Interview: David Hyams

david_hyams.jpgI had a chance to interview David Hyams, a Denver Seminary graduate and current practicing attorney. You’re really going to enjoy his wisdom – especially his personal story of navigating student loan debt.

David, you have a unique background – you are a practicing attorney but you also attended and graduated from Denver Seminary. Why did you pursue those seemingly very different directions?

The short answer is, because I was trying to follow God’s call on my life. What this looked like in reality, of course, was a serpentine path to law shrouded by fog, marked by stints of clarity. My undergrad degree is in Sport Medicine, which was never a good fit, but when I chose that major as a freshman, like most 18-year-olds, I didn’t know myself and certainly was not considering career options in terms of God’s calling on my life. Toward the end of college, I fell in love with Jesus and apologetics, which led to seminary. While at D. Sem., I learned my giftings trended more academic, so I pursued the M.A. in Philosophy of Religion. Upon finishing that degree, despite numerous red flags cautioning me otherwise, I was convinced a Ph.D. in Philosophy was what God had for me. Toward that end, I picked up another M.A. in Philosophy from Georgia State University. Eventually, in a most unfamiliar and uncomfortable act of humility, I surrendered to what the Lord had for my career instead of imposing on Him what I thought “made sense.” That led to law school, which wound up being a perfect complement for my background and giftings. In fact, I’ve met quite a few seminarians over the years who’ve entertained the prospect of attending law school, and lawyers who’ve wanted to go to seminary. Few have had the privilege of doing both. Thus, becoming an attorney was not the product of a planned career path, but was the result of my (highly imperfect) attempts to daily follow the Lord’s whispers.

 

You and I have talked briefly about your personal interaction with student loans. I know you have really sacrificed to pay those down – what has your journey looked like?

I’m not proud of my journey. Had I to do it over again, it would look very different. Nonetheless, if through my weaknesses and the ensuing suffering Christ’s power may rest upon me and others may be comforted (see 2 Cor. 12:9; 1:3-4), I gladly share it.

Thankfully, my personal interaction with student loans stemmed solely from my law degree. My parents paid for the B.S. We paid for seminary through a combination of work (my wife and I both worked, though she was the primary breadwinner), scholarships, and church contributions. The second M.A. was paid for through work (again, my wife mainly supported us, though I worked as well), and grants from the university.

By the time I started law school, however, we were burned out on school and were ready to cast off the shackles of financial restraint we had worn for the years of student life and start living like “grown ups.” Thus, despite having very good jobs for the duration of law school, instead of using our income to actually pay for tuition, we financed the entire degree with student loans. (For brevity’s sake, I’ll skip over the multitude of other financially-ruinous decisions we made over the next several years and focus on the loans.) I thus graduated from law school in 2008 with approximately $125,000 in student loan debt.

Aside from the sloth, prideful sense of entitlement, and utter foolishness that informed the decision to borrow all that money, I never once stopped and put pen to paper to determine the answers to such basic questions as:

How much money am I going to have to make each month in order to pay these loans back in x years?

If I don’t pay at least $x per month, what is the interest going to do to the principal?

What sort of jobs am I either going to need to apply for or walk away from because of my obligation to service this debt, and how does that align with God’s call on my life?

What sort of opportunities am I not going to be able to pursue because of the commitment I’m making to my lender?

Instead, in repeated acts of cowardice, I stuck my head in the sand and, semester after semester, took on more and more debt. Of course, I never abandoned my faith along the way, so, on those rare occasions when I’d actually entertain post-law school financial realities in a general sense, I would sanctify my naivety with such theological quips as, “I don’t know how, but God will provide.” (All the while ignoring that God was actually providing the entire time, I was just choosing to squander his provisions.)

After narrowly avoiding personal bankruptcy following law school, we went through a major life overhaul and (finally) started living on a budget. After eight years of attacking debt, belt-tightening, and the selling of two houses in 2016, we are, praise be to God, debt-free. The student loans had ballooned to ~$165,000, for I had put them in deferment and had entered into a federal “repayment program” while I repaid other debts. And while we’re now starting over in some ways, we’re finally complying with the Lord’s command in Romans 13:8 to owe no one anything except love. It feels amazing.

 

Financially, what word of advice would you give to someone just entering into seminary?

