What does a seminary education cost?
Full time attendance at a theological school is expensive. A visit to the Web sites of two Presbyterian seminaries reveals that a single student living in the Princeton Theological Seminary dorm will probably spend about $25,400, excluding health insurance, during the academic year. Students with dependents face steeper charges. The estimated expenses for married San Francisco Theological Seminary students with two or more dependents, depending on childcare costs, easily exceed $40,000.
These and other student budgets aren’t lavish. They often include lower-than-market rent for housing provided by the seminary, and they do not include “extras” like dance lessons or sports camp for children. Ominously, in typical cases, nothing is budgeted for savings to fund children’s college expenses, adults’ retirement, or unforeseen emergencies.
Tuition is rarely the biggest part of the budget. None of the Presbyterian schools charged more than $9,500 in 2005/06 Master of Divinity tuition, although other schools, which Presbyterians sometimes attend, often charged more, sometimes twice as much.
Often the seminary pays part of the total. Many students are fortunate to receive grants that defray or even cover tuition. Anecdotal evidence suggests that financial aid at Presbyterian theological schools is quite generous compared to others. Some schools even offer special scholarships that provide full tuition plus additional expenses. Presbyterian students can “comparison shop” among seminaries, but those who do so are in the minority. Most students have clear preferences for certain schools, basing their choice on the school’s location, reputation, and theological posture and on the advice they receive from their home pastor, campus chaplain, or committee of care.
The church offers some help. The student’s home congregation or presbytery may give grants designated for their student. The denomination’s Financial Aid for Studies office distributes restricted scholarship funds bequeathed to the denomination. These gifts help–no question–but are usually modest compared with total student expenses.
Families pay. The working spouse is the economic hero of many a seminary student couple or family. Not only does the spouse put food on the table, but often provides crucial health insurance and other benefits. The extended family may help as well.
Pay more, pay later
Inevitably, though, the student pays–usually cash, in monthly loan-repayment installments over a period of ten to twenty years. More and more students are borrowing to get through. Debt of M.Div. graduates of all denominations, as measured by two surveys by Auburn Theological Seminary ten years apart, showed that educational debt nearly tripled. The average Master of Divinity graduate in 1991 had $5,267 in educational debt from seminary. Ten years later, in 2001, the average debt had tripled, to $15,599. On top of the seminary debt, the average graduate had more than $6,000 in undergraduate debt.
More than a third (37 percent) of the nation’s 2001 Master of Divinity graduates avoided educational borrowing. But those who borrowed tended to borrow considerable amounts, averaging $31,376 in educational debt at graduation.
And then there are the high-debt cases. In 1991, only 1 percent of graduates had more than $30,000 in educational debt. Ten years later, 21 percent — one in five — of graduates had $30,000 or more. Five percent had more than $50,000 in educational debt from seminary alone.
How did this explosion of debt come about?
One of the main reasons is that the federal guidelines on borrowing were rewritten, lifting the limits on borrowing. Simply put, the supply of money increased. Its price decreased as well, as interest rates remained low through much of the 1990s. More speculatively, some believe our culture increasingly supports borrowing, whether by increased optimism about the future or by decreased self-discipline in consumption.
The church ultimately will pay
Graduates wrote on their Auburn survey that debt affects their life and ministry. About a quarter of borrowers report that they have missed payments or been late with payments. This is not surprising, since credit experts counsel that a debt of $30,000, to be repaid over ten years, requires a salary of at least $45,000; few new graduates from seminary earn such a salary. Those under financial stress report that they seek higher paying employment, moonlight from pastoral duties, and defer health care. Large debts also make home ownership difficult. Some graduates postpone entry into ministry while they work down the debt. Others leave, claiming that finances were a key material factor in their decision to leave the ministry. One correspondent noted a steep emotional toll taken by debt: “I still carry anger … concerning my seminary debt. It has affected my call, my outlook, and my willingness to recommend seminary to many who have the potential.”
Creative and subsistence missions and ministries also pay. Denominations sponsoring traditional missionary appointments find their candidate pool shrinking, as candidates must be largely debt-free. Small churches, “start-up” churches, social action ministries, prophetic calls, creative nonprofit organizations, and other innovative forms of service may similarly be unlikely to provide compensation generous enough to service substantial student loans.
The Board of Pensions offers debt repayment assistance for some small church pastors (see accompanying article), but until such help is available to all those in low-paying ministries (an arrangement that would require tens of millions of dollars of funding), debt will be a hidden incentive to pursue higher-paying forms of ministry.
What can be done?
The most effective control on excessive debt is to make sure the student engages in financial planning. Much debt is acquired by default — the student signs the loan papers in order to continue in school, without a careful assessment of the future impact of the repayment. Students should be fully aware of the consequences of borrowing, and fully aware of the economic realities of compensation in the ministry before any loans are taken. Indeed, those students who reported receiving good financial advice — from a parent, the financial aid office at their seminary, or by ecclesiastical officials — were far less likely to report the ministry-corroding stress of debt after graduation.
Financial planning should begin at the beginning — at the first moment a student expresses an interest in ministry. Official forms for enrolling inquirers should ask, “How do you expect to pay for your theological education?” as an opening for financial planning. At every step in the care and candidacy process the student should be considering and updating financial plans.
The long-term solutions are higher levels of funding of theological education and better clergy compensation. Church support of seminaries through the Theological Education Fund, if significantly increased, could enable the schools to keep tuition low and to make grants for living expenses. Clergy compensation should recognize the effort and expense of preparing for ministry. It is in a congregation’s own interest to pay enough to enable its pastor to service educational debt, because clergy in uncomfortable circumstances are highly likely to seek new calls.
If schools, churches, and denominations were to approach the problem of debt with increased determination and sophistication, excessive and unmanageable debts would decline. If left untended, however, growing debt and modest compensation could bring us to the point where few talented and educated leaders will be able to serve the church.
Anthony T. Ruger is Senior Research Fellow at Auburn Theological Seminary’s Center for the Study of Theological Education.
BOP Seminary Debt Assistance Program
New ministers facing financial struggles in their small church pastorates may be able to benefit from the Seminary Debt Assistance Program of the Board of Pensions, Presbyterian Church (U.S.A.).
Full-time Ministers of Word and Sacrament in their first seven years of ministry can receive a grant of up to $2,500 per year for four years to repay educational debt resulting from seeking an M.Div. degree.
Prospective candidates must meet certain qualifications, such as:
“¢ Full-time service as Minister of Word and Sacrament to a church with fewer than 150 members and a budget of $250,000 or less;
“¢ Attendance at a one-day financial planning seminar offered through the BOP;
“¢ Presbytery permission.
Further information is available at 1-800-773-7752 or at the BOP Web site: www.pensions.org.