1. Debt Literacy 101 2012 CAFAA Annual Conference Joel Laos Director of Financial Aid Denver Seminary

2. Welcome to Location: Littleton Population: 1,001 students, 109 faculty/staff Type: Private, Graduate only Tuition: Ave $525/credit for 2012-13 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 -$37k ave graduating debt per borrower

3. GRADUATE DEBT STUDY

4. -The national rate of tuition inflation is second only to health care -Student loan amounts have increased at 1.5x the rate of the national cost of education, nearing $1 trillion

5. -Denver Seminary’s average tuition has increased 64% over the past 10 years, representing an average 4.73% increase per year

6. -Denver Seminary’s graduating debt has risen 65% over the past 10 years

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

8. -The loss of the Federal Subsidized Loan Program is expected to accelerate average graduating debt by 7-10% within 3 years (an average increase of $2,500 per student).

9. -Left unchecked, 10 years from now average graduating debt will increase 80% -Over a 20-year period average graduating debt will have increased 182%

10. -Tuition has increased at twice the rate of inflation since 2001 -For every 1% increase in tuition, average graduating debt increases 1.12%

11. -Increases shown for average salaries are reflections of the 2.49% average inflation -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

12. Salary Comparison 2012-132021-22 Senior Pastor$9K($8K) Associate Pastor($7K)($27K) Counselor/Chaplain($15K)($37K) Youth/Worship Pastor($27K)($46K)

13. What are we doing about it? Financial Literacy 1.Loan management page (DenverSeminary.edu/FinancialAid) Loan Counseling – Entrance & Financial Awareness (StudentLoans.gov), Exit (NSLDS) Your Salary (Salary.com) Manageable Debt Levels (Debt-to-Income Ratio Chart) Your Loan Details (NSLDS, MyEdAccount.com) Grace Period Repayment – Calculators, consolidation, repayment plans (including PSLF), deferment options

15. What are we doing about it? Financial Literacy 1.Loan management page 2.Debt literacy statement on award letter Award letters now include a customized statement regarding the student’s specific aggregate student loan debt, estimated monthly payment and salary required to reasonably manage that debt. Students must sign that they’ve read, understand and accept that statement before any further loans will be disbursed.

16. What are we doing about it? Financial Literacy 1.Loan management page 2.Debt literacy statement on award letter Based on information received from the National Student Loan Data System (NSLDS) through your FAFSA, you currently have $_________ in aggregate student loan debt. Based on a standard 10‐year repayment period and the current interest rate (6.8% fixed) this amount of debt will require payments of about $_________ per month (payments begin after the 6‐month grace period). Based on manageable debt‐to‐salary figures you will need an annual salary of at least $_________ to be able to reasonably manage payments under the standard 10-year plan. Estimated salaries, repayment calculators & payment plans are published on the Loan Management page.

17. What are we doing about it? Financial Literacy 1.Loan management page 2.Debt literacy statement on award letter 3.Customized loan offers The initial student loan offer is enough to cover full-time tuition and fees. Each student must complete an additional form to request additional loan disbursements for books and living expenses, which is linked to the Award Letter. That form requires the student to use the Loan Management page to research their existing aggregate debt level and estimated monthly payment.

18. What are we doing about it? Financial Literacy 1.Loan management page 2.Debt literacy statement on award letter 3.Customized loan offers 4.Additional counseling for high debt levels Students with aggregate debt of $40K or higher must also complete a budget worksheet and discuss their financial plan with the Financial Aid Office prior to taking out additional loans.

19. What are we doing about it? Financial Literacy 1.Loan management page 2.Debt literacy statement on award letter 3.Customized loan offers 4.Additional counseling for high debt levels 5.In Process: Customize Entrance Counseling Bring all aspects mentioned above together into an Entrance Counseling document that requires students to do research on a realistic salary range, manageable debt levels, their expected aggregate student loan debt upon graduation, and a personal budget prior to taking out loans

20. -The average percentage of the Denver Seminary student body that utilizes student loans consistently hovers around 45% -Current research: is the 2012-13 drop (38%) reflective of the loss of subsidized loans or of our increased financial literacy efforts? Or perhaps a bit of both?

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