Improving the Economic Well-being of Future Servants 2015 of Jesus Christ–Report Table of Contents Introduction ................................................................................................................................................................2 How Data Was Gathered ........................................................................................................................................2 Brief Description of the Four Surveys.....................................................................................................................3 Report Findings...........................................................................................................................................................7 1.
Tuition Costs Have Risen Sharply Over the Years ...........................................................................................7
2.
Seminary Donors and LCMS Congregations Do Not Realize the True Cost of Seminary Education ...............9
3.
Student Loan Debt Has Risen Sharply Especially Over the Last Two Decades ............................................ 11
4.
Undergraduate Loan Debt Has Increased Over the Years ........................................................................... 13
5.
Student Household Debt From Spouse Has Increased Over the Years ....................................................... 15
6.
Students Who Borrow May Not Know What Financial Challenges They Face in the Future ...................... 16
7.
Students Rely Upon Various Forms of Gift Aid for Funding While at the Seminary .................................... 17
8.
Many Seminary Graduates Are Called to Small Congregations in Rural Settings That May Affect Their Ability to Repay Their Student Loans ........................................................................................................... 20
9.
Seminary Graduates Are Taking Longer to Repay Their Student Loans ...................................................... 21
10. Seminary Donors and LCMS Congregations Do Not Understand How Much Students Rely Upon Loans for Financing Their Education ............................................................................................................................ 26 11. Seminary Donors and LCMS Congregations Do Not Realize the True Sources of Seminary Funding.......... 27 12. Most Donors and LCMS Congregations Would Support a Campaign to Increase Student Aid ................... 28 Actions Taken .......................................................................................................................................................... 29 What’s Next? ........................................................................................................................................................... 29 Conclusion ............................................................................................................................................................... 32
1
Improving the Economic Well-being of Future Servants 2015 of Jesus Christ–Report Introduction In July 2012, Concordia Theological Seminary, Fort Wayne (CTSFW), submitted a grant proposal to the Lilly Endowment Inc. of Indianapolis, Indiana, entitled “Improving the Economic Well-being of Future Servants of Jesus Christ.” The objective of this grant was to discover ways that CTSFW could improve the future well-being of graduates who go out into the world to serve Jesus Christ and His Church. The grant would focus upon the financial well-being of CTSFW students, in particular the problem of student loan debt. Although the issue of student loan debt is a key component of this study, the ultimate goal would be to make lay members, clergy, church body leaders and Seminary supporters more aware of the challenges facing CTSFW students and to motivate them to get involved in providing solutions to this problem. On November 15, 2013, CTSFW was informed that the grant request was approved and the award amount would be $250,000. The grant period is for three years January 1, 2013, through December 31, 2015. Lilly Endowment Inc. requested that program and financial reports be submitted to Lilly in February of 2014, 2015 and 2016.
How Data Was Gathered The first year of the grant (2013) was dedicated to developing and sending out the surveys for the gathering of data. Much time was spent in writing the survey questions. From January to August 2013, there were at least 12 meetings of Lilly Grant committee members and other CTSFW staff involved with survey development. The end result of these meetings produced four different, yet similar, surveys directed toward four target groups. One survey was directed to the current population of students who are enrolled in the three residential programs at CTSFW that produce pastoral ministry and deaconess church workers (M.Div., A.R., M.A. Deaconess) for The Lutheran Church—Missouri Synod (LCMS). A second survey was directed to alumni of CTSFW who graduated in the last 20 years. A third survey was directed to CTSFW donors who had donated $100 or more to CTSFW. The fourth and last survey was directed to a sample of LCMS churches, approximately one-third of the congregations in our church body, chosen at random. The four surveys were tested on a small sample from each target group (alumni, students, donors and congregational leaders) to get their feedback on the clarity of the survey questions and the length of time for survey completion. Based upon the length of time needed by the survey sample groups, it was projected that most people would be able to complete any one of the four surveys in 10 minutes or less. The four surveys were sent out to the intended target groups August through October 2013. The surveys to the current students and the alumni were sent out by email via the Survey Monkey software. The surveys to donors and LCMS congregations were sent out in paper format via postal mail. A pre-addressed, postage-paid business reply envelope was provided with each paper survey. However, these last two surveys also gave the recipients an option to submit their data electronically via the Survey Monkey website. The intended goal of the four surveys was to obtain as many returns as possible, ideally a 100% participation rate. However, in the real world not everyone is able or willing to respond to a survey request. With that in mind, the Lilly Grant committee decided it would be best to offer an incentive for participation to the current students and alumni as well as to send out reminders to each of the four target audiences. The incentive was a $100 gift card to Amazon.com for one randomly selected participant from the current student and alumni surveys. The two winners were selected at random by the Survey Monkey software. Email reminders were also sent to the current students and alumni to encourage them to respond to the survey invitation. For the donor and LCMS congregation surveys, a postcard was mailed to the recipients about five weeks after the initial survey mailing to remind and encourage them to complete the survey. The surveys sent to the LCMS congregations
2
Improving the Economic Well-being of Future Servants 2015 of Jesus Christ–Report were addressed to the congregational president with the pastor of the congregation also receiving a copy of the letter. The final participation responses to the four different surveys were varied. The following table indicates the final response percentages that were obtained from the four different surveys. Send Date 10/07/13
Survey Close Date 11/30/13
Number Returned 542
% Response 43.92%
194
09/13/13
11/1/13
166
85.57%
CTSFW Donors
4,002
08/31/13
11/1/13
742
18.54%
LCMS Congregations
1,964
09/23/13
1/16/14
357
18.18%
Survey Graduates Current Students
Number of Surveys sent 1,234
The graduate and current student surveys received the best response rates of 44% and 86% respectively. It was expected that the current student survey would have the best response rate since the students themselves are more closely tied to the problem of educational debt and were sent several email reminders. The donor and congregational surveys had response rates of 19% and 18% respectively. For the donor survey, 4,002 surveys were sent out and 742 surveys were returned. This return rate provides a 95% degree of confidence in the results with a 5% error rate. Some of the donors telephoned or wrote on their paper surveys which they returned indicating that they felt unqualified to complete the answers to the survey. For the congregation survey, 1,964 surveys were sent out and 357 surveys were returned. This return rate provides a 95% degree of confidence in the results with a 5% error rate.
