Student Loan Reform in Future?

forbesAn article passed along to me this week with a lead that caught my attention:

A growing number of student loan borrowers — nearly one in three — aren’t making headway in paying down their loans five years after leaving school.

A couple of brief observations:

1.) 2/3 Borrowers with more then $50k in debt aren’t paying down their balances. It’s ‘compound interest’ in reverse – if you owe a lot, the minimum payments just barely – or in some cases don’t – cover the accruing interest. I noted this has a striking similarity to Negative Amortization Mortgages that contributed to the financial meltdown a decade ago.

2.) One of my major concerns two years ago was that the government could change it’s rules anytime on loan forgiveness. This article mentions several proposals that are on the table to do just that including eliminating the Public Service Loan Forgiveness plan altogether. It’s one of the main reasons I don’t think using any version of the loan forgiveness plan should ever be your primary payoff strategy.

3.) We’ve noted before about how the government makes over $50 Billion in profit from the student loan program each year. That enormous cash cow for those in power is the primary reason I don’t predict significant student loan reform for the benefit of the borrowers. In fact, this article says the proposed reforms will earn the government an additional $104 Billion over the next ten years. Incredible.

4.) If the government was actually serious about reform for the benefit of the American citizen, there are a number of options. For example they could put a hard cap on total student borrowing at the median household income ($55,775 in 2017), limit borrowing to the cost of tuition, or financially involve the educational institutions.

Conversation with Josh Collier

josh-cI got to know Josh last year when we were stuck at the Pittsburgh airport together. He was kind enough to buy me lunch and I can confirm he pays with cash! He is a graduate of Denver Seminary currently working with Dave Ramsey’s organization teaching financial principles. He is uniquely understanding to the real life financial stress of being a graduate student.

 What years were you at Denver Seminary, what was your focus, and what are you doing now?

My family and I were at Denver Seminary beginning in August of 2007 and graduated in May of 2012. Yes, we were able to cram a two-year degree into five years. As any economist can tell you- this was a booming time in our national economy 🙂 A little backstory, my wife (Christina) and I started with one child and, before moving off-campus in 2013 for a job back in the South, when I graduated we had four children under the age of six. So we went through seminary at a slower pace – at the speed of cash.

I initially was accepted into the counseling program, but at the last minute, I changed to a MA in Leadership and studied leadership with a self-designed emphasis on community development.

Now, I am part of a team of stewardship/church advisors at Ramsey Solutions or better known as Dave Ramsey’s office in Brentwood, TN. Together we serve pastors, church leaders, community developers, and seminarians as they are building and/or remodeling their financial discipleship ministries in their churches/communities.

Draw a connection between personal finances and your ministry training. Why are you doing what you do now?

Personal finances played a large part in “How?” we went through seminary. We went through seminary as we could afford (at the speed of cash) and did not take out any student loans, or any loans for that matter pre/post seminary for living expenses before, during or after seminary… nor did we have to take out any loans for relocation expenses post seminary. Which meant I took classes part-time (a lot of night classes) and worked full-time down in Colorado Springs. We lived on campus in Littleton so that we could literally have a built-in community for my family through our seminary years. During my seminary years I truly embraced a concept that Dr. Larry Lindquist noted at my new student orientation, “Learn from, embrace and take note of the time and experiences spent outside of the class and library as much as the time inside the class and library.” In other words, pay attention and be aware of the experiences and interactions that God orchestrates during your seminary years both inside and outside the structured learning environment.

A big part of “Why?” I am doing what I am doing now is because of our experience of going through seminary debt free without loans and how God surprised and transformed my family and I with His lavish provision which came in many forms- literal hard work, redemptive financial gifts from churches back home, anonymous envelopes of cash on our doorstep, care packages from friends and families, support from our neighbors and peers on and off campus, and lavish support from ministries in the Denver metro area (e.g. Manna ministries, bread drop and food closet at Denver Seminary, odd jobs for my mentors, and support/encouragement from Colorado Community Church, etc.). Through this transformational process known as the “seminary years” we were able to graduate seminary debt free and go when God said, “Go” via a job opening at Ramsey Solutions.

