Auburn Research on Educational Debt · 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 Undergraduate...

Auburn Research on Educational Debt Economic Challenges Facing Future Ministers

April 7, 2014

Anthony Ruger, Auburn Theological Seminary

[email protected]

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Preliminary - Not for Citation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


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


Average Theological Debt Per School

M.Div. Graduates – 2011

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000


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%


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%



$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




$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000


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


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%


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%


Loan debt has influenced my career choices

School Culture Regarding Debt

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


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

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