Brief Description of the Four Surveys Survey of Current CTSFW Students (electronic survey) The current CTSFW student electronic survey contained a total of 18 multiple choice questions. Each question presented to the survey participant required an answer to be selected in order to progress to the next question. The first section of the survey asked personal demographic questions: What theological degree are you working on? What year are you in your program? What is your age? What is your marital status? How many dependent children do you have? How many hours a week do you work? The next section asked specific questions about financial matters: Rank the importance of the various sources of funding available to you while at seminary. How much educational debt did you have entering seminary? How much educational debt have you incurred while at seminary? How much educational debt do you currently have including your spouse’s educational debt? What will your estimated monthly loan payments be after graduation? Which loan repayment options are you considering? How many years will it take to repay your student loans?
3
Improving the Economic Well-being of Future Servants 2015 of Jesus Christ–Report
How much consumer debt do you currently have? Where have you received help in managing your personal finances?
Survey of CTSFW Graduates-Alumni (electronic survey) The alumni electronic survey contained a maximum of 31 multiple choice questions with the inclusion of skip logic that would eliminate certain questions that would not apply to an individual depending upon how they answered the previous question. Each question presented to the survey participant required an answer to be selected in order to progress to the next question. The first section of the survey asked for personal demographic information: Theological degree received Gender Age Marital status Number of years in the ministry The next section asked various questions regarding the survey participant’s current service: What type of duties do you fulfill? Do you serve in a congregation or an institutional setting? How many congregations or institutions are you serving? What size of community are you serving? What is the average weekly worship attendance? How many individuals or families do you serve (if serving in an institutional setting)? Do you hold another paid position in addition to your ministerial duties? The third section contained specific questions about financial matters: What sources of funding did you receive while at seminary? How much educational debt did you have entering seminary? How much educational debt did you incur while at seminary? How much educational debt did you have leaving seminary? How much educational debt do you currently have including your spouse’s educational debt? What is the current level of your consumer debt? The last section included questions such as: How adequate are your current finances? What is the current status of your student loans? What is your monthly education debt payment? Which loan repayment option did you choose? How many years will it take to repay your student loans? Have you received outside help with paying your student loans? What is your total household cash income before taxes? Would you be willing to support a campaign to increase CTSFW student financial aid?
4
Improving the Economic Well-being of Future Servants 2015 of Jesus Christ–Report Survey of CTSFW Donors (paper and electronic survey) The CTSFW donor survey contained a total of 19 multiple choice questions which were the same for both the paper and electronic versions of the survey. The first section of the survey asked various questions: What is your gender? What is your age? What is your marital status? Have you ever visited the Seminary campus? Have you donated to any seminary programs in the past? Has your congregation had contact with seminary students, faculty or staff? The next section asked various questions regarding the survey participant’s perception of seminary funding: What are the various sources of funding the Seminary budget? What percentage of the Seminary budget comes from tuition, fees, Synod, district, congregations, donors and endowments? The next section asked questions about debt and costs for seminary students: How much educational debt does the average student bring to the Seminary? How much does it cost for tuition, books and fees for one academic year? How much does it cost to live on campus for one academic year? How much does it cost to live off campus for one academic year? With how much educational debt does the average seminary student graduate? The final section contained specific questions about financial resources: What importance to seminary students are the various sources of funding? How many hours a week do students work while attending seminary? The last survey question asked if the respondent agreed with a series of six statements regarding the level of debt of future church workers, financial literacy training for students and whether the respondent would be willing to support a campaign to increase seminary student financial aid.