Now at Ramsey Solutions, I have the opportunity and privilege to minster and walk with men and women who are leaders in their community and looking for ways to equip families, marrieds and singles who are struggling or in need of a tune up financially. It still surprises me each day how finances are many times a gateway to how someone is really doing. Billy Graham was spot on when he said, “Give me five minutes with a person’s checkbook (or online bank account these days), and I will tell you where their heart is.”

In your personal story, what did you have to do to graduate without a big debt burden?

Decide that going into debt and taking out loans was not an option from the beginning. Again, it is important to note that my personal story turned into a family and community story. When my family and I graduated from seminary it was a team success. Yes, I had to do literally whatever it took to graduate debt free, which many times required me working and traveling a whopping 70-80+ hours for a five-year period… but God was so lavish in His provision of not only work but wages, health, a steady stream of prayers and encouragement from friends and families across the country.

What do you think are the biggest FINANCIAL challenges facing future ministers?

Pride, pride and… pride. Be open and ask for help. We all need help, so put your pride aside, humble yourself and let others know how they can help you- the sooner the better. The world does not need perfect leaders, but humble leaders who can ask, be filled and receive help from God and through His means. My mentor Pastor Brad Strait said it best, when personally I hit a VERY low point midway through seminary, “Joshua, allow others to minister to you. One day, I know this may not be encouraging right now…,” he laughed and continued, “… you will be on the other side of the equation and serving others. So do not forget the struggles, thoughts and challenges you are experiencing right now and use them to better serve others.”

If you could give one piece of advice to a student just starting seminary now, what would that be?

“Slow down and go outside.”  A smile comes to my face as I reflect on my seminary years and the wisdom that was poured into me from one man in particular- the late Dr. Vernon Grounds. I can think of at least three different encounters in the Denver Seminary library in which he would stop by my desk and say, “Son, what’s the rush? Go outside… its beautiful out there. Don’t spend all your time cramped up in this library!”

Or said another way, don’t believe the myth that the pace of the seminary years will slow down once you graduate. I would argue that the pace only increases after you leave, and you need to be intentional NOW about building in times “outside” with friends, families and enemies for that matter… before, during and after your seminary years.

 How is it even possible to go to graduate school without going into debt?

First of all, going to graduate school is a want not a need and is a choice. I literally made a deal with God before going to seminary. I told him, “God, if this is your idea, you are going to have to provide and show me how to make this work financially each semester.” Remember, with God all things are possible, and  this may require one to rethink his or her current way of going through seminary and to evaluate their previous, present and future standard of living. We made a ton of small changes and pivots to live more intentionally and frugally. For example, prior to attending seminary and as a family of three, my wife, daughter and I lived in a 240 sq. ft. apartment. We also worked two jobs and saved up an entire full year before moving out West to begin seminary. Once in school, we took full advantage of bread drops for seminarians, became a one car family, very very rarely ate out, had family style meals with neighbors, refrained from getting a TV and our entertainment was enjoying the great outdoors. Chances are, if your story is like ours it will also require more than just the work of one’s two hands and will involve a community of support, gifts, pep talks from mentors, days of repentance and journaling, telling others “Sorry, I was wrong!”, forgiveness, letters of encouragement and prayers to get you through as well.

Remember, I wish someone would have told us this: It costs money to move to that new job after you graduate. So start saving for moving expenses if your next job requires you to move across the country.

 What word of advice do you have for someone that isn’t good at budgets? How do I start doing a regular budget?

Join the club! Like the Apostle Paul, when it comes to doing a budget, “I am the chief of sinners!” Kind of joking, kind of not, but seriously- it takes practice. My wife Christina and I, when we were first married took 3 months to just get started doing a budget (this is what happens when your marriage consists of two oldest children who are recovering perfectionists). We attended financial seminars, read budgeting books, used online forms and sought out advice from those that we wanted to mimic financially as we grew up together; however, it was not until we went through a Financial Peace University class (that was hosted by our Senior Pastor at our home church in South Carolina) that we actually did and lived on a budget on a consistent regular monthly basis. Are we perfect now, “No!” Some months we do not start until the month is almost halfway over, but we now build grace into our budgeting lives, remind ourselves to push pause, start where you are and face the reality of where you are in the month and what remains.

