Series - Post 11: What Can We Do, Pt. 2

Series - Post 11: What Can We Do, Pt. 2

March 14, 2016

Operational Models and Educational Debt in ATS Seminaries
Why do we care? What do we know? What can we do?

Part Two: What Can We Do?

Over the past two weeks, we have been looking at practical ideas that may help us address the issue of student debt.  It is a multi-faceted concern, and we believe institutions must attack it from three angles: cost reduction, revenue generation, and curriculum development.  Last week, we looked at cost reduction.  Today, we will dive into revenue generation.

While reducing the cost to deliver education is important, we must also think critically about revenue generation.  We believe there are a few activities that may lead to increased revenue.  Obviously, we cannot control the results, but we can hold ourselves accountable to faithful activity.  Here are a few suggestions for ways in which we might sow seeds for revenue generation.

Market Driving Planning
Only one school in our study could point directly to a specific plan for program development that was rooted in market dynamics.  Put simply, only one school actively researched its market and then created programs relative to that market.  It had a metrics for what classified a market as one worth pursuing and specific systems for developing programs when such markets were identified.  We must become more attentive to the market rather than developing programs based on what we “know” people “need” for ministry.

Temporarily Restricted Giving
Over the past decade, unrestricted giving to seminaries has been a little like a roller coaster.  It fluctuates from year to year.  Temporarily restricted giving, which are gifts made for a specific purpose, has risen.  This is especially true among a subset of schools that have participated in a peer study for more than a decade.  It seems we may need to be more attentive to the ways in which gifts for specific projects could serve our institutions.  For more on this topic, see this article published in In Trust.

Multi-stream Tuition Model
Multiple schools in our study have moved away from the traditional “per credit hour” tuition model.  In one case, a school no longer builds its budget using credit hours sold as the primary calculation.  In response to market trends and creative programming models, the school has created a tuition model that sees various streams of tuition flow into its overall tuition number.  Those streams vary based on the type of program, the payment model the student uses, or the degree level of the student.  At times, there could be as many as five to ten different streams of tuition.  The variety allows for individual pockets of enrollment to fluctuate and for more exact forecasts of revenue.

Monthly Tuition Model
Also used by multiple schools in our study, a monthly tuition model creates a significantly more steady cash flow.  Rather than charging students by the term or by credit hour, a few schools simply require students to pay a monthly tuition fee that gives them complete access to anything within their degree program.  One school charges a monthly fee and allows students to take as many or as few courses as they want in a given term.  For schools using this model, cash flow is more predictable, and barriers to entry have been lowered.  At the same time, the time required to process student payments and student registration has diminished because registration no longer impacts that amount of tuition owed by a student. The flurry of “add-drop week” has disappeared for students using this tuition model.

Re-engaging the Church in Giving Through Individual Givers
This example deserves a little more attention because it has several variants.  In essence, a few schools have developed ways to bring the church back into the funding model for seminaries.  As we know, funding from denominations and local churches has diminished over the past few decades.  The models that follow are connecting students with local churches or specific individuals.  Many schools have seen very encouraging results.

We are going to look at three partnership models we discovered, each of which helps students fund education.

Ministry + School + Student
The first model has been around for quite some time, but it is worth noting because it has served numerous schools well.  For the sake of illustration, let’s imagine that a year’s worth of tuition at ABC Seminary is $15,000.  In this model, the student’s ministry context pays a portion of that amount, the school pays a portion, and the student pays the remaining portion.  The specific amounts or percentages paid by each vary from school to school.  A popular way to implement this program is to have each entity pay one-third of tuition.  Another way is to have the school match the amount given by the ministry context.  Some schools are having success with this model.  Others are finding it difficult for the ministry context to support the student in this way.  This leads us to the other two partnership models we discovered.  Both of the following options are variations on the same theme, a theme that requires the student to be actively engaged in seeking scholarship funds.

Gifts to Ministry + School + Student
In many ways this model is very similar to the one previously described.  The school will match (up to a certain amount or percentage), the amount given by the student’s ministry context.  The student is responsible for the remaining amount. The primary difference is that the student is responsible for raising the money that is given by his or her ministry context.  For instance, if the ministry is going to provide $5,000 for the student, he or she must raise $5,000.  The money raised is given to his or her ministry context which, in turn, is given to the seminary.  One value of this model is that it removes the school from the fundraising process, thereby bypassing some of the IRS restrictions on student fundraising.  The final model deals with IRS restrictions by integrating the student fundraising into the curriculum

Student + Ministry Support Network
Very few schools are using this model, and for good reason.  It must be implemented with care and with extreme attention to IRS regulations.  From our research, we learned that the first school to implement this program on a large scale actually received an IRS ruling allowing it to engage in the process.  In this model, students are responsible for securing a certain level of monthly funding, say $300 per month. The gifts come to the seminary and are placed in a specific fund, but not placed directly in the student’s account (the previous models all result in external funds being placed directly in a student’s account).  In essence, all students in this model raise money that is placed in a pool.  The money in this pool then funds the scholarships for all the participating students.  On the surface, IRS regulations seem to say this type of model is not allowed.  However, if such practices are part of an academic program and lead directly to specific academic goals or program outcomes, the process is allowable.

Multiple schools are now utilizing this model, but they have integrated significant amounts of financial content into their curricula.  In some cases, students participate in stewardship seminars outside of class.  In other cases, students are required to create ministry plans that incorporate biblical stewardship principles (things they have learned from their fundraising experiences) and strong fiscal expertise.  In some ways, this model is the most integrated of all models because it brings together some of the curriculum changes we believe may need to take place and the practical application of financial skills.

In closing, we would suggest that there is merit in requiring a student to be engaged in raising funds for his or her ministry.  If connected to the curriculum in meaningful ways, the student will not only see his or her cost of education decrease, but will also gain valuable knowledge and skills.

Revenue generation is an important step toward addressing the challenge of student debt.  As mentioned above, however, it will best serve students if it is supported by curriculum development.  Come back next week to hear our thoughts on that topic!

Article Repost from Beyond Tomorrow –