5
Improving the Economic Well-being of Future Servants 2015 of Jesus Christ–Report Survey of LCMS Congregations (paper and electronic survey) The LCMS congregation survey contained a total of 20 multiple choice questions which were the same for both the paper and electronic versions of the survey. The first section of the survey asked various questions: What is your position of leadership in the congregation? In what size community is your congregation located? What is the average weekly attendance of your congregation? What seminary did your pastor attend? How often does your congregation contribute to the Seminary? What seminary programs has your congregation supported in the past? Has your congregation had contact with seminary students, faculty or staff? The next section asked various questions regarding the survey participant’s perception of seminary funding: What are the various sources of funding the Seminary budget? What percentage of the Seminary budget comes from tuition, fees, Synod, district, congregations, donors and endowments? The next section asked questions about debt and costs for seminary students: How much educational debt does the average student bring to the Seminary? How much does it cost for tuition, books and fees for one academic year? How much does it cost to live on campus for one academic year? How much does it cost to live off campus for one academic year? With how much educational debt does the average seminary student graduate? The final section contained specific questions about financial resources: What importance to seminary students are the various sources of funding? How many hours a week do students work while attending seminary? The last survey question asked if the respondent agreed with a series of six statements regarding the level of debt of future church workers, financial literacy training for students and whether the respondent would be willing to support a campaign to increase seminary student financial aid.
6
Improving the Economic Well-being of Future Servants 2015 of Jesus Christ–Report Report Findings 1. Tuition Costs Have Risen Sharply Over the Years Over the last 30 years (1984–2014) the cost of higher education has risen steeply. During that same time period, the net annual tuition cost at CTSFW has gone from $2,570 to $12,848, an increase of 400% or about 5.5% per year. Using the Bureau of Labor Statistics http://www.bls.gov/data/inflation_calculator.htm to provide a point a reference, the inflation rate between 1980 and 2013 was 183%.
Historical Tuition & Fees (CTSFW) $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0
Tuition Grant
Net Tuition Paid by the Student
This trend is not unique to CTSFW as can been seen in the findings of a recent report from the Auburn Center for the Study of Theological Education, www.auburnseminary.org/sites/default/files/ ToilandTribulation_AuburnSeminary.pdf, July 2014, which shows how seminary tuition has increased among Association of Theological Schools seminaries.
7
Improving the Economic Well-being of Future Servants 2015 of Jesus Christ–Report Although the total tuition has risen dramatically in the past 30 years, the percentage of the net tuition paid by the student has dropped from 85% to 50%.
Net Tuition Percentage of Total Tuition 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 1980-1981 1981-1982 1982-1983 1983-1984 1984-1985 1985-1986 1986-1987 1987-1988 1988-1989 1989-1990 1990-1991 1991-1992 1992-1993 1993-1994 1994-1995 1995-1996 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014
0%
From 1998-2002, the Seminary operated a Tuition Guarantee Program. Its foundation was a tuition grant of 35% of demonstrated need (later reduced to 30%). Need was defined as Cost of Attendance minus Expected Family Contribution. To that amount was added all other outside gift aid, e.g., district, home church, outside scholarships and student adoption funds. If grant money and outside aid combined failed to meet or exceed actual tuition costs, additional grant money was added to meet the actual tuition cost. This program essentially resulted in 100% tuition coverage (from all sources). This was not a sustainable financial model for the Seminary. Since 2002, the Seminary has operated with a shared funding model in which the Seminary has offered in some years up to 70% tuition grant. For the most recent years, the tuition grant is about 50% of the total cost of tuition.
8
Improving the Economic Well-being of Future Servants 2015 of Jesus Christ–Report 2. Seminary Donors and LCMS Congregations Do Not Realize the True Cost of Seminary Education The donors and congregations responded similarly to the questions regarding the cost of seminary education as shown in the following charts. When answering the question “What do you think is the cost for CTSFW tuition, books and fees for one academic year?”, the responses from the donors and congregations were split approximately in thirds between the answers of less than $10,000, less than $20,000 and less than $30,000.
What do you think is the cost for CTSFW tuition, books and fees for one academic year? 29%
29%
30%
26%
31% 28%
14%
<$10K
<$20K Donors
<$30K
13%
More than $30K
Congregations
The actual undiscounted cost for tuition, books and fees for academic year 2012–2013 was $27,200 for three academic quarters. For those qualifying for the full 50% tuition grant, this figure was reduced to $14,900.
9
Improving the Economic Well-being of Future Servants 2015 of Jesus Christ–Report When answering the question “What do you think is the living expense cost for a single/married CTSFW student living on/off campus one academic year?”, the donor and congregation populations also responded similarly. More than half of the donor and congregation respondents thought the living costs for a single student were less than $10,000 when in fact for academic year 2012–2013, they were $15,800. Similarly, more than half of the donor and congregation respondents thought that the living costs for a married student were less than $20,000 when in fact for academic year 2012–2013, it ranged from $20,600 to $28,600 depending upon the number of dependents.
What do you think is the living expense cost for a single/married CTSFW student living on/off campus for one academic year? 57% 52% 42% 40% 42% 33%
32% 33%
14% 13%
14% 8%
<$10K Donors - Single
10
<$20K Congregation - Single
5% <$30K
Donors - Married
11%
2% 1% More than $30K Congregation - Married
Improving the Economic Well-being of Future Servants 2015 of Jesus Christâ&#x20AC;&#x201C;Report 3. Student Loan Debt Has Risen Sharply Especially Over the Last Two Decades In a span of about 20 years, the number of students relying upon student loans has increased from 31% to 84%.
