Debt Analysis 101

2013 RMASFAA Annual ConferenceJoel Laos and Michael Murphy

Denver SeminaryJ

Location: Littleton, CO

Population: 1,000+ students, 109 faculty/staff

Type: Private, Graduate only

Tuition: $530/credit for 2013-14 Ave 4.7% annual increase

Primary Degrees: Master of Divinity (97 credits) Master of Arts (62 credits)

Financial Aid: -Federal loans, work study, institutional grants/scholarships, veterans benefits

-55% participation

-11.2% institutional discount rate

-$39k ave graduating debt per borrower

Welcome to

- The national rate of tuition inflation is second only to health care

1 2 3 4 5 6 7 8 9 10 11$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

National Cost of Education vs. Debt (in billions)National Cost of EducationNational Student

Loan Debt

Cost of Education data taken from USA Today, 10/19/11Debt data taken from www.finaid.org

- Student loan amounts have increased at 1.5x the rate of the national cost of education, nearing $1 trillion

- Denver Seminary’s average tuition has increased 47% over the past 10 years, representing an average 4.7% increase per year

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14$250

$300

$350

$400

$450

$500

$550

$359 $375

$390

$415

$440

$460

$480 $480

$505

$525 $530

Denver Seminary's Tuition History

Ave price per credit hour

- Our institutional discount rate has remained steady at only 11%

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

0

100

200

300

400

500

600

700

$359 $375 $390

$415 $440

$460 $480 $480

$505 $525 $530

Average Tuition Discount RateAverage 11%

- Denver Seminary’s graduating debt has risen 64% over the past 10 years

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13$20,000

$22,000

$24,000

$26,000

$28,000

$30,000

$32,000

$34,000

$36,000

$38,000

$40,000

$23,846$24,800

$29,800

$32,200 $32,100

$34,284 $33,868

$35,401

$36,562$37,651

$39,013

Denver Seminary's Graduating Debt Trend

per borrower

- Our most-recent default rate is 7.6% below the national average

0

1

2

3

4

5

6

7

8

9

10

0

3.32.8

1.8

0.40

0.7 0.71.2

1.5

5.4 5.2

4.5

5.14.6

5.2

6.77

8.89.1

Cohort Default Rate HistoryDenver Seminary National Av-

erage

Rate

(%

)

Data taken from http://www2.ed.gov

- Left unchecked, 10 years from now average graduating debt will increase 80%

- Over a 20-year period average graduating debt will have increased 182%

1970-71

1973-74

1976-77

1979-80

1982-83

1985-86

1988-89

1991-92

1994-95

1997-98

2000-01

2003-04

2006-07

2009-10

2012-13

2015-16

2018-19

2021-22$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$42,907

Denver Seminary's Graduating Debt Trend

Estimated Actual Projected

Actual ProjectedEstimated

- Tuition has increased at twice the rate of inflation since 2001

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 210%

20%

40%

60%

80%

100%

Increases Since 2001Inflation Tuition Graduating Debt

5.3% / year

4.7% / year

2.5% / year

Actual Projected

Inflation data taken from the Bureau of Labor Statistics (www.bls.gov)

- For every 1% increase in tuition, average graduating debt increases 1.12%

- In order to stay at the recommended 10% educational debt-to-income ratio, the salary required to service the average graduating debt currently exceeds the average salaries for associate pastors, counselors/chaplains and youth/worship pastors

- In 10 years, the required salary for the projected graduating debt will exceed all positions

2012-132013-14

2014-152015-16

2016-172017-18

2018-192019-20

2020-212021-22

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

$100,000

Debt-to-Salary ComparisonTotal Graduating Debt (undergrad and grad)

Salary RequiredSenior Pastor

Associate Pastor

Counselor/Chaplain

Youth/Worship Pastor

Salary data taken from the Bureau of Labor Statistics (www.bls.gov)

Debt

Salary

Salary Comparison  2012-13 2021-22

Senior Pastor $9K ($8K)

Associate Pastor ($7K) ($27K)

Counselor/Chaplain ($15K) ($37K)

Youth/Worship Pastor ($27K) ($46K)

2012-132013-14

2014-152015-16

2016-172017-18

2018-192019-20

2020-212021-22

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

$100,000

Debt-to-Salary ComparisonTotal Graduating Debt (undergrad and grad)

Salary RequiredSenior Pastor

Associate Pastor

Counselor/Chaplain

Youth/Worship Pastor

Salary data taken from the Bureau of Labor Statistics (www.bls.gov)

Debt

Salary

What are we doing about it?

Increasing Financial Literacy1. Loan Management page

DenverSeminary.edu/FinancialAid

What are we doing about it?

Increasing Financial Literacy1. Loan Management page

DenverSeminary.edu/FinancialAid

Before You Borrow▪Anticipate your income▪Know your limits

What are we doing about it?

Increasing Financial Literacy1. Loan Management page DenverSeminary.edu/FinancialAid

Before You Borrow▪Anticipate your income▪Know your limits▪Understand your loan▪Integrate your budget

Know What You Owe▪Visit and bookmark NSLDS▪Revisit and keep track

Anticipate Repayment▪Prepare▪Transition▪Repay

What are we doing about it?

Increasing Financial Literacy1. Loan Management page2. Award Letter:

1. Customized loan offers▪ The initial student loan offer is customized to the student’s actual net

tuition and fees.

Customized Loan Offers

Customized Loan Offers

What are we doing about it?

Increasing Financial Literacy1. Loan Management page2. Award Letter:

1. Customized loan offers2. Debt literacy statement

Debt Literacy Statement

What are we doing about it?

Increasing Financial Literacy1. Loan Management page2. Award Letter:

1. Customized loan offers2. Debt literacy statement

3. Additional counseling for high debt levels▪ Students with aggregate debt of $40k or higher are asked to

complete Financial Awareness Counseling through StudentLoans.gov

What are we doing about it?

Increasing Financial Literacy1. Loan Management page2. Award Letter:

1. Customized loan offers2. Debt literacy statement

3. Additional counseling for high debt levels4. Webinars and on-campus seminars

- The average percentage of the Denver Seminary student body that utilizes student loans has consistently hovered around 45%

- Current research: Is the recent decrease reflective of the loss of subsidized loans or of our increased financial literacy efforts? Or perhaps a bit of both?

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Percentage of Students Borrowing Stu-dent Loans

National Average (masters degree) Denver Seminary

National average data taken from www.finaid.org

What has worked for you? What methods are you using to help

mitigate student debt?

What methods have not seemed to produce results?

Contact

Michael Murphy Joel LaosFinancial Aid Officer Director of Financial Aid

FinancialAid@DenverSeminary.edu 303-762-6888 direct

800-922-3040 ext. 1239 toll free