Make doing a budget simple. I have heard it said that budgeting is like a marathon. As a runner, this is ridiculous –  a marathon only lasts 26.2 miles and is one day. Budgeting is more like an Ultra Race that lasts your entire life! All kidding aside, find a basic budgeting spreadsheet or plan that works for you and your family and KEEP IT SIMPLE.  With time you can add more depth, but first you will need to pace yourself for the many miles of budgeting yet to go. If you really want to make a budget stick and see lasting results, ask for help from a budgeting coach. This needs to be someone who has a track record of helping others, the heart of a teacher AND can help keep you accountable, no matter how much you whine or try to make up an air tight, theological excuse of, “Why?” your situation is different especially as a seminary student (pointing a finger at myself here). As Dave Ramsey is fond of saying about a young, novice baker who is frustrated that his vanilla cake keeps turning out chocolate, “If you are not happy with the results you are getting, change the recipe.”

You can touch base with Josh at joshuathecollier@gmail.com. If your church would like to host a Financial Peace University class, he would also be a good contact for you. Thanks for reading! Sorry for any abuses of the king’s English – this is a transcript of a recorded conversation.

CEO or Physician?

stethoscopeI’m working on a long article. Here is a short excerpt. What do you think is the best metaphor for a local pastor?

There are a couple of occupational metaphors for someone going into a full time ministry career. The rise of the mega church over the past 25 years has led some to equate the lead parson as the “CEO” of the local house of worship. One potential problem of this metaphor is the primary ‘work’ of a faith leader doesn’t have anything to do with that of a CEO. Eugene Peterson says “The pastors of America have metamorphosed into a company of shopkeepers, and the shops they keep are churches. The vocation of pastor has been replaced by the strategies of religious entrepreneurs with business plans.”   A better metaphor might be faith leader as Physician of the Soul. The origin of that saying goes back hundreds of years, probably predating a famous sermon by George Whitefield in the mid 1700s. The phrase is taken from Jesus famous retort to those questioning the company with which he chose to keep “Healthy people don’t need a doctor – sick people do.”

The primary work of a faith leader is to tend to the spiritual health of those in their care. For that reason I really like the analogy of faith leader as a physician of the soul. My proposal is this: The way the medical profession educates physicians is a good example for how we should be educating occupational ministers.

Apprenticed Learning

francois bonvinFor most of human history the way to learn a craft was to work side by side in an apprenticed model. From Rabbi’s to blacksmiths, this model of learning has been used to transmit some portion of a lifetime of knowledge from one generation to another.

In today’s society, the written word (books, blogs, etc.) and organized education (grade school, trade school, graduate school) have taken a primary role in the passing on of institutional knowledge. There are even really good books written about how to organize your institution in a way where this knowledge can be passed in a written manner so employees bring as little creativity to their jobs as possible. Almost every organization of any significant size has written job descriptions for every position – and employees wandering too far outside those descriptions will find themselves looking for new organizations. This is the definition of a factory, even if every job in the organization is a white collar job.

But in a post factory world, there is a groundswell back toward the way of an artist. This model of apprenticed learning is at the heart of our Ministry Residency Program, which is modeled after the medical residencies in which future physicians participate.

It may even be helpful to think through occupational ministry in the context of another career. Many large churches consider the lead pastor a CEO, and in many ways the carry the responsibilities for a staff, building, budget, and planning. But I think that comparison emphasizes the business side of a church too much. My favorite metaphor for occupational ministry I’ve found so far is this: The physician of the soul.

To become a qualified ‘physician of the soul’, it makes sense to put the time in learning under the tutelage of a qualified mentor.