Reliance Upon Federal Student Loans 84% 69% 53%
58%
46% 31%
Years Since Ordination or Commissioning >20 16-20 11-15 7-10 3-6 0-2
In that same span of 20 years, the number of students incurring more than $30,000 of educational debt while at Seminary has increased from three percent to 59%.
More Than $30K in Educational Debt Incurred While at Seminary 59%
40% 28% 15% 3%
6%
>20 Yrs
16-20 Yrs
Years Since Ordination or Commissioning
11
11-15 Yrs
7-10 Yrs
3-6 Yrs
0-2 Yrs
Improving the Economic Well-being of Future Servants 2015 of Jesus Christâ&#x20AC;&#x201C;Report In that same span of 20 years, the number of students graduating with more than $60,000 combined educational debt (undergraduate and seminary) increased from 3% to 40%.
More Than $60K Educational Debt for Loan Repayment After Leaving Seminary 40%
22% 13% 3%
4%
5%
Years Since Ordination or Commissioning >20 Yrs
16-20 Yrs
11-15 Yrs
7-10 Yrs
3-6 Yrs
0-2 Yrs
This trend is not unique to CTSFW as can be seen in the findings of a recent report from the Auburn Center for the Study of Theological Education, www.auburnseminary.org/sites/default/files/Taming-TempestFinal.pdf, October 2014, which shows an increasing amount of undergraduate and seminary debt being accumulated by students who attend Association of Theological Schools seminaries.
12
Improving the Economic Well-being of Future Servants 2015 of Jesus Christâ&#x20AC;&#x201C;Report 4. Undergraduate Loan Debt Has Increased Over the Years The problem of student debt at the seminary level actually begins at the undergraduate level. Most current CTSFW students (60%) come to the Seminary with undergraduate debt.
No Educational Debt Upon Entering Seminary 72% 66% 59%
62%
49% 41%
> 20 Yrs
16-20 Yrs
Years Since Ordination or Commissioning 11-15 Yrs
7-10 Yrs
3-6 Yrs
0-2 Yrs
40%
Current Students
The number of students who enter seminary with no debt has decreased from 72% to 40% in 20 years.
13
Improving the Economic Well-being of Future Servants 2015 of Jesus Christâ&#x20AC;&#x201C;Report Educational Debt Upon Entering Seminary 36% 33% 28%
27%
26%
25%
24% 21%
20% 21% 16%
19%
15%
8% 4%
4% 0% <$20K > 20 Yrs
0%
2% 1%
<$40K
Years Since Ordination or Commissioning 16-20 Yrs
11-15 Yrs
7-10 Yrs
3-6 Yrs
0-2 Yrs
3%
$40K and Greater Current Students
Nearly 20% of the most recent graduates and 25% of the current students have $40,000 or more in undergraduate debt.
14
Improving the Economic Well-being of Future Servants 2015 of Jesus Christâ&#x20AC;&#x201C;Report 5. Student Household Debt From Spouse Has Increased Over the Years In a span of 20 years, the number of students with a spouse who has significant educational debt increased from 0% to over 30%.
Spouse/FiancĂŠe with Educational Debt 30%
16%
32%
18% 14%
6% 0% >20 Yrs
16-20 Yrs 11-15 Yrs
7-10 Yrs
3-6 Yrs
0-2 Yrs
Current Students
When this survey was administered, one-third of current student households had educational debt of $60,000 or more.
Total Educational Debt (Including Spouse's Debt) 33%
22% 19%
17% 10%
None
15
<$20K
<$40K
<$60K
More than $60K
Improving the Economic Well-being of Future Servants 2015 of Jesus Christâ&#x20AC;&#x201C;Report 6. Students Who Borrow May Not Know What Financial Challenges They Face in the Future There are seven loan repayment options available to the most recent graduates: Standard, Graduated, Extended Fixed, Extended Graduated, Income-Based Repayment (IBR), Pay as You Earn and IncomeContingent Repayment (ICR). Students must review each of the repayment options and weigh the impact each has on their individual situation. The current students were asked to select all of the repayment options they are considering. More than one-third of current CTSFW students do not know what kind of loan repayment plan they will be facing in the future. One-third of the current CTSFW students are considering Standard and another third the IncomeBased Repayment options. More than one-third of current CTSFW students are not sure how much their monthly payments will be, and one-quarter of current CTSFW students are not sure how long it will take to repay their loans.
