Auburn Research on Educational Debt Economic Challenges Facing Future Ministers April 7, 2014 Anthony Ruger, Auburn Theological Seminary aruger@auburnseminary.org
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 $20,000 $17,949 $18,000 $16,000 $13,518 $14,000 $12,000 1991 $10,000 2001 $7,807 $8,000 2011 $6,357 $5,967 $6,000 $4,000 $1,978 $2,000 $0 All Borrowers Preliminary - Not for Citation
Average Reported Theological Debt of M.Div. Graduates $45,000 $38,704 $40,000 $35,000 $30,000 $25,018 $24,917 $25,000 1991 2001 $20,000 $15,599 2011 $15,000 $11,043 $10,000 $5,267 $5,000 $0 All Borrowers only Preliminary - Not for Citation
Average Reported Theological Debt of Other Masters Graduates $35,000 $32,488 $30,000 $25,000 $23,435 $18,482 $20,000 1991 2001 $15,000 2011 $11,387 $10,017 $10,000 $5,000 $3,397 $0 All Borrowers only Preliminary - Not for Citation
Average Theological Debt Per School M.Div. Graduates – 2011 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 Preliminary - Not for Citation
MDiv Theological Debt 2011 $80K and up $70K to $80K 5% 3% $60K to $70K 5% $50K to $60K 6% No debt 36% $40K to $50K 7% $30K to $40K 9% $1 to $20K to $10K $10K to $30K 8% $20K 11% 10% 7 Preliminary - Not for Citation
Distribution of Other Masters Theological Debt 2011 $60K and up $50K to $60K 6% 5% $40K to $50K 6% No debt $30K to $40K 43% 9% $20K to $30K 11% $1 to $10K to $20K $10K 13% 7% 8
Average Theological Debt Per School M.Div. Graduates – 2011 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 Preliminary - Not for Citation
Average Theological Debt Per School M.Div. Graduates – 2011 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0
2011 Graduating Class Average total debt: $21,375; Borrowers only: $45,600 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $- 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 Undergraduate Debt Theological Debt 11 Preliminary - Not for Citation
Average Theological Debt Per School M.Div. Graduates – 2011 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 Preliminary - Not for Citation
2011 Graduating Class Average total debt: $57,600; Borrowers only: $63,130 $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $- 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 13 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? 120% I now wish I had I now wish I had borrowed more. borrowed less. 100% 80% 60% 40% 20% 0% Strongly agree Agree Strongly disagree Disagree
Lack of Knowledge I was aware of the I had knowledge of 60% monthly repayments my future compensation 50% 40% 30% 20% 10% 0% Strongly agree Agree Strongly disagree Disagree
Effects of Debt Loan debt has substantially influenced my standard of living. 60% 50% 40% 30% 20% 10% 0% Disagree Strongly disagree Agree Strongly agree
Effects of Debt Loan debt has influenced my career choices 70% 60% 50% 40% 30% 20% 10% 0% Strongly agree Agree Strongly disagree Disagree
School Culture Regarding Debt Administration or faculty Borrowing was common 100% discouraged borrowing among students 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Strongly agree Agree Strongly disagree Disagree
How would you evaluate the advice or guidance you received on financing your theological education? Adequate, 45% 41% 40% 35% No guidance, 30% 30% 25% Excellent, 20% 17% Inadequate, 15% 13% 10% 5% 0%
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 : Those who pursue theological education and I. 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. Complete financial aid information, personal II. 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) $700 $576 $576 $600 $500 Monthly payment $400 Standard $291 $300 IBR PAYE $194 $200 $100 $68 $45 $- Single, with $40K in Family of four with $40K in Discretionary Income Discretionary Income
Questions 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? 27
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.
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