BONUS: Several years ago Tim Ferris blog had a guest posting by Robert Greene. He posted a six part series with autobiographies of famous people who used some form of an apprenticed model of learning toward their life work. Here are those links:

Part I
Part II
Part III
Part IV
Part V
Part VI

Theological Education: A Dangerous Journey

Pilgrims ProgressOne of my favorite books of all time is Dangerous Journey: The Story of Pilgrim’s Progress. The narrative is abridged straight from the words of John Bunyan, but what immediately captures your imagination are the beautiful illustrations by Alan Parry.

The story is Bunyan’s allegory of the Christian journey, told as an adventure including the many challenges represented by dungeons, dark forests, black rivers and intense hardship.

Today there are great financial obstacles on path to following God’s calling into occupational ministry. On this blog I address one of the biggest obstacles – pursing a theological education. Last year I wrote a breakdown of routes to pay for your theological education beside debt, but here I’d like to articulate a few of the financial barriers – the allegorical giants, dragons, and lions – someone going into occupational ministry faces.

1. Rising Education costs

For over 30 years, the cost of all higher education has outpaced inflation. This is a huge wave, and Seminaries have been swept up in its wake. This rising tide requires focused attention to avoid being drowned. You simply cannot ignore the financial aspect of pursing a graduate degree and just assume it will all work out – it requires a plan.

2. Popular teaching on Higher Education

Throughout popular culture, there has been a long term bias toward encouraging young people to pursue higher education. These people were probably well-intentioned, and often quote stats like this, but this is really post WW2 logic. Back then, you could get the appropriate degree and work as a cog in a factory for your entire career. It really was a solid plan. This type of teaching often sounds something like this:

  1. All Education debt is “Good Debt”
  2. Always invest in yourself
  3. Education is always good

I’ve talked here several times before about how highly I value a theological education – I want and need my pastor to have one. But the end doesn’t universally justify the means, and popular culture has more or less ignored the ‘how’ and just pushed young people to ‘get an education’.

3. Spiritual Misinterpretation

I linked to a really good article last month where the author said some people have “’spiritualized’ educational debt, believing that if one followed God’s call to ministry, God would take care of the finances.” This “God will provide” narrative is taken from some amazing biblical stories (like Abraham and Isaac) where God did miraculously show up and provide. If God has specifically told you he will provide, please don’t let me stand in your way. But if you believe God has told you this and you’re using debt to pay for it, I am going to push back based on the large amount of scriptures on the dangers of debt.

Don’t call being naïve a ‘step of faith’.

4. Changing Job Market

For around a 100 years in America, we’ve had a cultural that encouraged a form of ‘cultural Christianity’ where a local community attended a house of worship and financially supported local institution. Prior to this we had a ‘traveling preacher’ model, and you can trace occupational ministry back throughout history to the Levites around 1500 BC.

That is all to say that there isn’t any guarantee of what occupational ministry looks like over the next 40 years. Traditional church attendance is declining – probably in part because there isn’t a cultural pressure to attend or be a member of a faith community.

Those pursing a theological education also graduate into a career that often pays lower salaries than other careers requiring advanced degrees. This probability of lower lifetime incomes needs to considered when thinking through how much debt is acceptable to take on while pursing that education. Regardless of your and my opinion, we all agree that there is some level of debt that is ‘too much’.

Occupational ministry is also very ‘hands on’, meaning that there is a high probability that you will need to move geographically throughout your career as you take and leave various jobs. This is a challenge – a lion on the path if you will.

Finally in this category, you will need to navigate changing denominational structures over the next few decades. The ‘cultural Christianity’ we referenced earlier provided a huge financial platform for those going into occupational ministry. These denominational structures are eroding.

5. Debt is the Path of Least Resistance

Debt is certainly the easiest way to go to college right now. You simply sign your name and you’re financially able to attend classes immediately without any financial obligations until you graduate.  Water flows down hill, and because the barriers are so low this has become an industry with $50 Billion in profits.

Dave Ramsey has used the word “wander” to describe going into debt and getting out. As in, “You cannot wander out of debt”. Because its so easy, you can wander into debt if you don’t have a plan.

