Deeper in debt: are seminary students borrowing too much? - Cover Story

Christian Century, Feb 2, 1994 by Anthony Ruger, Barbara G. Wheeler

JOHN OSTERHOLT (not his real name) planned carefully for his seminary education and beyond. After graduating from college he worked for four years, and his parents agreed to take over payments on his college loans. He obtained a $5,000 annual scholarship from a private group. The Lutheran seminary he chose to attend supplemented the scholarship with a grant of its own. With summer work and careful spending, he figured, he could get through the four-year program, which included a year-long internship, in fair financial shape. Once he was ordained and working in a church, his wife, who would stay home during his seminary years to care for their small children, could get her own advanced degree.

But nothing worked out as planned. Living expenses were higher than the seminary had forecast, and costs escalated over the four years of his program; health insurance premiums that were $250 a quarter during the first year of seminary reached $600 by the end. A change in financial aid policy made John ineligible for a supplemental grant from the seminary after the first year. The required internship cut summer earnings, because John had to move his family to the internship site early to enroll his daughter in school. "We lived on loans," he says. By graduation in 1989 he had borrowed $25,000 through government programs.

In order to make payments on these loans and meet other expenses, John considered only positions that paid at the top end of his denominations beginning scale for pastoraI assignments. He got such a job but still found it hard to make ends meet. Though he enjoyed the position, he decided to move when the church council refused to let him join the military reserves as a part-time chaplain--the only thing he could think of to generate some extra cash.

In his new job as associate pastor of a large church, John no longer struggles to pay the bills. The $30,000 that he and his wife earn (she now works pan-time) covers educational debts and payments on the modest mortgage that the church helped them obtain. But John is deeply distressed that his wife has not been able to go back to school and that their daughter, now a junior in high school, "can't count on us paying for her college education. Maybe by the time the seven-year-old is ready to go, we can help." John loves being an associate minister, but he often thinks about learing the ministry for some field where the amount of work and the compensation are better matched.

One hears more and more stories like John's. Seminary presidents commonly describe the rising debt loads of students as the most pressing problem they face. Church executives are also troubled. More seminary students are asking their denominations for financial help than in the past, and fewer graduates can afford to work for minimum salaries. Financially pressed denominations have few resources with which to respond. (John found his Lutheran conference "not very supportive" when he asked for help during seminary and his first assignment.) The frequent reports of debt and the sharp contrast between this situation and the recent past (most senior clergy borrowed little or nothing to finance their educations) have led to fears of an imminent crisis. Are we nearing a time when beginning ministers will be so drastic measures to forestall the crisis--such as redirecting denominational funds from theological schools to needy theological students?

The prevalence of these concerns led the Center for the Study of Theological Education at Auburn Theological Seminary, with the help of the Lilly Endowment, to conduct the first national study of theological student debt. About two-thirds of theological schools in the U.S., including three of the four major rabbinical schools, agreed to provide debt and demographic profiles of more than 5,500 students who graduated in 1991 and the names of earlier graduates (from 1984 and 1989), whom we surveyed. Almost 4,000 people answered our request for detailed information about their careers and finances.

The data surprised us--and contradicted some widespread impressions. More than half of master of divinity graduates and two-thirds of those enrolled for other (usually two-year) masters degrees do not borrow any money during seminary. These figures do not change appreciably even if college debts are considered: 48 percent of M. Div. graduates and 63 percent of others graduate with no formal educational debt of any kind.

Further, most borrowing is in a range that most graduates have found manageable, even on a ministerial salary. Figure I shows that of the 48 percent of 1991 M .Div. graduates who incurred some indebtedness during their seminary studies (hereafter we refer to this as "theological debt"), about half (25 percent of the total) borrowed less than $10,000 and about one-third (or 15 percent of all graduates) owed from $10,000 to $20,000. Only one M.Div. graduate in 14 matched the case of John Osterholt-graduating with more than $20,000 in theological debt.

Johns situation is, of course, no less serious for being atypical. So we studied who the significantly indebted students are. Certain groups, we discovered, tend to incur greater debt than others.