Generally speaking, you need to understand that, while the degree you’re about to earn is extremely valuable and worthwhile from a kingdom perspective, the world does not place the same value on it. And, by and large, the world’s value metrics determine the amount of money you will earn upon exiting seminary, regardless of your place of employment. And while it may feel a little “dirty” to the seminarian who is dutifully following the call of God on his or her life, they need to get comfortable talking about money and the financial realities that come with it. The last thing you want to do is in one breath say, “God, I will go anywhere and do anything you call me to do,” and in the next breath say, “so long as it pays at least $x per month because I’ve got to pay these student loans back!” At its most basic level, taking on student loans is taking on the yoke of another master, and the Lord has warned us about the feasibility of serving two masters (Lk. 16:13)—especially when that other master is Caesar himself (i.e., the federal government)). Moreover, many (most?) of the life crises of the people you’ll be ministering to involve finances in some capacity.

Moreover, you have no idea what will happen in life. Yes, God will provide for your needs. And yes, He owns the cattle on a thousand hills. But this world we live in is fallen and suffering and persecution is a part of the path of righteousness. Why purposefully compound that by fiscal irresponsibility?

Accordingly, I’d advise the seminarian to avoid student loans at all costs. If need be, take your time getting through seminary. (For most of you, being older and wiser upon exiting seminary will only help your future ministry.) Get creative by working multiple jobs (even jobs that might be “beneath” you), take night or weekend classes, check your textbooks out from libraries, live on a budget, beg, pinch, scrape, whatever, just stay indebted only to the Lord.

 

 You have a unique background in Bankruptcy law. I believe one of the biggest issues with large amounts of student loans is that personally you can’t bankrupt out of them. That makes it almost impossible to escape them should you become overly indebted or should life change radically. Obviously bankruptcy has been abused by some people over the years, but can you help us understand why it’s important to our economic process and what risks someone takes by taking on non-bankrupt-able debt?

In its simplest form, bankruptcy is about the unmerited forgiveness of voluntarily-incurred debt. As people of the gospel, we should be able to appreciate this, especially given bankruptcy’s biblical roots in the year of jubilee (see Lev. 25). By allowing a debtor—whether an individual or a company—to make a “fresh start,” risk-taking activity is encouraged. Starting a business, pursuing an idea, investing in something you believe in—all of these are risks. If failure would result in a lifetime of inescapable debt, fewer people and companies would be willing to take risks. Thus, fewer jobs, inventions, and fulfilled dreams, i.e., less human flourishing. Bankruptcy allows the risk-taker to minimize her risks by providing a means to discharge or reorganize her debts in the event of financial calamity. Likewise, creditors are encouraged to invest in the risk-takers, for their rights are protected under the Bankruptcy Code as well. Of course, certain types of debts are offered very little protection, but most creditors will work the prospect of bankruptcy into their pricing and they understand the risk of participating in the market.

By taking on debt that cannot be discharged in bankruptcy, such as student loans, the debtor is taking on the risk that, despite Jesus’ promise that we will face trouble in this world, “everything is going to work out.”  Unlike other debts where the debtor and creditor share the risk and therefore want to see the debtor succeed, student loan creditors bear virtually no risk by extending the loans to the particular student. The student bears all the risk, the debt is completely unsecured, i.e., the debt does not attach to any collateral that can be liquidated to satisfy the debt, and it will follow the student all the way to the grave.

 

What have you learned from your unique background working with religious institutions about how occupational ministry and finances collide?

There are of course numerous and beautiful exceptions I’ve seen, but here are a few trends I’ve noticed.

Often, ministry leaders are incredibly gifted at relationships, but they do not have a very keen business sense.  This can have the effect of a poorly run organization that is out of tune with realities its donor base grapples with on a daily basis, even if the leader has good intentions and the doctrinal statement is sound. Of course, there are problems that come with unreflectingly adopting “secular” business principles, but at a minimum, a basic understanding of budgeting, business, and economics (and law) would help ministry leaders.

By embracing a negative mindset toward finances, pastors contribute to the sacred/secular divide, and stymie their flocks’ ability to think Christianly regarding money and work.

Many younger evangelicals who do not feel called into pastoral ministry come to the conclusion that in order to faithfully serve God, they must start or work for a non-profit, because, in their mind, they cannot work for a for-profit company because “profit equals greed,” which is, of course, a sin. But profit and greed are distinct concepts that are not necessarily correlated. This mindset has deprived us of thoughtful Christians in the marketplace and given us too many non-profits, which has had the concomitant results of draining kingdom resources and increasing ministry redundancy. (Not to mention the sympathies toward Marxism this general disdain toward capitalism has engendered—an economic philosophy whose utter failure to actually work in reality has only been surpassed by the torrents of blood that have flowed everywhere it’s been implemented.)

Many believe that by getting too far into the details of finances, they aren’t trusting God or would be idolizing money. A quick survey of Proverbs should put that fear to rest. (See, e.g., Prov. 27:23.)