CONCLUSION

This has been a bit of downer. It wasn’t meant to be. The point wasn’t to address the morality of any of these things (they simply are), nor to address any solutions. Just to take what is scary in the dark and shine a light on it.

In the pictorial illustration I included above, the protagonist Christian, weary from his journey is looking for a place to stay for the night. In Bunyan’s words:

But as he drew nearer, he could hear in the darkness the roaring of lions. The only way forward was along a narrow passage, which was about a furlong from the porter’s lodge. This, he knew, was the place from which Mistrust and Timorous had fled. And Christian was never so near to running back after them.

But the porter at the lodge, whose name was Watchful, perceiving now that Christian made a halt, cried out:

Is your strength so small? Fear not the lions. They are on long chains. If you  keep strictly to the beam of light, in the centre of the path, they cannot reach you.

So Christian moved on. He took good heed to the directions of the porter. At the same time, he trembled for fear of the lions, for now they were on either side of him, straining at their chains.

And how they roared, and snapped at him! And how they tried to catch him by the foot! But Christian soldiered on boldly. And in another minute he was through and had reached the gate unharmed.

My hope here was to illuminate the lions, to be your Watchful, and to reduce fear showing that the path becomes more clear. This isn’t meant to be discouraging. In fact, I think it’s the making of great drama and a wonderful story. There is hope! You can do this.

Lessons from Medical Residency

stethoscopeI attended a Residency Summit last week and left with some great ideas, an appreciation of public transportation, and a Cubs victory in a play-in game.

One of the highlights of the conference was hearing from Dr. Greg Ozark. Dr. Ozark has led medical residents for 15 years at Loyola Medical Center and he came to share lessons from the medical world that we could apply to our Theological Residencies, and specifically to our Ministry Residency Program.

Perhaps the most valuable observation I gathered was this. A medical doctor will go through 4 years of undergrad, then 4 years of medical school. The first two years of medical school are spent in intensive book learning building their medical knowledge.

After two years of intensive study we have, in Dr. Ozark’s words, “a highly qualified paper weight”. Thus begins the final two years of med school – medical knowledge combined with clinicals. Clinical skills – actually working with patients – are radically different from just having the head knowledge of how to practice medicine. Clinical work is defined as pertaining to a clinic or to the bedside; pertaining to or founded on actual observation and treatment of patients, as distinguished from theoretical or experimental” (emphasis mine). Clinical work can’t be tested with a written test, instead Dr. Ozark outlined their intensive process of peer evaluation of 6 core competencies measured with 1-5 grade milestones.

One of the major motivations behind the Ministry Residency Program here at Denver Seminary was an understanding that “Theological Education” needed to be combined with actual hands on “Ministry” work. Just like a med student needs a comprehensive baseline of knowledge, you need a solid theological foundation to practice occupation ministry. But a theological education by itself is insufficient to do ministry. You have to get into the field and begin to ‘get your hands dirty’.
We have a hope that your ministry ‘clinicals’ are the actual practicing of ministry with careful observation and feedback from qualified mentors.

Increasing the Value of Seminary

brooks-circularIn a wonderful opinion piece in the New York Times this week, David Brooks writes on the roots, present deficiencies, and future of universities.

Specifically he notes that universities are not just job training. Mark Cuban made this same point (on which I wrote about here) – an education that is strictly a return-on-investment job training program isn’t as important/valuable as universities are charging for.  It is ultimately incomplete training.

Seminaries and those in theological education would do well to think through Brooks four points. For hundreds of years, educational institutions had a monopoly – they were the gate keepers of information. That no longer exists. But studying theology and preparing those going into occupational ministry shouldn’t be just dispensing of information. Brooks tasks through the lens of Seminary:

  1. Reveal moral options
  2. Foster transcendent experiences
  3. Reveal callings and teach a love of learning
  4. Practical application of theological/philosophical ideas

About a decade ago Denver Seminary began requiring students go through Training & Mentoring – realizing that knowledge apart from character development was useless at best and harmful at worst. Wisdom has been defined as “Knowledge rightly applied”.

