Home Pastors Articles for Pastors Effective Ways to Pay Off Seminary Debt

Effective Ways to Pay Off Seminary Debt

seminary debt

Today many people struggle with seminary debt, but it can be especially difficult
for those who have gone to seminary and are not in high paying positions as they
serve in churches or faith-based organizations. The statistics can be daunting
but also, in a way, reassuring, because they show that millions of people are in a
similar situation.

According to cnbc.com1, there are over 44 million Americans with student debt. That means that roughly one in four American adults are paying off student loans. The average amount owed by recent college graduates is $37,172 and for seminary students, the amount is even higher. Luckily, there are some steps you can take to pay down your student loans and MMBB Financial Services can show you how.

First and most importantly, you need to know what you owe, the interest rate, minimum monthly payment and the length of the loan. It’s not uncommon for people to have multiple student loans, which can make it difficult to keep track of how much is owed. If you’re not sure about the details on your loans, for Federal Loans you can visit the National Student Loan Data System website. For private loans you will need to contact the original lender or ask your school to help you track down the information. You may also be able to find it on your credit report.

Once you gather all the information, you’ll want to create a seminary debt reduction plan. Be consistent, while it may at first appear discouraging, with a steady plan you will reach your goal of paying off the seminary debt. Here are some effective strategies to assist you:

  • Pay more than the minimum amount due if your budget allows.
  • Consider using additional financial resources, such as honoraria, anniversary and birthday gifts, tax refunds, etc. to pay off seminary debt faster.

Making an extra payment at least once a year can help pay off the debt faster and in turn reduce the amount of interest paid. Make sure the lender knows the extra payment is to go toward principal, not the next month’s payment. If a pastor receives anniversary gifts from the congregation a lump sum could be paid on the student loan to reduce principal. The gift is taxable income but will reduce the principal and the interest one has to pay.

Resist getting another educational degree solely to defer paying on existing educational loans. Interest is accruing while loans are in deferment.

Refinancing student loans is an option, but one needs to consider the total interest paid particularly if the length of the loan is extended. With a refinance it is possible to get a lower interest rate. Make sure you shop around and read the small print. There are online student loan prepayment calculators (www. makelemonade.co) that may help you figure out how much interest you can save.

Do not neglect funding your retirement accounts while paying off seminary debt. Having a budget and sticking with it will help with bill paying, saving for retirement and establishing an emergency fund.


As a benefit of membership, MMBB has CERTIFIED FINANCIAL PLANNERTM professionals available to answer your questions and assist you with your financial planning needs. For more information or a no obligation consultation, please contact us at financialplanning@mmbb.org or 800.986.6222.

https://www.google.com/url?sa=D&q=https://www.cnbc.com/2018/02/15/heres-how-much-the-average-student-loan-borrower-owes-when-they-graduate.html

This article previously appeared in the Summer 2019 MMBB Tomorrow newsletter.

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Rev. Jim Cook, CFP®, RICP® has been with Ministers and Missionaries Benefit Board (MMBB) since 1999. Currently, Jim works in financial planning, bringing expertise in comprehensive financial and retirement planning to his work at MMBB. Prior to joining MMBB, Jim, an ordained minister in the American Baptist Churches, USA, served as a pastor in churches in California.