Which Repayment Options Are You Considering? 36%
36%
31% 16%
What Do You Estimate Your Monthly Payments Will Be? 35% 30%
20% 19%
<$350
How Long Will It Take to Repay Your Loans? 26%
26%
25% 23%
Up to 10 Yrs Up to 20 Yrs More than 20 Yrs
16
Not Sure
16%
<$500
>$500
Not Sure
Improving the Economic Well-being of Future Servants 2015 of Jesus Christâ&#x20AC;&#x201C;Report 7. Students Rely Upon Various Forms of Gift Aid for Funding While at the Seminary From the perspective of current CTSFW students, the Seminary tuition grant program is the most important part of their financial aid package, probably because it is the only form of grant money that is guaranteed and known in advance. However, students highly value the Seminary Student Adoption Program as well as the CTSFW Food and Clothing Co-op. Student Adoption Program gifts can be used for educational or living expenses while the Food and Clothing Co-op provides gifts-in-kind to offset food, clothing and household needs.
Sources of Support Ranked as Important and Very Important 95% 83% 72%
70%
69%
68%
65% 52%
17
51%
Improving the Economic Well-being of Future Servants 2015 of Jesus Christ–Report District financial aid and home congregation support are also very important factors in the student’s overall financial aid package.
Total LCMS District Support $ Received by the Seminary
Average LCMS District Support Award Per Student
$380,065
$2,403
$339,811 $336,995 $310,045 $280,926 $273,942
$2,349 $2,361
$2,332
$2,308
$2,111
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Over a six year period, the total amount of support from LCMS districts has decreased by more than 35%. This decrease is most likely directly related to the significant decrease in M.Div./A.R./deaconess students at the Seminary. During this time period, about 77% of the residential students have received, on average, $2,310 per academic year from their district. The value of this support has remained constant in the last six years and translates to about 15% of the student’s net tuition for the 2012–2013 academic year. The percentage of students served from year to year varies for a number of reasons, such as: 1) Some districts do not support deaconesses; therefore not all deaconess students receive district aid. 2) Some students are accepted to the Seminary too late to meet their district aid application deadline. Reasons for this include students failing to get their admission application forms turned in on time; or issues beyond the student's control (district interview schedule, letters of recommendation, etc.) which cause them to be delayed in the acceptance process. 3) Some districts have very early deadlines in April and May, but others are as late as August, which can affect a student's ability to complete required tasks in time to qualify for district support. 4) Some districts do not give any aid to seminary students while in school and wait to support them only after they graduate and are placed. Although the average district support is $2,310 per year, there is a wide disparity in the amounts districts award to individual students, from as little as $284 to $12,050 per year. Sometimes students with great financial need receive little or no support from their home district.
18
Improving the Economic Well-being of Future Servants 2015 of Jesus Christâ&#x20AC;&#x201C;Report Total Home Congregation Support $ Received by the Seminary
Average Home Congregation Support $ Received Per Student $3,364
$279,179 $274,167 $246,708 $240,096 $224,108 $219,450
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
$2,825 $2,850 $2,873
$3,013
$2,625
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Over a six year period, the total increase of support from home congregations has increased by a little more than 10%, which is less than the increases in the cost of living. During this time period, less than half of the residential students have received, on average, about $2,700 per academic year from their home congregation. The amount of this support has increased somewhat since the Financial Aid Office began requesting a specific amount of support for their student each year. This level of support translated to less than 25% of the studentâ&#x20AC;&#x2122;s net tuition for the 2012â&#x20AC;&#x201C;2013 academic year.
19
Improving the Economic Well-being of Future Servants 2015 of Jesus Christ–Report 8. Many Seminary Graduates Are Called to Small Congregations in Rural Settings That May Affect Their Ability to Repay Their Student Loans A review of the CTSFW graduate survey responses indicates they are most likely to be placed in: A congregation that is located in a rural or small town setting with the average weekly attendance less than 100; Or a multi-point congregation, also located in a rural or small town setting, with the average weekly attendance less than 100.
% Serving Size of Community
% Serving More than One Congregation 31%
60% 26% 22% 18%
Rural/Small Town
21%
19%
Suburban
Urban
Average Weekly Attendance 55%
32%
13%
< 100
20
100 - 249
> 249
0-6 Years
7-15 Years 16-20 Years More than 20 Years
Improving the Economic Well-being of Future Servants 2015 of Jesus Christâ&#x20AC;&#x201C;Report 9. Seminary Graduates Are Taking Longer to Repay Their Student Loans The average starting salary for a graduate has increased from just under $26,000 in 1998 to $40,000 in 2013. Many congregations calling CTSFW graduates may not be able to provide a salary that meets the average but may be able to assist the graduate with a parsonage and gifts-in-kind (e.g., produce from gardens and farms). Of the most recent graduates, only 16% of the respondents reported they had no educational debt, while 44% of the respondents had debt up to $60K and the remaining 40% of the respondents had debt greater than $60K (over 10% had more than $100K). It is expected that the current student population will have similar financial circumstances.
Total Educational Debt for the Most Recent Graduates After Leaving Seminary 44%
40%
16%
None
21
<$60K
$60K and Greater
Improving the Economic Well-being of Future Servants 2015 of Jesus Christ–Report The Consumer Financial Protection Bureau (CFPB) categorizes debt burden as follows: Low Debt Burden: Monthly payment less than 8% of monthly gross income Medium Debt Burden: Monthly payment between 8% and 14% of monthly gross income High Debt Burden: Monthly payment greater than 14% of monthly gross income The following charts show the ANNUAL INCOME REQUIRED FOR EDUCATIONAL LOANS when calculated using an interest rate of 6.8% and a medium debt burden level of 11% for the Standard 10-year repayment plan and the Extended 25-year repayment plan.
