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Auburn Research on Educational Debt Economic Challenges Facing Future Ministers
April 7, 2014
Anthony Ruger, Auburn Theological Seminary
Outline
Levels of debt
Distribution of debt
Among schools
Among students
Graduate testimony
Thinking about what to do
Students
Schools
A new wrinkle
Average Reported Undergraduate Debt
1991-2011 Theological School Graduates
$1,978
$5,967 $6,357
$13,518
$7,807
$17,949
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
All Borrowers
1991
2001
2011
Preliminary - Not for Citation
Average Reported Theological Debt of M.Div.
Graduates
$5,267
$11,043
$15,599
$25,018 $24,917
$38,704
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
All Borrowers only
1991
2001
2011
Preliminary - Not for Citation
Average Reported Theological Debt of Other
Masters Graduates
$3,397
$10,017 $11,387
$23,435
$18,482
$32,488
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
All Borrowers only
1991
2001
2011
Preliminary - Not for Citation
Average Theological Debt Per School
M.Div. Graduates – 2011
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
Preliminary - Not for Citation
MDiv Theological Debt 2011
7
No debt
36%
$1 to
$10K
8% $10K to
$20K
10%
$20K to
$30K
11%
$30K to $40K
9%
$40K to $50K
7%
$50K to $60K
6%
$60K to $70K
5%
$70K to $80K
3%
$80K and up
5%
Preliminary - Not for Citation
Distribution of Other Masters Theological
Debt 2011
8
No debt
43%
$1 to
$10K
7%
$10K to $20K
13%
$20K to $30K
11%
$30K to $40K
9%
$40K to $50K
6%
$50K to $60K
5%
$60K and up
6%
Average Theological Debt Per School
M.Div. Graduates – 2011
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
Preliminary - Not for Citation
Average Theological Debt Per School
M.Div. Graduates – 2011
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
2011 Graduating Class Average total debt: $21,375; Borrowers only: $45,600
11
$-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31
Undergraduate Debt Theological Debt
Preliminary - Not for Citation
Average Theological Debt Per School
M.Div. Graduates – 2011
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
Preliminary - Not for Citation
2011 Graduating Class Average total debt: $57,600; Borrowers only: $63,130
13
$-
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Undergrad Other grad Theological debt
Preliminary - Not for Citation
Suggested Annual Reports for Internal
Administration and Case Management
For each degree program generate charts like the
foregoing that show preexisting debt and debt taken
since enrolling, with names, for:
Entering classes
After one year
After two or more years if still in school
Graduating classes
Any Regrets?
0%
20%
40%
60%
80%
100%
120%
Strongly agree Agree Strongly disagree Disagree
I now wish I had
borrowed less.
I now wish I had
borrowed more.
Lack of Knowledge
0%
10%
20%
30%
40%
50%
60%
Strongly agree Agree Strongly disagree Disagree
I was aware of the
monthly repayments
I had knowledge of
my future compensation
Effects of Debt
0%
10%
20%
30%
40%
50%
60%
Disagree Strongly disagree Agree Strongly agree
Loan debt has substantially influenced my standard of living.
Effects of Debt
0%
10%
20%
30%
40%
50%
60%
70%
Strongly agree Agree Strongly disagree Disagree
Loan debt has influenced my career choices
School Culture Regarding Debt
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Strongly agree Agree Strongly disagree Disagree
Administration or faculty
discouraged borrowing
Borrowing was common
among students
How would you evaluate the advice or guidance
you received on financing your theological
education?
Excellent,
17%
Adequate,
41%
Inadequate,
13%
No guidance,
30%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Things that worked
Advice to “live like a student”
Requiring financial counseling or a course on
financial management
Going to school part-time and working more
Ability to pay month-to-month tuition
payments
Financial planning through the first few years of
ministry
Auburn’s General Recommendation:
I. Those who pursue theological education and
ministry should be fully informed and fully aware of
the financial costs of education for ministry and
aware of the economic realities of professions in
ministry.
II. Complete financial aid information, personal
financial planning resources, and vocational
counseling are needed for persons inquiring about
ministry, for those in seminary, and for those in the
early years of ministry.
Student Types
Difficult to Dissuade: Convenience Borrower
Consumer/Lifestyle Maintenance
Possibly Open to Education, Advice or Intervention: “Default” Borrower
Not oriented to church occupations
Multiply challenged
The ideal: Rational Planner/Entrepreneurial Fundraiser
Financial Aid Officers Survey
43% have policies/practices to slow debt
acquisition.
23% have policies/practices for high debt
students.
67% make it as easy as possible for students to
obtain loans.
School Approaches
Program Marketing
Laissez-Faire
Rational and Opportunistic
“In Loco Parentis”
Example of Monthly Payments on Stafford Loan Debt of $50,000 Standard Repayment (10 years @ 6.8%) vs. Income Based Repayment (IBR) and Pay As You
Earn (PAYE)
$576 $576
$291
$68
$194
$45
$-
$100
$200
$300
$400
$500
$600
$700
Single, with $40K in
Discretionary Income
Family of four with $40K in
Discretionary Income
Mo
nth
ly p
aym
ent
Standard
IBR
PAYE
Questions
27
Do income-based repayment programs provide an
incentive for theological students to borrow more?
Do income-based repayment programs give schools an
incentive to ignore/promote borrowing?
Debt issues
Undergraduate debt is rising rapidly.
Students increasingly rely on debt for expenses while in
seminary.
Ordinary repayment schedules are difficult to meet on
graduates’ compensation levels.
Income-based repayment arrangements (e.g., Income
Based Repayment, Pay As You Earn) may extend the debt
to 20-25 years.
Reflections on research – student debt
Debt provides an incentive to move to higher paying
professions. Insofar as this affects Church-related
occupations the mission of the school may be diminished.
Part-time tracks may retain students with lower levels of
debt.
Discouraging borrowing may discourage full-time
attendance – an ambiguous position for the school to be
in.
Screening, education, and counseling can reduce the
acquisition of unmanageable or unwanted levels of debt.
www.AuburnSeminary.org/CSTE