Can North Park Theological Seminary stem a decline in enrollment in its residential, three-year master of divinity program? Its dean, Dave Kersten, along with the financial leadership of the Evangelical Covenant Church, North Park’s parent denomination, is betting big bucks that they can. 

Over the last 10 years, the Chicago seminary has seen a 30 to 35 percent reduction in residential students. North Park’s decline in residential students parallels that of many schools, as family, life-stage issues, and financial challenges all militate against on-campus learning. 

Since finances are a major factor for students, the church is tackling money head on with a new program that promises to reduce costs for students and keep their loan payments to a manageable level while at the same time increasing funding for the seminary. The key to the magic: interest-free loans, funded at first from the church program budget, but later from a donor-financed pool. 

The new program was developed by Paul Hawkinson, executive director of finance for the Evangelical Covenant Church, and Steve Dawson, president of National Covenant Properties, a 47-year-old financial services and real estate firm that is a wholly owned subsidiary of the denomination. Hawkinson explains that the initiative, called Covenant Scholars, started this past fall with a denomination-funded pilot program. Approved scholars have been given interest-free loans to cover three years of seminary tuition. The loans are provided by the Covenant Scholars Loan Program, a newly formed corporation owned by the church. Funding for the Covenant Scholars Loan Program comes from a line of credit provided by National Covenant Properties. 

To qualify, students must have a strong connection to an Evangelical Covenant congregation, feel called to serve in church-related ministry, and enroll in North Park Seminary’s full-time residential M.Div. program or equivalent. The program pays their tuition directly to the seminary, and, if they meet performance requirements, guarantees that loan repayments post-graduation will be no more than $250 per month for no more than 84 months. That’s a total of $21,000 over seven years, interest free, which is repaid into the fund so that another student can benefit. 

Students also promise to crowdfund (through friends, members of their congregation, or others) at least $5,000, due to the Covenant Scholars program at graduation. The program website suggests that one way to raise $5,000 is to enlist 50 partners who agree to pray for the student and to contribute $100 toward the student’s education. Every additional dollar raised (beyond the required $5,000) reduces the post-graduation obligation down from the maximum of $250 per month. 

The $21,000 in cumulative monthly student payments, added to the $5,000 crowdfunded support, total $26,000. 

The debt incurred by students in the program compares favorably with debt typically owed by new seminary graduates. The Association of Theological Schools reports that among seminarians who borrow to finance their education, evangelical students emerge with an average of $33,700 in debt. Mainline Protestant students who borrow leave seminary owing $38,200. Roman Catholic seminarians who borrow owe, on average, $26,750 on graduation. And these figures represent only principal obligations, with accrued interest bringing the total lifecycle costs dramatically higher. (Amounts are based on 2016–17 figures.) 

The Covenant Scholars program is a direct response to these sobering figures on student debt. And the church believes that the model can also increase on-campus enrollment and provide broader opportunities for students to interact with the church’s leadership. 

Early indications are encouraging, with scholars in the first cohort saying that the program has served as a catalyst for their enrollment. Further, there is a strong sense that the inculcated responsibility to “pay it forward” will lower student default rates and make the loan fund sustainable for future seminarians. 

How it’s structured
Like many denominations, the Evangelical Covenant Church sets aside reserve funds for various purposes, including developing new congregations and financing new church buildings. Before seeking any broader donor participation for the Covenant Scholars program, the church has committed to use some of these reserves to provide support for a three-year pilot phase, funding 10 new students per year, which represents 20 to 25 percent of a typical M.Div. cohort at North Park Seminary. 

But there won’t necessarily be a three-year wait to roll out the full program. If the initial positive signs continue, development staff members will begin approaching donors after about 18 months and ask them to contribute to a fund so that the program can be expanded to additional students. 