Repaying Educational Loans Using Standard 10-Year Loan Option Annual Income Required
$125,556 $100,476 $75,276 $50,184
Loan of $40,000 Total Payment $55,239
22
Loan of $60,000 Total Payment $82,858
Loan of $80,000 Loan of $100,000 Total Payment $110,477 Total Payment $138,096
Improving the Economic Well-being of Future Servants 2015 of Jesus Christ–Report
Annual Income Required
Repaying Educational Loans Using Extended 25 Year Loan Option $75,708 $60,540 $45,384 $30,324
Loan of $40,000 Total Payment $83,289
Loan of $60,000 Loan of $80,000 Loan of $100,000 Total Payment $124,933 Total Payment $166,577 Total Payment $208,222
These charts reinforce what many of the recent graduates reported–namely, that they expect it will take more than 20 years to repay their educational debt loans.
23
Improving the Economic Well-being of Future Servants 2015 of Jesus Christâ&#x20AC;&#x201C;Report Years to Repay All Educational Loans 56% 52% 47% 40%
38% 33% 27%
25%
23%
26%
18% 15%
Up to 10 Yrs
Up to 20 Yrs
More than 20 Yrs
Years Since Ordination or Commissioning
Graduate Aggregate
7-10 Yrs
3-6 Yrs
0-2 Yrs
In reality, many of our students arrive with more educational debt than they can expect to service with a pastorâ&#x20AC;&#x2122;s salary using the Standard 10-year repayment plan. Another way to look at this is that many of the recent graduates leave with educational debt equivalent to a home mortgage with an interest rate greater than a typical home mortgage. NOTE: For many years, the interest rate for student loans was not changed. Recently, the interest rate for student loans was changed so that it is reviewed and adjusted each year per market conditions. The interest rate for Direct Unsubsidized Stafford loans is 6.21% for the 2014-2015 academic year. The interest rate was 5.41 % for the 2013-2014 academic year and 6.8% for the 2012-2013 academic year. The interest rate is fixed for the life of the loan at the rate at which the student borrowed for that academic year.
24
Improving the Economic Well-being of Future Servants 2015 of Jesus Christâ&#x20AC;&#x201C;Report Most CTSFW graduates reported they selected either the Standard or the Income Based Repayment (IBR) options. More of the recent CTSFW graduates are using the Income Based Repayment plan as these plans offer lower monthly payments spread out over a greater length of time, 20-25 years rather than the 10-year Standard repayment plan. For the most recent graduates of CTSFW (0-2 years), 50% are now choosing the IBR plans whereas only a little over 40% are choosing the Standard 10-year repayment plan.
Loan Repayment Options Used 71%
57%
60%
58% 52%
50% 43% 31%
0% Standard
3%
6%
9%
Income Based Repayment
Years Since Ordination or Commissioning
>20 Yrs
25
16-20 Yrs
11-15 Yrs
7-10 Yrs
3-6 Yrs
0-2 Yrs
Improving the Economic Well-being of Future Servants 2015 of Jesus Christ–Report 10. Seminary Donors and LCMS Congregations Do Not Understand How Much Students Rely Upon Loans for Financing Their Education Most donors believe that students are working to support themselves with an outside job while attending seminary.
How Many Hours Do Students Work While at Seminary? 86%
1%
0%
None
13%
12%
Less than 10 Hrs/Wk Donors
88%
More than 10 Hrs/Wk
Congregations
The survey reports that more than one-third of CTSFW students are not working while attending seminary. Whether this is due to a lack of available jobs, low wages creating a low return on the student’s efforts or a lack of time due to seminary studies or family commitments, this study cannot determine.
Current Students Report Hours Working While at Seminary 41%
None
30%
29%
Less than 10 Hrs/Wk
More than 10 Hrs/Wk
In reality, more students borrow to support themselves rather than work an outside job as assumed by responding donors and congregations. As a point of reference, full-time students at CTSFW taking 15 credit hours per quarter are expected to spend approximately 15 hours each week in the classroom and an additional 30–45 hours outside of the classroom completing assignments and preparing for class. In addition, there are fieldwork responsibilities at local congregations and institutions that can account for another eight hours per week. This means students are spending up to 68 hours per week fulfilling academic requirements.
26
Improving the Economic Well-being of Future Servants 2015 of Jesus Christâ&#x20AC;&#x201C;Report 11. Seminary Donors and LCMS Congregations Do Not Realize the True Sources of Seminary Funding The donors and congregations were asked to estimate the major sources of revenue for the Seminary budget. (They were told not to worry about ensuring the answers added up to 100%.) The charts below reflect a rough estimate of the responses from each survey group.
