Billionaire Robert F. Smith pledged to pay off student loans for every member of Morehouse College's graduating class.

The Ivy League-educated business leader made his fortune investing in software firms and other tech companies.

He's well-known for his philanthropy — and is the first African-American to sign Bill and Melinda Gates' Giving Pledge.

Members of Morehouse College's class of 2019 received more than their diplomas at the college's commencement ceremony Sunday when honorary degree recipient Robert F. Smith announced he would eliminate the entire class's student debt.

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

Morehouse is an all-male, historically black college in Atlanta. The billionaire's gift is estimated to be worth about $40 million, based on the combined debt shouldered by the graduating class's nearly 400 students, making it the single largest individual donation to a historically black college or university.

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Morehouse President David Thomas had "no idea" the announcement was coming.

"People were stunned. If you look at any other film footage, you will see the students turning to each other. What did he say? Did he say what I think he said," Thomas told CBS News correspondent Mark Strassmann. "This will allow them to pursue their dreams ... As opposed to serving the debt."

A biz whiz worth an estimated $5 billion

The 56-year old Smith, who holds an undergraduate degree from Cornell University and a master of business degree from Columbia University, is the founder of the nearly 20-year-old Austin, Texas-based private equity firm Vista Equity Partners. His P.E. firm, which manages more than $46 billion in assets from pension funds and other big institutional investors, buys major stakes exclusively in software, data and technology companies. It has an exceptional annualized rate of return of 22%, according to Forbes. The magazine also estimates the business whiz is worth about $5 billion.

Recognized for his leadership in both business and philanthropy, Smith is the first African-American to sign the Giving Pledge, created by Bill and Melinda Gates and Warren Buffett as a promise to commit at least half one's wealth to philanthropic causes. Other ultra-wealthy pledgers include former New York City mayor Michael R. Bloomberg and Facebook founder Mark Zuckerberg and his wife, Priscilla Chan.

Smith began his career in business at Kraft General Foods, where he earned a four U.S. and international patents, and joined Goldman Sachs in 1994 before ultimately founding his own investment firm.

Hope Dworaczyk, left, and her husband, the investor and philanthropist Robert F. Smith, seen Dec. 12, 2018. AP

His approach to philanthropy has been described as transformative, and his gifts, much like his grant to Morehouse students last weekend, are often unprecedented. Smith made a $20 million gift to the National Museum of African American History and Culture, making him the second-largest individual donor behind Oprah Winfrey, who donated $21 million to the museum. Other past gifts include sizable donations to Columbia and Cornell, whose School of Chemical and Biomolecular Engineering bears his name.

He is also the founder of the Fund II Foundation, a grantmaking organization focused on preserving and deepening the understanding of African-American history, safeguarding human rights, funding education and environmental initiatives, and promoting entrepreneurism.

Martin Luther King Jr.'s daughter Bernice King tweeted her thanks Sunday to Smith who she said purchased her father's birth home for the National Park Service through the fund.

"Wow. What a love-power move by Robert Smith. I believe it's the start of something major. I'm grateful for what Mr. Smith, who purchased my father's birth home for the National Park Service, is doing for @Morehouse, which happens to be Daddy's alma master," she wrote on Twitter.

Wow. What a love-power move by Robert Smith. I believe it’s the start of something major. I’m grateful for what Mr. Smith, who purchased my father’s birth home for the National Park Service, is doing for @Morehouse, which happens to be Daddy’s alma mater. https://t.co/uRstRi49fr — Be A King (@BerniceKing) May 19, 2019

Morehouse graduates interviewed by "CBS This Morning" said they expect that Smith's gift will have an immeasurable impact on their lives.

"Just imagine the weight lifted off your shoulders when you have a clean slate coming out of college," said Dwytt Lewis, a 2019 graduate with a degree in business administration, who owed more than $150,000 in debt.

"It's just an overwhelming feeling, in a good way," the formerly homeless student told Strassmann earlier Monday. "I'm so motivated to go change the world."

This isn't Smith's first gift to Morehouse. Earlier this year, he donated $1.5 million to fund endowed scholarships and build a park where students could study.

Smith did not return CBS News' request for comment.

He said during his commencement address that he expects recipients to "pay it forward," and hopes other benefactors will follow his lead and do what he did for future graduates.

His wife, Hope Dworaczyk, 34, whom he married in 2015, is a former Playboy model. She advocates for individuals with intellectual and developmental disabilities through an organization called Best Buddies.