Hawkinson says that the real power of the future program is that donated funds will be invested in the market to take advantage of long-term capital gains. Simultaneously, a much larger line of credit, secured by the invested funds and other church assets, will be the actual source of the funds for each student scholarship — funds that will go to the seminary, not the student. The assumption is that the investments will, in the long run, earn a higher rate of return (say, 5 percent or 6 percent) than the interest rate on the line of credit (say, 3 percent or 4 percent). This differential between earnings and cost will inure to the benefit of both North Park Seminary and the student. Students will pay no interest at all on a maximum debt of $21,000. The seminary will receive $26,000 in tuition for a three-year M.Div. program, with no further discounting or aid obligation. (Seminary-financed financial aid packages often give students a discount of up to 50 percent off the published tuition rate — about $45,360 for the three years — which means that the seminary might receive less than $23,000 in tuition from a “typical,” non-Covenant Scholar student.) Furthermore, if the donor-backed fund behind the program performs well in the equities market, the church is considering ways to share the windfall with the seminary. 

Hawkinson, who had a Wall Street career before joining the denominational staff a few years ago, calls this “turning the concept of endowment on its head.” In traditional fundraising, a donor might be asked to give toward a fund in which 4 or 5 percent of assets are drawn down each year in order to provide direct support for the seminary’s bottom line. But in this reimagining, donor funds enable students to enroll right away, taking on debt at a more manageable level, and prepare for service to the church, which is what donors want anyway. Graduates are deployed into ministry, the seminary’s bottom line is strengthened, and the long-term need to draw on endowment funds is lowered. 

Financial acuity training
The Covenant Scholars program is not just about bolstering the seminary’s on-campus population. Kersten, the dean, calls the program “the last piece of the puzzle” in an attempt to weave “financial acuity training” into existing M.Div. course work. The seminary designed the project — named The Financial Health of Our Future Ministers and funded by Lilly Endowment Inc. — to help students develop a theology of generosity, to give them the financial skills they need to manage both their own finances and a congregation’s budget, and to teach them to feel comfortable with asking others to give. 

From the first day a seminary graduate becomes a pastor, says Kersten, they are budget managers and fundraisers. Thus, even in field education, North Park gives future ministers financial leadership experience. 

Kersten and Hawkinson designed the required $5,000 crowdfunded payment to help students practice fundraising during their seminary years, as well as to promote their ministry calling to others. It gives them some “skin in the game” and “a dose of reality,” says Kersten. Students are free to appeal to friends, relatives, a working spouse, social media contacts, or the congregation back home. 

To shore up their personal financial health, every student receives twice-a-year financial counseling sessions by representatives of the Covenant Trust Company, an estate planning and investment management company jointly owned by the denomination and North Park University. Students often come to seminary with debt from undergraduate education, so financial counselors hold students accountable and caution them against taking out more loans to cover moving and living expenses. Meanwhile, the Covenant Church is working on a program to help students refinance additional debt they may acquire. 

The value of on-campus learning
North Park Theological Seminary has been offering a combination of online and intensive hybrid programs since the mid-1990s, but the on-campus cohort of M.Div. students is still central to the seminary’s identity. Spiritual and personal formation, community worship, and mentoring are frequently cited reasons for preserving a robust residential program. Cross-registration within the Association of Chicago Theological Schools is another benefit. 

Kersten is particularly excited by the ministry laboratory provided by North Park’s unusual neighborhood, Albany Park, a diverse community on the north side of Chicago. “The world is at our doorstep,” he says. “Major people groups of the world are all around us.” Local public schools report anywhere from 50 to 90 first languages spoken by their students. And the campus reflects its unusual neighborhood; North Park University has no majority ethnic group. Ministry training in such a context is hard to duplicate at a distance. 

Another North Park program, one that can only happen with residential students, takes students for a 90-minute ride to the Stateville Correctional Center, a maximum-security prison where inmates can enroll in seminary courses and mingle with residential M.Div. students in the same classroom. That, too, creates learning experiences that cannot be matched by distance learning. 

If the Covenant Scholars program proves sustainable and effective, it could revitalize the residential program at North Park and spawn similar programs at other denominational seminaries. It will also give Paul Hawkinson the chance to tell potential generous donors that instead of putting their “name on another conference room door,” their gift “can be the catalyst for the next thousand Covenant pastors.” 

For more information on the Covenant Scholars program, visit

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