Donors: Major Revenue Sources for Seminary Budget 35%
LCMS Congregations: Major Revenue Sources for Seminary Budget
35%
50% 10%
10%
25%
25% 10%
The Seminaryâ&#x20AC;&#x2122;s actual budget from fiscal year 2013 is presented in the chart below.
Major Revenue Sources for Seminary Budget 62%
17% 6% Tuition & Fees
Ind. Donors/ Endowments Congregations/ Grants
13% 2% LCMS Subsidy
Other
Both the donor and congregation survey groups overestimated the amount of revenue that the Seminary receives from both tuition and fees and the LCMS. CTSFW and Concordia Seminary, St. Louis (CSL), are the only two seminaries accredited by the American Theological Schools to be classified as donor-driven rather than tuition or endowment driven. This means that more than 50% of our budget is funded annually by generous gifts from our donor base. This may include current year fundraising or estate gifts that are released to assist with the tuition grant provided by the Seminary.
27
Improving the Economic Well-being of Future Servants 2015 of Jesus Christâ&#x20AC;&#x201C;Report 12. Most Donors and LCMS Congregations Would Support a Campaign to Increase Student Aid Donors and LCMS congregations feel empathy for seminary students with large amounts of debt and are willing to help alleviate this problem.
I would be willing to support with my prayers and gifts a campaign to increase CTSFW student financial aid. 68%
57%
Donors
28
Congregations
Improving the Economic Well-being of Future Servants 2015 of Jesus Christ–Report Actions Taken CTSFW has taken several steps to increase the awareness of the financial challenges faced by seminary students and to encourage more support for future church workers. A “Support Future Servants” webpage (http://ctsfw.edu/SupportFutureServants) dedicated to this topic was developed to provide information and products from the Lilly Grant Project. The goal is to encourage people to use the materials from this webpage to raise awareness and support for seminarians and church work students from their own congregations, circuits and districts. The webpage contains:
A brochure that can be downloaded and printed for congregational use. A bulletin insert that can be downloaded and printed for congregational use. Fund raising ideas with suggestions on what congregations and individuals can do to help seminarians and church work students. The June 2014 issue of CTSFW’s magazine “For the Life of the World” on student debt that contains information on the Lilly Grant survey conducted in 2013. “Support Future Servants” video which shows the problem of student debt from different perspectives. A “How Can You Help” section that explains options to make gifts through online giving opportunities and Student Adoption.
CTSFW will also be sending representatives to attend the various 2015 district conventions of The Lutheran Church--Missouri Synod to share these materials.
What’s Next? It will take time to digest all of the findings of this study. One conclusion that will inevitably be drawn is that seminary education, especially the formation of pastors, demands significant resources. While some might suggest that the remedy would be to scale back the training of pastors, we at CTSFW are convinced that this would not be in the best interests of the Church. It is becoming increasingly evident that Christians live in a hostile environment in which controversial issues such as same-sex marriage, gender identity, physician-assisted suicide, and, most recently, religious freedom, threaten the very fabric of our society and pose a significant challenge to the Church’s confession of the faith. More than ever, we need pastors who are thoroughly equipped to lead God’s people toward a faithful confession of what we believe and teach. While the Seminary continues to search for innovative ways of equipping future pastors for the challenging demands that will be placed upon them, nothing can replace the daily one-on-one interaction that students have both with the faculty and with each other. To that end, CTSFW pledges nothing less than the preparation of well-equipped pastors who are able to lead the faithful to contend for the faith (Jude 3).
29
Improving the Economic Well-being of Future Servants 2015 of Jesus Christ–Report Moving on to specific steps that will help to improve the economic well-being of future servants of Jesus Christ, the Seminary administration will take the following actions immediately. 1. Require all students to participate in some form of financial literacy program. A clear finding from our research shows that the donors and congregations we surveyed view student loans as the lowest among a number of options for funding seminary education. The reality, however, is that the ready availability of federal loans has made them the most common form of support for our students. Given that such high levels of debt will require many years of repayment and, in many cases, significant financial burden, the administration believes that it must help the students become fully aware of how their future will be burdened as they struggle to service their accumulating debt. To that end, the Seminary will require all students to participate in various forms of financial literacy instruction. How extensive that instruction is will depend upon the amount of debt that a student is carrying. One of the best known programs currently available is Financial Peace University (FPU). In past years, funding from the LCMS Indiana District made it possible for CTSFW students to attend FPU classes that were offered in local congregations. The grant, unfortunately, is no longer available. While the FPU Program would be the most intensive piece of financial literacy required by the Seminary, it will likely not be the only one. Assuming that FPU becomes the primary form of instruction for first-year students, secondand fourth-year students will be asked to participate in additional, though less rigorous, instruction in order to build upon the principles gained in FPU. Central to the strategies promoted by FPU is the goal of students making a realistic budget and then sticking to it. This process is also recommended by the Center for the Study of Theological Education at Auburn Theological Seminary. The concluding remarks in “Resources for Student Financial Planning” (www.auburnseminary.org/sites/default/files/Financial%20Aid%20Officers4.pdf), however, go even further: Many students will find that even after budgeting, collecting information about the impact of borrowing, planning and researching additional funding sources, there is still a financial gap. One more effective strategy remains: spend less. In the course of Auburn’s research, we have met students who found a variety of ways to save: from living with roommates to going without a cell phone. The cost-savings from such temporary measures have long-term impact on financial well-being. Developing frugal habits has other long term benefits too. Many religious professionals will work for relatively low salaries. Learning to live well on less income is an art, the mastery of which can begin in seminary. At the same time, it is important for students to build a little leeway for small luxuries into their financial plans. Flexibility will help to lower stress; if stress builds, students may be tempted to abandon targeted spending levels and to compensate through additional borrowing. It is possible to get through seminary with manageable levels of debt, if students are thoughtful and deliberate in their financial choices and if all possible avenues of financial aid are pursued as well. By contrast, graduates’ personal and professional lives can be seriously compromised if they borrow indiscriminately, taking on debt without seriously considering the final cost of repayment within the context of future earnings.
