Asbury Will Stop Taking Federal Loans

Asbury Theological Seminary in Kentucky has announced it will change its financial model to “phase out” the use of federal loans, the institution announced on Tuesday.

Starting at the end of this academic year, the institution, which enrolls about 1,700 graduate students, will no longer process such loans; instead it will rely on “scholarship support and other financial options better suited to how students experience seminary today and how they will serve after graduation,” the announcement states.

The shift was years in the making, officials said; The number of students utilizing federal loans at Asbury declined in recent years from 30 percent to 17 percent. The goal, the institution said, is to allow students who enter low-paying ministry jobs to graduate debt-free. Asbury is one of the first “prominent” seminaries in the U.S. to take this step, according to the press release.

College leaders told Inside Higher Ed they did not take the step as a result of any particular changes to federal loan programs.

“We are, of course, attentive to changes in the federal higher-education landscape,” Asbury President David F. Watson wrote in an email. “But this transition is fundamentally about long-term stewardship, expanding access to theological education, and ensuring that the Seminary does not add unnecessarily to the debt many students already carry when they arrive.”

Still, the change comes as theological institutions face potential fallout of the new federal earnings test, which took effect July 1 and will restrict access to federal loans for students enrolled in programs whose graduates do not earn more than adults with just a high school diploma. Religious colleges have expressed concern about the impact of the rule; the Association for Biblical Higher Education Commission on Accreditation found that 53 percent of students in religious studies’ bachelor’s programs and 89 percent in religious studies master’s programs could lose access to loans.

Some advocates pushed for ministry-training programs to be exempted from the rule entirely but were unsuccessful. However, the Education Department changed how it would apply the harshest penalty for those that don’t pass the earnings test—cutting access to Pell grants—so that institutions that haven’t received federal loans in the past five years would retain access to the grants.

Asbury is far from the first religious college to stop accepting federal student aid, according to Frank Yamada, executive director at the Association of Theological Schools and the Commission on Accrediting. Some institutions eschew all federal funds to avoid having to adhere to certain requirements, such as following civil rights rules or investigating sexual harassment in accordance with Title IX. Hillsdale College in Michigan is perhaps the best known, but numerous smaller examples also exist.

Theological institutions—which are distinct from religious colleges broadly in that they only offer degrees related to the study of religion, such as in divinity or pastoral care—are deeply invested in making college affordable, Yamada said. Graduates of these institutions work mainly in low-paying jobs in the ministry—such as chaplains in hospitals or the military, or in faith-based organizations—so ensuring their educations are affordable is vital. For over a decade, the Association of Theological Schools has administered the Economic Challenge Facing Future Ministers Initiative, which aims to provide financial education on theological campuses and reduce the number of student loan borrowers at those schools.

“It really is a service-based sector,” Yamada said, “and because of that, many theological schools try to minimize the amount of student loans students take out.”

Robert Kelchen, an education professor at the University of Tennessee, Knoxville, noted that in addition to discouraging students from taking on debt, severing Title IV funding could be a marketing tactic to signal just how affordable an education at a place like Asbury is.

“It’s strongly mission driven, as well: They want individuals to follow their calling, not have debt,” he said. He noted that some Christian denominations have sought to minimize student debt in recent years, emphasizing that living without loans makes for a freer life. For instance, Bethlehem College and Seminary in Minnesota, a seminary that does not take federal funding, calls student debt “a shackle on the Gospel’s advance” on a student aid webpage.

Regardless of Asbury’s goals, Kelchen said that the Education Department, which has called on colleges and universities to help prevent students from overborrowing, will likely view the seminary’s shift away from loans as a success story.

Yamada noted that a significant share of the institutions the Association of Theological Schools accredits will be affected by the earnings test and will likely have to take steps to mitigate the damage. Whether they can afford to follow Asbury’s footsteps and raise scholarship money to fill the gap is another story.