There is also the risk of the pendulum swinging the other direction toward the “health and wealth” prosperity gospel, which also prevents thoughtful, biblical engagement with finances.

Jesus rightfully warned of the dangers of money. But by failing to help move their flocks beyond “money is bad” (except when the offering plate comes around), the church is left ill-equipped to expose the idols of the age and model a biblical counterexample.

Thank you for your wisdom, vulnerability, and leadership in this area. We are deeply grateful.

 

If you’d like to learn more about David in is own words you can visit a longer bio here: www.sdglawllc.com and if your organization has any legal needs feel free to reach out to him here or 703-771-4671.

 

Loan Forgiveness and PSLF

Tnythis article surfaced in The New York Times a couple weeks ago:

They Thought They Qualified for Student Loan Forgiveness. Years Later, the Government Changes Its Mind.

I’ve written several times including this long post in September of 2015 that I thought the Public Service Loan Forgiveness program was risky and I did not think it was wise to plan on the PSLF program to be your primary loan repayment strategy.

The risk that the government could change the rules at any time was one of the original reasons I wrote that I didn’t like the program. That is exactly what happened to the subjects of that NY Times article and we’ll see how the pending litigation plays out.

There are other alternatives. If you’d like some help working through those then hit me up.

Payment Calculator Link

payment-calcThe two most common financial questions students have are “How much will my income be once I graduate?” AND “What will the payments be on my student loans?“.

We’ve looked at different income questions before (here, here, here, here), and we’ve looked at some of the payment questions (like is Public Service Loan Forgiveness (PSLF) a good option?), but as a regular reminder you can go to this link and run your future payments for yourself:

STUDENT LOAN PAYMENT CALCULATOR

DEBT AS SOCIAL JUSTICE

words on justice.jpg Articles like this make me angry when they use a college education as the “carrot on a stick” that makes student loans a good thing:

“Student loan debt is also an investment in your future. Simply put, you will be more employable and earn more with a college degree.”

I believe this is a straw man. The argument for or against a college degree is irrelevant to the structural problems that student debt brings. I believe that student loan debt is a social problem, a social justice problem even, because it is most egregiously harmful to very specific segments of our society.

  • 1 out of 3 student loan borrowers don’t graduate. This immediate invalidates the ‘college is worth the debt’ argument. If as many as a third of borrowers aren’t graduating, they are stuck with debt they can’t get out of and no increased earning potential. There is myriad of reasons they might not be graduating, including being poorly trained for college, health, financial, family instability, substance abuse (yo Madison!), and more. More on that here.
  • If I default, the government will withhold low-income benefits. Because the government is the debt collector, if I default on my student loan debt the government will withhold my tax returns (including Earned Income Tax Credit and Social Security benefits). These social safety nets aren’t a big deal if I’m wealthy, but it’s devastating if I’m poor. Between the socio-economic classes (rich and poor), who is more likely to default?
  • The highly indebted are borrowing even more. We’ve discussed before that there is a bifurcation of healthy borrowers and unhealthy borrowers. The healthy borrowers borrowing is remaining level, but the unhealthy borrowers are borrowing even more than before. Some estimates put these borrowers at around 17% of all borrowers. In my experience, this sounds about right. We know that if you are female, of color, or an older student you are significantly more likely to be a highly indebted borrower.
  • Borrowing to make an “Investment” is extremely dangerous. Quoting a 15% financial rate of return is just lying if it doesn’t take into account borrowers who don’t graduate and the higher interest rates and fees on defaulted student loans. If you can’t bankrupt out of a ‘bad investment’, it can cause decades of pain for defaulted borrowers. High returns don’t mitigate risk. This is why the lottery is a bad investment. A potential 15% ROI doesn’t offset the inherent risks of student loan borrowing.

So to summarize, “it’s okay to have student loan debt!” as long as you’re intelligent (with an aptitude for intellectual studies, healthy family structures, and safety nets that allow you to graduate), are not poor, and are not a woman or minority.

There are a variety of potential improvements that could be made on the legislative level (realistic hard cap on borrowing, lower interest rates, larger Pell grants, allowing bankruptcy), but these are out of our ability to change right now.

Instead, let’s focus on personal behaviors I can change RIGHT NOW to reduce my risk of being a statistic. These include borrowing as little as possible, fully understanding my current situation and risks, and building healthy personal financial habits.

Debt Reduces Academic Performance

Scrabble LoanDaniel Pink  pointed to this research paper which suggests:

Those paying for college with loans perform significantly worse than students receiving other forms of aid.

Why is this? It may be because of increased financial pressures, or stress about the future, perhaps debt is a trailing indicator of some other instability, or it may be caused by many factors.

