Debt

Debt and the Seminarian

student-loan-debtEvery spring semester I have the opportunity to speak to our Spiritual Formation students (mostly first-year master’s students) about stewardship. In that discussion, I explain to them that stewardship is about managing resources that belong to someone else. From a spiritual standpoint, God owns everything, and he has entrusted some of those resources—money, time, talents, etc.—to us to use for his Kingdom. Although I attempt to reinforce to my students that stewardship involves much more than money, I spend a significant amount of time talking to them about money and specifically the impact of debt on the ministry. For some of these students, it is the first time they have ever been confronted with how debt could impact their future.

I was reminded of this today as I read a recent article in The Wall Street Journal about student loan debt repayment. Here are some highlights:

  • “Many more students have defaulted on or failed to pay back their college loans than the U.S. government previously believed.”
  • “The new analysis shows that at more than 1,000 colleges and trade schools, or about a quarter of the total, at least half the students had defaulted or failed to pay down at least $1 on their debt within seven years.”
  • “No college saw its repayment rate improve under the revision, and some schools saw their seven-year repayment rates fall by as much as 29 percentage points.”[1]

In my experience teaching stewardship and working in financial aid in the seminary setting, student loan debt is one of the most crushing debts that seminarians face. While my seminary does not participate in any federal loan programs, many students still enter seminary carrying debt from their undergraduate programs. A recent study reported that 68% of graduates from public and nonprofit colleges in 2015 had student loan debt. The average amount of debt per borrower was over $30,000.[2]

If a seminary student enters with this level of debt, he is most likely to defer that loan until he completes 3-4 years of seminary. Over that time, that loan will have accrued interest, and it is possible that he may have even taken on further debt in the form of credit cards, vehicle loans, or medical expenses. Once he graduates from seminary, he may be in debt well over $40,000.

Now let’s couple that debt with a relatively low wage for pastors when compared to careers with similar education levels. According to LifeWay, the average full-time senior pastor of a Southern Baptist church with 75-99 in attendance is $46,981 per year.[3] For the typical seminary student, a salary over $40,000 may sound fantastic. But we have to remember that ordained ministers are considered self-employed by the IRS, so nearly 15% of that salary will be allocated for self-employment taxes (approximately $7,000). Then, the typical seminary student living on campus does not pay market rates for housing, so his overall housing expense goes up. Compound that with other expenses of moving and setting up a home, and the typical seminarian may find it difficult to make payments on his student loans. Then he will become one of the statistics mentioned in the WSJ article.

Helping students avoid the traps of bad debt is one of the goals in my Family and Church Financial Stewardship class at Southwestern Seminary. I don’t want students to question whether or not they can “afford” to accept a call to a church. I want them to be free to go where God calls them because they have been wise stewards of God’s money that he has entrusted to them.

In Proverbs 22:7 we read, “The rich rules over the poor, and the borrower becomes the lender’s slave.” I want my students avoid the slavery of debt and to serve God without the albatross of debt hanging around their necks.

If you’re a student at SWBTS, it’s not too late to sign up. The class meets on Mondays at noon, and I’d love to see you there.

[1] Andrea Fuller, “Student Debt Payback Far Worse Than Believed,” The Wall Street Journal, 18 January 2017.

[2]Project on Student Debt,” The Institute for College Access & Success, 2016.

[3]Compensation by Average Attendance of Church: Senior Pastor Full-Time,” LifeWay, 2016.

Good Reading: Defined by Debt

Steven Smith, VP for Student Services and Communications at Southwestern Baptist Theological Seminary, has a great post on the issue of debt and ministry. Here is an excerpt:

Those who train for the ministry are called to lead a generation addicted to consumerism to embrace the counter cultural message of Christ, who was building toward a kingdom to come. Whatever else the coming generation of pastors does, it must convince people not to live for money in this life, but to invest in the next. Which leads us to a question. How can ministers of the Gospel call a generation to turn from being consumed with money when their own existence is beholden to financial institutions?

At the end of the post, he also gives a link for new M.Div. and college students at SWBTS to apply for a new scholarship program that will cover an entire year of tuition. Check out the entire post here.