Seminary financial aid disappears

Incoming students at Eastern Mennonite Seminary were unpleasantly surprised shortly after their arrival this semester when they learned that EMS was going to offer them virtually none of their expected financial aid.

Speaking anonymously, several seminary students told Weather Vane that they felt EMS had been too optimistic in portraying their chances of receiving aid, though all said that the seminary had warned them that the aid might not fit in this year’s budget.

EMS’s website describes several generous assistance plans, including the Ministry Leadership Award, a "grant for full tuition plus a stipend for living expenses" offered to "up to three new M.Div [Masters of Divinity] students;" and "need-based grants…up to full tuition less other non-repayable aid."

"Seminarians do not get the same kind of federal financial aid that undergrads do," said former Director of Seminary Development N. Gerald Shenk, now a professor of Church and Society at the seminary. "Many arrive in mid-life with families to support; most cannot anticipate the kinds of salaries ahead that professionals in other graduate programs across campus foresee. Some of our graduates walk away with $50,000 in educational debt."

Seminary students generally agreed that the awards they had been promised played a large role in their selection of EMS for ministerial training.

The problem arose out of a mix of circumstances: the increased cost per student of graduate education as opposed to undergraduate, the financial difficulty in which the university finds itself during a nationwide economic downturn, and the recent end of income from the Lilly Grant awarded to the seminary in 1998.

The actual cost of operating Eastern Mennonite University is thousands of dollars more per student than students pay in tuition, creating a need for the university to raise funds through other sources such as private donors.

The seminary has often perceived itself as operating in a different way from the undergraduate university regarding student financial aid. For instance, because of smaller class sizes and requirements that professors (usually with longer tenures) have doctorate degrees, the cost above and beyond tuition for each student is dramatically higher at the graduate level.

The difference between costs and tuition income is higher for seminary students than for undergrads, who might be surprised by the amount of their tuition that goes to offset the discrepancy at the seminary. Business and Economics Department Chair Rick Yoder estimated that the tuition-expense gap is over four times larger at the seminary.

Thus, when the Board of Trustees decided that university-wide budget cuts and a hiring freeze were necessary to bring the recent financial crisis under control (see "Campus Belts Tighten" in the Oct. 9, 2003 Weather Vane), it asked the seminary to raise tuition so that seminarians would pay a portion of their education expenses closer to that paid by undergrads.

This increase in tuition apparently created a drop in enrollment in the late ’90s, as documented in the EMU factbook. In order to compensate for dropping enrollment, the seminary needed to raise financial aid to offset increasing tuition costs.

This problem seemed to be solved in 1998, when a $1.3 million Lilly Grant was awarded to the seminary, a large portion of which was designated for student financial aid, specifically full tuition and stipend packages for individuals with tremendous leadership potential. Tuition at EMS was nearly 40 percent higher than at Associated Mennonite Biblical Seminary in Elkhart, Ind., but the average EMS student had financial aid to cover more than half of that cost.

The Lilly Grant was not a perpetual stream of income, however; it was meant to fund a developmental office and pay the salaries of staff who would solicit endowments that could continue to provide revenue to the seminary long after the initial grant funds ran out. But as the Lilly Grant monies began to dry up, the endowments that had been raised for the seminary were frozen because of the stock market collapse that had just occurred.

Eastern Mennonite University has a fairly conservative policy concerning endowments, attempting to insure that the money taken out of endowments is less than the money that the endowments are accruing in interest. This allows the endowments to grow from year to year without adding to the principal funds.

The stock market’s decline in recent years triggered a reversal of the trend, and endowments university-wide began to lose money from year to year. In an unprecedented move, the Board of Trustees froze all of the usage of the endowments until such a time as they are restored through their earnings up to their original principal.

The freeze hit the seminary’s endowments harder than those held by other branches of the university, since the endowments started by the Lilly Grant had not had as much time to accumulate interest

"Many of them are just very new funds because we’ve just gotten the Lilly Grant to help us get a development [office]," said Seminary Dean Ervin Stutzman. "Even though these endowments are coming in, they are not yielding enough to make something happen. We are losing $100,000 in financial aid just through this system."

This was all during what was labeled a university-wide situation of "financial exigency," which has prompted various budget cuts and a hiring freeze. It might be said that because of the perception that the seminary has not been charging enough for tuition, it took a larger percentage of the cuts in the financial exigency that was plaguing the entire school. Both Shenk and Stutzman told Weather Vane that the seminary’s accounts were affected.

This put the seminary in a less than desirable financial situation. For instance, the seminary awarded $363,485 in financial aid to students during last school year. This was not a problem, as there was actually more than that budgeted for financial aid.

However, to sustain the returning students’ financial aid packages at levels equivalent to the year before, it was estimated that the seminary would need $189,913 more. The problem arose when offering equivalent financial aid to the incoming class. To maintain previous levels would have cost the seminary $238,414, which simply was not there.

Stutzman told Weather Vane that the seminary began to ask how to rectify the problem, but arrived at the conclusion that if the monies were to be spread equally between new students and returning students, the returning students would feel as though their trust was betrayed by a promise of something that could not be delivered, and so it was decided to give first priority of financial aid monies to returning students.

The seminary does view this year’s crisis as an exception, though Stutzman did caution that the status of the seminary’s endowments will certainly have an effect on what financial aid it offers in the future.

Proposed fixes for the budget shortfall include the Augsburger Endowment launched last October, which is hoped to reach $5 million, $2 million of which would be allocated to financial aid. The low earning potential of endowments has reduced their attractiveness to big donors, however, which has forced the seminary to rely increasingly on less dependable one-time gifts.

The "Stand in the Gap" fund, an appeal to seminarians’ home congregations for one-time gifts, has had mixed success: the churches’ response has not generally been as strong as hoped, though individual donors have been generous, with one writing a check for $10,000.

Many other individuals stepped forward as well, with some returning students even voluntarily giving up some of their financial aid in order to add several thousand dollars to the amount that was able to be designated to incoming seminarians.

Additionally, the entire full-time seminary faculty agreed to give up the $750 raise that the university had awarded them this year. Weather Vane has been informed that this money was actually used to insure that returning students’ scholarships would remain intact.

All of this has allowed the seminary to supplement the matching church grants, the only financial aid incoming students had been awarded, with a reduced grant of $10,000 for each student who had been slated to receive a Ministry Leadership Award of full tuition plus a stipend for living expenses.

The seminary administration has also drafted a "Philosophy and Practice of Financial Aid at Eastern Mennonite Seminary," which hopes that "in the future, a majority of our student body will come to seminary with the discernment, commissioning and financial support of congregations."

"If strong, unrestricted, giving continues, and if the market turns around, incoming students will do much better in the future," Stutzman said, "If our number of students keeps going in this direction, then we hope to pay incoming students more next year. We have people with a strong sense of call who are willing to live sacrificially in order to follow that call, and I’m grateful for that."

Most seminary students seemed to feel that if their awards are restored next year, it would be a balm to soothe any wounds that this year’s perceived communication gaffe has caused.