Asbury Theological Seminary to phase out federal student loans

Asbury Theological Seminary is pulling out of the federal student loan program, becoming one of the first prominent seminaries to do so, citing a desire to reduce student debt and concerns that a hostile future administration could use federal funding against the school.

The Kentucky seminary, which is rooted in a the Wesleyan-Holiness movement and serves students from dozens of denominations, announced that it would stop processing federal Title IV student loans beginning in May 2027. Title IV is the section of the Higher Education Act that governs federal student aid.

Asbury President David Watson said the seminary’s heavy use of internal scholarships is one reason it is scaling back its reliance on federal loans.

“Right now, we scholarship on average 65 percent of master’s tuition costs, 100 percent of Ph.D. student costs and about 50 percent on our doctor of ministry program,” Watson told The Christian Post in an interview. “We want to get that number higher, but the big issue really was student indebtedness.”

Watson, who has been president for a little over a year, said the seminary seeks to "chart out our own course" and not let federal government have any influence on its financial situation. 

“If the federal government controls your finances, then the federal government can control other things about your institution," he said. "Asbury is a school that is Wesleyan, orthodox and Evangelical and it’s very important for us to maintain those commitments."

If a federal government administration rose to power that stood in opposition to Asbury's beliefs, Watson said the seminary could find itself "compromised."

"We just don’t want to get there," he said. 

Watson is unsure if other schools are making similar moves but said he wouldn't be surprised if some are planning on it. 

“I think it could become a trend in Christian higher education because depending upon the ideology of the administration that’s in power, things could become very difficult for schools that take their Christian identity seriously,” Watson told CP. 

In addition to internal scholarships, Asbury works with churches and church groups to identify scholarships available to students.

“If students must take out loans, we can work with them to identify the best lenders, private lenders for them, but we really don’t want them to do that," Watson said. "We have some capacity to provide some internal loans but in general, we want to discourage students from taking out loans unless they really have to."

Finances are continually one of the biggest burdens for people pursuing careers in ministry.

“A lot of students over the years have graduated with significant debt, ... not necessarily from Asbury, but from seminary in general. I went to a different seminary and graduated with ... debt. And when you go into ministry ... if you’re starting out in your career as a minister, you don’t make a lot of money in most cases,” he said.

“This can really be a hindrance to effective ministry. ... We want to prepare ministers to be as effective as possible once they get into the church. And so student loans and debt can be a hindrance and finances can prevent people at times from going to seminary or from finishing seminary."

Watson believes the institution's move away from Title IV funding will “be good for our students" and allow Asbury to "chart our future in the most faithful way possible.”

According to Asbury, the share of its students relying on Title IV funding has dropped from about 30% to around 17% in recent years. Watson told CP that pulling away from Title IV is “not a new idea at Asbury,” adding, “We’ve been working at this for a long time.”

The seminary credited its ability to take this step to its “strong endowment health, supported by decades of generous donor investment and strategic stewardship.”