30
Improving the Economic Well-being of Future Servants 2015 of Jesus Christâ&#x20AC;&#x201C;Report While students may naturally find this message difficult to hear, it is imperative that the Seminary help them to prepare for the realities of a life of service in the church. 2. Provide regular updates to the students on the status of their student loans. Another finding from our research reveals that a significant number of students do not have a clear understanding of their long-term financial status, specifically, how their student loan debt will impact them when repayment begins. In order to leverage the increased financial literacy gained in the previous step, the CTSFW Financial Aid Office will provide regular updates to students that will help to project the actual cost of servicing the student loans once the student has graduated and is placed. 3. Make adjustments to the calculation of the CTSFW tuition grant in order to continue benefitting those who have the most need while at the same time reducing the net tuition that all students must pay. Currently, the Seminaryâ&#x20AC;&#x2122;s tuition grant is calculated on the basis of the Expected Family Contribution (EFC) score that is reported following the completion of the Free Application for Federal Student Aid (FAFSA). While students coming directly from undergraduate studies to the Seminary invariably qualify for the maximum CTSFW aid, second-career students and deaconess students in the hybrid (online) program frequently do not. Because the task of completing the FAFSA is quite demanding, some of these students may not find it worth their while to make the effort. In addition, the FAFSA itself is not an ideal tool for determining financial need at the graduate level. While it works well to determine the ability of parents to contribute toward the education of their dependent children, it is not as helpful for independent adults. Furthermore, the FAFSA does not take into consideration the fact that a person leaving a career to attend the Seminary will no longer have a steady income after matriculation. In addition, future changes by the U.S. Department of Education to the calculation of the FAFSA may render it even less useful to these students. The Seminary recommends developing a two-tier system in which all students would be guaranteed a certain level of tuition assistance regardless of their financial need without the completion of the FAFSA. Students who demonstrate significant need (which is currently 90% of our full-time residential students in church formation programs) would be awarded up to the full tuition grant, based upon their EFC scores that are calculated after completing the FAFSA. 4. Increasing endowments that will provide greater support to tuition assistance. There is universal agreement that the Seminary must undertake a major effort to increase its general student aid endowment in order to provide an increased and sustained level of financial assistance to students in future years. Relying upon the Annual Fund as the major source of support for our students is not as effective as one would like; neither is it sustainable. Unquestionably, increasing the student aid endowment must be a priority of any future capital campaign.
31
Improving the Economic Well-being of Future Servants 2015 of Jesus Christâ&#x20AC;&#x201C;Report 5. Raising the level of awareness of student need at the congregation, district and Synod levels. While there is a general sense within the congregations of the Synod that many of our future pastors are accumulating education debt, it is clear that most are not aware how significant those levels of indebtedness have become for some. The Seminary will develop a comprehensive plan to raise awareness of this growing challenge by forming partnerships at the congregation, district and Synod levels. Districts and congregations can be encouraged, for example, to explore the possibility of establishing loan repayment plans during the first years of a graduate's time of service in order to help mitigate the initial burden of servicing their debt. The Lutheran Church Extension Fund, which already offers an excellent program that assists graduates in consolidating their loans into a manageable plan, can be encouraged to partner with districts and congregations to find new ways of addressing this challenge so that the many constituencies in the Synod can become a part of the solution to this growing problem. Finally, CTSFW will invite the Concordia Seminary, St. Louis, Board of Regents to join together in petitioning the Synod to make the issue of educational debt a high priority that requires concrete action.
Conclusion Concordia Theological Seminary, Fort Wayne, understands that this study is just a first step in solving the challenge of educational debt among pastors and church workers. Recognizing that the entire body of Christ must become involved in the support of future servants of the church, a major goal of this study is to make congregations, districts, donors and laypeople more aware of the financial challenges that future church workers face. We are grateful to the Lilly Endowment Inc. for its support of this study and believe it will be a blessing both to our students and to our Seminary. We welcome your continued prayers and support for this endeavor. May the Triune God guide and bless the efforts of â&#x20AC;&#x153;Improving the Economic Well-being of Future Servants of Jesus Christ.â&#x20AC;?
32