Thinking Theologically about Stewardship
Note: Some of the media and spreadsheets below were produced by Auburn Seminary's "Theological Student Debt"
Pursuing a graduate theological education is an exciting and rewarding endeavor that will open up a world of possibilities for ministry, service to others, and future vocational plans. Knowing that graduate school requires significant time and money, Vanderbilt Divinity School is committed to helping our students succeed through smart and sound financial stewardship. To this end, VDS is among 60+ graduate theological schools that have committed to helping students make wise financial decisions and minimize debt. As full participants in the Economic Challenges Facing Future Ministers Project funded by the Lilly Endowment, our institution has increased our programmatic and educational offerings related to all areas of personal and professional finance.
As a starting place, it may be helpful for incoming and current students to review the Consumer Financial Protection Bureau's definition of "Financial Well-Being."
It is always good practice for students to know their current educational debt balance and continue to track those figures throughout their degree program. Students can look up their current balance any time by visiting the National Student Loan Data System.
Top 8 Tips for Financially Preparing to Attend VDS
1. Do the Math! - Once you receive your admission letter and any merit scholarship information, look at the figures for cost of attendance and cost of living to determine exactly what your bill to the school will be as well as other monthly expenditures. You will need this information to create a budget for your time as a student.
2. Research Sources of External Funding - Does your religious tradition or denomination offer support for theological education? Would your local church be willing to offer some financial support for your education? Have you looked through various scholarship search engines? Does your employer offer tuition reimbursement?
3. Develop a Sound/Creative Housing Plan - Rent can be the most expensive item in graduate education. Get creative! Share housing costs by having roommates, or consider living in one of the affiliated housing programs that offers rent at a subsidized cost (The Disciples Divinity House at Vanderbilt, The Friendship House at Vanderbilt, the Intentional Living Community at Scarritt-Bennett Center, etc.). Research affordable neighborhoods. Consider live-in opportunities such as serving as a Resident Advisor/Head Resident on campus, a house manager at a fraternity or sorority house, working as a live-in nanny or caregiver, or locating an off-campus job that includes housing. To explore some of these housing resources, click here.
4. Ask Yourself Tough Questions About Simplicity and Be Honest - Do you need a car? Can you join a family cell phone plan? Can you commit to eating out less frequently and cooking inexpensively at home? Do you need cable and internet at home? Can you forego some of those vacations during this time as a student? Can you give less expensive gifts to family and friends while in school?
5. Explore Which Makes More Sense: Part-Time or Full-Time Status - Will one of these options be more affordable and alloy you to borrow less loans. Example: Some students find that if they work more hours as a part-time student, they do not need to borrow loans to cover housing expenses.
6. Work Smart - Consider full- or part-time employment that will give you the most return for your time. While on-campus jobs usually pay anywhere from $9-$12 per hour, students have successfully located jobs off campus that pay significantly more. Consider whether you have any unique experiences or skills that would enable you to be paid well for your time.
7. Borrow Only What You Need - Once you have done the math and know that you need to borrow some loans to bridge the gap in expenses, borrow the bare minimum to fill that gap. Do not overborrow out of fear of scarcity. If you get in a bind and have not borrowed the maximum, you can always ask the Office of Student FInancial Aid to package up an additional disbursement. If you borrow the maximum from the beginning, you are more likely to spend it all.
8. Have a Plan For Repayment - Borrow an amount that is reasonable relative to the income you are likely to make following graduation. Think of loans as "real money" that will need to be paid back and research which repayment plan you will use following graduation.
Budgeting is an essential tool for theological students. Don't know where to start? Try some of the tools below and see how simple budgeting can be!
Current Divinity students have the opportunity to set up one-time or ongoing financial coaching sessions to receive guidance and support for planning their finances during school and following graduation. For more information, contact Lillian Hallstrand, Director of Stewardship and Vocational Planning.
Debt Repayment Calculators
What are your current debt levels? How much educational debt can you afford to incur based on your intended career path? The calculators below can assist you in navigating repayment numbers and timeframe.
"The rule of thumb for borrowing is that debt should never exceed starting salary."
-Mark Kantrowitz, Publisher of Finaid.org
Student Loan Cautions
Minimizing student loan debt allows for maximum freedom to choose a vocational path with your heart, and give less regard to salary levels. While federal student loans often carry lower interest rates than private loans, they still represent debt, which can be a limiting factor in one's future life plans.
While the Federal Government has an array of repayment options for student loans, there are some cautionary facts to consider:
1. Income-Based Repayment plans have to be reapplied for on an annual basis.
2. Loan forgiveness programs currently available under the Income-Based Repayment Plan and the Pay As You Earn Plan treat any forgiven debt as taxable income, usually at a rate of 25%-30%.
3. There are conversations on the floor of Congress about capping loan forgiveness at anywhere from $30,000 to $57,500.
4. Even if you declare bankruptcy, your federal student loans will not be discharged.
Before you borrow, know the facts by reading the Financial Literacy Guidance From Federal Student Aid document published by the U.S. Department of Education.
How do they do it? How students say they are graduating with minimal debt:
- "I worked as many hours as my schedule would allow."
- "I sought out funding from my denomination and local church."
- "I took 7 years to finish the degree so that I could work and pay out-of-pocket as I went."
- "I saved up money in advance so that I could attend without borrowing."
- "My family helped support me."
- "I made small changes to save money, like canceling cable at $100/month and just sticking with Netflix at $9/month."
- "My partner worked full-time to support both of us while I was in school."
- "It was a priority for me to not have debt so I made sacrifices in lifestyle and worked to have enough money to live simply."
Video: How to Keep from Mortgaging Your Future
This 30-minute video, developed by Auburn Theological Seminary, offers an account of how several students have approached financing a theological education. For detailed budget spreadsheets and information on national studies on theological student indebtedness, please visit the Auburn Theological Seminary website.