Smith said in his American University commencement speech.
Smith would rise to cohead of enterprise systems and storage-investment banking at Goldman Sachs, advising on $50 billion of deals from 1994 to 2000.
Smith launched Vista Equity Partners after leaving Goldman Sachs.
Smith's former colleagues at Goldman Sachs were initially skeptical of his new venture.
"When I left my post at Goldman Sachs just after we had gone public to set up a private equity firm called Vista Equity Partners … my mentors and colleagues at Goldman thought I had lost it," he said in his speech at American University.
Vista has grown into one of the most successful private equity firms, with more than $46 billion in assets, according to Forbes.
In the years since its founding, the firm has generated bumper returns for investors and gradually increased assets under management.
Smith's investing strategy is to back Silicon Valley's least-known companies.
Silicon Valley may be best known for billion-dollar valuations and soaring real-estate prices, but Smith's strategy is practically contrarian: He's investing in software and technology companies that aren't in the least bit flashy.
Smith's company is known for its unconventional hiring methods.
The New York Times called Vista's hiring strategy "decidedly unusual" for how it uses tests to whittle down candidate lists.
The Vista CEO has the respect of many of his Wall Street peers.
Smith's strategy — as well as his work ethic — have won him praise on Wall Street. He's the "antithesis of [Blackstone CEO Steve] Schwarzman," a tech-industry banker told Business Insider. The banker went on to praise Vista, as well, saying "there is no shortage of PE shops that have succumbed to style creep and/or chasing fleeting trends, but Vista has remained focused on enterprise software and technology."
Another banker told Business Insider that Smith was "one of the smartest men I've ever met."
Smith is married to Hope Dworaczyk, a fashion editor and former Playboy Playmate.
Many private equity executives are regular donors to campaigns on both sides of the aisle, and Smith is no exception.
Smith has donated at least $1.6 million to the Democratic National Committee, according to Open Secrets, a non-profit, nonpartisan research group that tracks the effects of money and lobbying on elections and public policy. He's donated thousands more to specific Democratic candidates including Barack Obama, Hillary Clinton, Kamala Harris, and Chuck Schumer.
Smith also donated $5,000 to Republican Mitt Romney, according to the research group.
He's also a member of the Giving Pledge, which was founded by Bill Gates and Warren Buffett to encourage the world's wealthiest to donate a majority of their fortunes to charity.
In his Giving Pledge bio, Smith promised to invest half of his net worth during his lifetime "to causes that support equality of opportunity for African Americans, as well as causes that cultivate ecological protection to ensure a livable planet for future generations."
In a 2015 interview with Columbia Business School, Smith said fly fishing helps him be "more mindful, more thoughtful," adding: "It makes you slow down and actually focus. You have to focus on everything that you're doing, seconds at a time."
Smith is the third-richest black billionaire in the world, ahead of Oprah Winfrey and Michael Jordan.
Smith ranks third in Forbes' Black Billionaires list, following Nigerian cement and commodities tycoon Aliko Dangote, worth $10.9 billion, and Nigerian-born Mike Adenuga, who made his fortune in the oil and mobile telecoms industries and is worth $9.1 billion.