When done right, your seminary experience should reflect this. Moving into the future, seminaries would be wise to shift more and more emphasis toward the ‘rightly applied’ side of that equation. As Brooks points out, this spiritual work is work that can’t be devalued, exported, or done online – “we do it through small groups and relationships and in social contexts.”

ARTICLE: Why College Isn’t Worth The Money

forbesForbes had an interesting article this weekend:

http://www.forbes.com/sites/caseybond/2015/09/04/why-college-isnt-worth-the-money/

Change is painful. For our parent’s generation, a college education was a path to a career.  That isn’t a given anymore. In fact, if all you want is an interesting, high paying career with excellent job security, I would strongly recommend:

Welding, HVAC Tech, ElectricianPlumberDental Hygienist, etc.

Many skilled trades can have salaries above 70k, and if you start your own company (as many of my friends have), you can easily clear $100,000 a year. All without going to college for a traditional liberal arts degree. The economics are simple – these trades remain in strong demand and there aren’t enough skilled workers to fill them.

But as was pointed out earlier, not all educational decisions should be made based on a straight return on investment. In fact, if the educational system moves this direction our society will miss out.

It may be helpful to frame the pursuit of a Theological Education in these terms. The value of a theological education is critical – I want and need my personal spiritual leaders to be properly trained. But if you’re pursing a Seminary degree ONLY for the future employment opportunities it will offer, this deserves critical thought. The larger social landscape (church attendance,  tax law, freedom of religion, etc.) will determine the number of clergy employment opportunities and there is a strong possibility that this could limit the economic value of your seminary degree.

It doesn’t mean there will be less ministry opportunities – in fact probably just the opposite. That’s why I believe so strongly in the value of a theological education. But the economics of the social landscape may cause future ministers to pursue bi-vocational or other alternative funding models to traditional pastoral ministry jobs.

As our title article articulated, for a full generation student loans were an easy sell because a liberal arts education was worth $1 million more than a high school diploma. But as the math of that equation starts to erode, it makes sense to be very diligent about limiting the debt burden of pursing higher education. This is one reason I strongly recommend pursing your theological seminary education with as little debt as possible.

 

Mark Cuban on Student Loan Reform

Dec 26, 2013; Dallas, TX, USA; Dallas Mavericks owner Mark Cuban reacts to a call during the game against the San Antonio Spurs at the American Airlines Center. The Spurs defeated the Mavericks 116-107. Mandatory Credit: Jerome Miron-USA TODAY Sports

Mark Cuban (who is an investor in an alternative education model) recently made some remarks on issues he had with Hillary Clinton’s student debt proposal. While he addresses the Clinton plan, there are a couple of points he makes that more directly apply to us that I thought were worth highlighting:

1.)  Not all higher educations should be measured on a straight Return on Investment.

Many careers are really important to our culture, and often those occupations (teachers, clergy, social workers, musicians, etc.) aren’t built on financial models that pay well. Cuban’s point that “not everyone should be a STEM student” is important to educators as well as those interested in going into occupational ministry.

We should have an education model that doesn’t penalize those that want to go into lower paying occupations.

2.)  Easy money is what causes dramatic rises in prices

I saw this first hand working in the mortgage and real estate industry in the mid-2000s. Lowered lending standards (created by large amounts of unused capital) allowed lots of buyers and capital into the market that changed the supply/demand ratio – driving up prices to unsustainable levels.

The key in this type of market (which higher education is currently in) is to use tremendous personal restraint.  You need to know that the government, your financial aid office, or the culture at large (media, friends and family, etc.) won’t give you reliable lending guidelines or limits.

3.)  Keeping administrative costs low is critical to your schools sustainability

As a plug here, I believe Denver Seminary has done a wonderful job at this. The campus is run debt free with a critical eye on cash flow, future financial challenges, and keeping costs low and in control.

I’m glad big thinkers are addressing these issues in the public forum.