We don’t need to know the ‘why’ to understand that if we’re headed toward large volumes of debt we need to pump the breaks and really calculate if it is worth it. As educational institutions, we need to dig deeper to provide alternatives to debt.

“I ruined my life”

Lives on Hold“Step by step, one law after another has been enacted by Congress to make student debt the worst kind of debt for Americans”

One of the things I informally track is overall attitudes toward borrowing, student loans, and higher education debt. I think this is important, because if there is a ‘bubble’ and the landscape of higher education (and paying for that education) dramatically changes, one of the major reasons will be because of a very public backlash.

We may not have a full fire, but there is a lot of smoke around this subject. The latest example:

http://www.consumerreports.org/student-loan-debt-crisis/lives-on-hold/

That article puts some of the blame on the private collection agencies, but I don’t think that is a real problem or a real solution.

Larry Burkett used to say ‘Debt isn’t a problem, its a symptom of a problem’. Collection agencies aren’t the problem, but a symptom of a larger institutional problem.

Article

Here is a long article published last week in the Boston Globe:Capture

LINK: The College Debt Crisis is Even Worse Than You Think.

 

It raises a lot of tough questions about the role college plays in escaping poverty. It’s a tough subject. I’m speaking tomorrow to 25 students on the risks minority students face when taking out student loan debt. In my talk I highlight ‘Layers of Risk‘, including the graph you see here. When you combine layers of risk, the stakes change. For example in the graph, you’re slightly more financially healthy as a black male then a white female – primarily because of the Gender Pay Gap. But when you add an additional layer of risk – being a black female, the numbers jump. Add additional layers of risk like being born into poverty and the numbers jump further.

Email me with thoughts or questions.

Triumphs!

There is a lot of negative news. Long articles like this one…Ginger

The Secret Shame of Middle-Class Americans

….make it seem like becoming financially free is almost impossible for non-high income people. Additionally there are articles like this one (link) that seem to indicate that the current generation is falling farther behind.

The reality is that winning with money requires a personal commitment – hitting that point that Dave Ramsey refers to as being ‘sick and tired of being sick and tired’. Enter Ginger Zambrano (@gingerzam). Ginger works at a fellow theological institution, Winebrenner Theological Seminary. Here is her story in her own words:

I am 33 years old (according to some charts considered a millennial) and these statistics align with what I have observed in myself and my peers. When we first graduated, the shock of our situation was too much to handle, so many of us did bury our heads in the sand. My first job out of college teaching Kindergarten at a private Christian school paid $18,000 a year, and I had over $50,000 worth of debt. This was a shock in itself since I only borrowed $24,000, but was limited to private loans with high interest rates because I had to claim my parents income on my FASFA. I had a 3.87 GPA but was only awarded three scholarships totaling $2,500 because most considered financial need, which was not accurately reflected on my FASFA. I worked 2-3 jobs the entire time I was in college and only borrowed enough to cover tuition. I thought I was being responsible, so to graduate and realize the situation you are in is extremely overwhelming. When I made these decisions at 18 years old, I can say that I absolutely had no idea what I was getting myself into.

However, here is where I see hope. There is a point when you can stop living in denial about your situation and begin to accept it and deal with it. I am happy to report that I will not be paying on my student loans when my kids are in college anymore because we worked hard, lived simply, and put everything extra we could find towards my student loans to pay them off early. Many of my friends are adopting the same mindset and taking control of their situation.

All that to say, I think it is a broken system, but millennials are resourceful enough to repair the damage. My prayer is that those of us that have already gone through this broken system can prevent the younger generation from blindly following it. That is my two cents! 🙂

Student Loans in the News

USA TodayAs I was traveling a couple weeks ago, I picked up the March 29th edition of USA TODAY. In the Money section Peter Dunn had written an article specifically addressing adult children still living with their parents. But what really caught my attention was the following paragraphs on student loans:

I’ve come to the conclusion that asking 18-year-olds to commit to tens of thousands of dollars of debt, without a job, income or assets, is among the stupidest thing modern society does. When you have no concept of money, what’s the difference between borrowing $20,000 or $50,000? You certainly know there’s a difference now, but you didn’t when you were 18.

Student loans can convince you that money doesn’t matter. Debts tend to do that. You get the benefit of the purchase without having paid for it. Obviously, this idea isn’t limited to student loans.

His line “You get the benefit of the purchase”  popped into my mind when I read this article today:

Forbes: The Scary Truth About Millennials and Student Loan Debt

The opening line of that article reiterates a similar idea – “out of sight, out of mind”. One of the most important things financial counselors like myself can do is bring people into an awareness of their current situation.