For those who want to leverage their lives for the sake of the gospel—whether by serving as a missionary overseas or by giving of their time and resources for gospel advance through their home church—student loan debt can be a major sticking point. If you are already dealing with student loan debt, you don’t need to be told what a big problem it is.
According to the Federal Reserve Bank of New York, total student loan debt in the U.S. is approaching $1.5 Trillion, which is higher than total credit card debt! Studies differ in their estimates of the average loan balance, but it was in the $30,000 to $40,000 range at the end of 2018.
Of even greater concern is looming student debt defaults. About one million go into default each year. And worse, the Urban Institute estimates that almost 40% of borrowers will be in default by 2023.
Christians who are dealing with student loan debt can find help and hope from God’s Word. While we may disagree on some of the specifics when it comes to handling our finances, there are some biblical principles that can guide you when it comes to dealing with debt in general, and student loans in particular:
1. Having student loan debt is not a “sin,” but it can really do a number on your personal finances.
The Bible does not teach that borrowing is a sin, but rather that it is wise to avoid debt if at all possible.
That’s because debt robs us of the liquidity (margin) we need in our personal finances. Many graduates are having to use so much of their income to repay their loans, over such a long period, that they don’t have much left for living expenses, let alone enough to give or save.
Student loans aren’t like car loans or house mortgages, which require you to put up collateral (offering something of value as security for the loan). The collateral for student loans is your future earnings and any assets you accumulate; they in effect “mortgage your future.”
And if you don’t pay, your earnings can be garnished and other income, such as tax refunds, can also be taken.
Starting out “in the hole” may severely limit what you can do with your money for an extended period. According to a survey done by the American Institute of CPA’s, of those with student loan debt, around 40% delay saving for retirement, buying a car, buying a home; some even delayed getting married.
In effect, financially speaking, student loans have made age 30 the new age 20. Several years out of college, the average borrower still has a negative net worth.
2. Deal with any regrets you have about taking out student loans.
About a third of recent graduates regret going to college. And about 60% of students say they actually regret taking out student loans in the first place. They apparently didn’t realize that getting a high-paying job and paying off their loans would be so difficult.
We all have some regrets when it comes to our personal finances—it’s part of life. And let’s face it, regret is painful. “A glad heart makes a cheerful face, but by sorrow of heart, the spirit is crushed” (Proverbs 15:13).
But focusing on the past and what you should have or should not have done will only foster more regret. And more importantly, it won’t make the debt go away.
Better to focus on today—a new day in the Lord:
The steadfast love of the Lord never ceases; his mercies never come to an end; they are new every morning; great is your faithfulness. (Lamentations 3:22-23)
So the most crucial question is not why you did or didn’t do something in the past, it’s “What are you going to do going forward?”
3. If you have student loan debt, you must pay it off.
If you have finished college with a bunch of student loan debt, the Bible is pretty clear: You should pay it back as soon as possible:
The wicked borrows but does not pay back, but the righteous is generous and gives. (Psalm 37:21)
The rich rules over the poor, and the borrower is the slave of the lender. (Proverbs 22:7)
Owe no one anything, except to love one another, for the one who loves another has fulfilled the law. (Romans 13:8)
Many students are optimistic about being able to pay off their loans after graduation, and according to one study, about half believe that they will get help from some kind of federal student loan forgiveness program after they graduate.
There are loan forgiveness programs available, but most apply to public service employees so very few people will actually qualify for them.
Additionally, many loan programs allow you to postpone payment via deferral or forbearance. While it may be necessary to delay payment for a season, ultimately, Christians have a moral obligation to repay to the best of their ability.
Delay only makes things worse.
4. To be successful, you will need both a conviction and a plan.
Before you come up with a repayment plan, you must be convinced that God wants you to do this and that He will help you do it, for your good and His glory. “Each one should be fully convinced in his own mind” (Rom. 14:5b).
Once convinced, you need a plan. Paying off debt takes time, effort, and sacrifice. It’s not easy—if it were, there wouldn’t be so many deferrals, forbearances, or defaults.
One of the greatest hindrances to paying off student debt is the “someday syndrome”—“someday” I’ll have more income; “someday” I’ll get a big bonus or tax refund; “someday” my debt will be forgiven, or someone will pay it for me.
But the reality is that “someday” rarely comes. To get this done, you are going to have to get “radical” (sorry, I had to throw that in). Seriously, you’ve got to get a little crazy about paying it off.
Dave Ramsey describes this as having “gazelle intensity,” which is a reference to Proverbs 6:4–5, which says, “Give your eyes no sleep and your eyelids no slumber; save yourself like a gazelle from the hand of the hunter, like a bird from the hand of the fowler.” Ramsey applies this to paying off debt this way: “When you’re in over your head with money problems, you need to work as hard to get out of debt as a gazelle works to run from a cheetah.”
Putting the loans in deferred or forbearance status isn’t a plan; neither is just making minimum payments. Consolidation or refinancing are options for some, based on the type of student loan. That may make the payments more affordable but will also just prolong the problem.
The best approach is to continue to live “like a college” student to create maximum cash-flow margin and use it to “snowball” your student loan debt. Dave Ramsey (and many others) recommend the debt snowball approach to getting out of debt. The idea is pretty simple: You start with the smallest debt and pay them off one at a time, rolling the money you were paying on the smaller debt over to help pay off the next largest. It’s all about momentum. Also, if you can take a side job or start a side-hustle to help, consider doing so—it will move things along even faster.
5. God knows your situation and wants to help you.
God knows your situation; he knows what you’re facing. What is overwhelming and seemingly impossible for you is easy for Him.
For nothing will be impossible with God. (Luke 1:37).
But no matter what, don’t succumb to fear or hopelessness. Turn to the Lord instead.
When the righteous cry for help, the Lord hears and delivers them out of all their troubles. The Lord is near to the brokenhearted and saves the crushed in spirit. (Psalm 34:17-18)
And as you do your part and put your hope and trust in God,
May the God of hope fill you with all joy and peace in believing, so that by the power of the Holy Spirit you may abound in hope. (Romans 15:13)