A Perspective to Consider Regarding College Loans

A Strategic Investment

College is a gateway to a higher earning potential. Data consistently shows that individuals with a bachelor’s degree earn significantly more over their lifetimes than those with only a high school diploma – about $1 million more on average. With increased income, debt becomes a calculated investment rather than a burden, and a loan becomes a lever for growth.

Consider the example of other worthwhile investments. Borrowing $300,000 to buy a home might seem daunting, but if the property appreciates to $400,000 in a decade, the resulting equity and wealth are worth much more than the original loan. The monthly mortgage payment serves as an investment in future value. Similarly, a business loan of $50,000 to open a small coffee shop could yield $80,000 in annual revenue, dwarfing the monthly repayment.

College loans follow the same principle. Borrowing $20,000 for a degree that leads to a $60,000 starting salary (versus $35,000 without a degree) means the debt pays for itself over time. The extra $25,000 in yearly earnings more than offsets the loan cost and provides financial breathing room. Monthly payments are also eased by federal income-driven repayment plans, which cap payments at 10% to 15% of discretionary income.

Biblical figures, such as Joseph (Genesis 41), utilized resources strategically to prepare for the future. Just as a mortgage builds a home or a business loan builds a legacy, a college loan becomes a bridge to an impactful and fulfilling career. For students, it can be a vote of confidence in their future – a way to break free from financial limitations and seize important opportunities rather than waiting years to save up. Like the servant in Matthew 25 who invested his talents, a loan can serve to multiply God-given potential.

Borrowing As Stewardship

At TMU, about two-thirds of our students decide to take out loans. However, 67% of our students graduate with less than $20,000 in loan debt, which is a third less than the national average of $29,800. TMU has also been ranked in LendEDU’s 2019 annual report as one of the institutions with the lowest default rates nationwide, in the 90th percentile. This means our students can repay their loans on time and do better than 90% of students at other schools. It reflects responsible habits, financial support, and career opportunities.

While many online finance “gurus” may inspire us with their zeal for debt-free living, Scripture doesn’t mandate it. Scripture instructs us to be prudent and manage our resources well. Taking out a loan to attend a college with a low default rate can thus align with biblical wisdom if it’s affordable, purposeful, and repaid faithfully. It’s a matter of personal discernment, requiring careful attention to avoid bondage or deception. Skipping college to avoid debt might mean missing a calling—such as being a teacher, doctor, or pastor—requiring a degree. Don’t let a misguided fear of debt close that door.  If education opens doors that were previously closed, a loan can be a practical step of faith that equips students to build their future.

Understanding Student Loans

Federal student loans, which are the most common, come in two types: subsidized (no interest while in school) and unsubsidized (interest accrues from the day of disbursement). The student applies through the FAFSA, borrows what they need up to a specific limit (e.g., $5,500-$12,500 per year for undergraduates), and starts repaying six months after graduation.

Interest rates are fixed, hovering around 5-6% for undergrads. These rates are not predatory—they’re a fair market cost for the opportunity. Repayment options include a standard plan with fixed payments over 10 years or income-driven plans where payments scale with earnings over 20-25 years. An average monthly payment of $150-300 is less than many car payments or rent hikes—and unlike those, it’s an investment that keeps paying dividends through career advancement.

Students should be aware that some schools offer “full-ride” packages that appear generous but are often disguised as “Parent PLUS” loans. These federal loans, taken out by parents rather than students, come with higher interest rates (around 8% for undergrad Stafford loans) and less flexible repayment options. These can result in unexpected debt without a safety net for income-based repayment. Legitimate student loans are designed with the student’s future in mind, offering lower rates, deferment options, and forgiveness programs.

God speaks authoritatively regarding debt, loans, repayment, investment, and stewardship. We strive to avoid even the semblance of misusing scripture for manipulation or fear regarding this sensitive topic. While TMU is in favor of loans and debt being used wisely as a tool, as we have argued in the article above, we encourage every believer to prayerfully search the riches of God’s word when considering their finances, education, career goals, and all of life.

Here are some of the passages referred to in the above article for your further study:

Genesis 41, Exodus 16, Leviticus 25:36, Deuteronomy 28:12, Psalm 37:21, Proverbs 22:7, Matthew 6:33, Matthew 25:14-30, Luke 16:1-10, Romans 13:7.