Is Seminary Worth It? Part 2: Accounting Versus Economic Evaluation

If you missed the introduction, Is Seminary Worth It? : Part 1.

I remember where I was when I told my dad that I felt called to ministry.  My dad, the pragmatic lawyer that he is, began to pepper me with a number of pragmatic questions:

  • How much will ministry training cost?
  • What are your projected career earnings as a pastor?
  • Why would you pay for a graduate degree that will cost more than your projected career earnings as a pastor?  

In all seriousness, my dad was simply asking the accounting question. “Is the traditional, on-site model really worth the cost of moving, living, learning, and decrease in overall income?”  Every good pastor and pastor’s family should count the costs of any and all major life decision and theological education is included. (This post assumes an American context and a distinctly American theological education.  Perhaps I will deal with world-wide theological education in a future post). I want to weigh into this question by offering a helpful, but little-discussed, factor in this discernment process.  I want to access the difference between an accounting evaluation verses an economic evaluation.  Let me explain.

The University of North Carolina’s school of economics offers this distinction between the terms:

Accounting Costs (explicit costs) vs. Economic Costs: The real (economic) costs of production usually exceed the accounting (bookkeeping) costs of production because economic costs include both explicit accounting costs and implicit costs – the value of the personal resources the owners of a firm make available (e.g., their labor and capital).

For our purposes, Accounting Costs (AC) include all the monies that change hands in the process of funding a seminary education.  Think of the word “fees” when thinking of the AC.  This would include books, tuition, taxes, moving costs, state taxes (if applicable), conference fees, school t-shirts, library fees, and other educational expenses.  Most concerned parents and family members usually jump to these “fees” when thinking about the cost of seminary.  And, most concerned family members stop evaluating at the dollar signs.

However, there are other costs to consider.  Economic Costs (EC) include AC plus all the non-monetary costs associated with living on planet earth.  This would include opportunity costs like a job/income or like an equity-building property.  This would include the early years of income earned, the time-value of money, and the potential for investing income in a savings account.  This would also include the cost-of-living increase or decrease, and other lifestyle costs (such as an increase in coffee/ hot tea expenses).

However, by exploring the EC we discover a little-discussed factor in the seminary evaluation equation: the Economic Value Added (EVA).  In a real sense, there must be more to a theological education than a degree on a wall or a credential for a resumé.  That something more is called “value,” the intangible ministry worth that a pastor brings to a church staff and a local congregation.

While it is difficult to calculate, there are some organizations that have tried to put dollar signs on this intangible worth.  For example, the Southern Baptist Convention has created a salary comparison database with variables like ministry experience and theological education.  For example, a full-time associate staff member in a Texas church with a college education earns around $59,000/year on average.  That same staff member earns better than $62,000/year on average with a seminary degree. That is better than a $3,000/year increase.  In other words, the SBC sees the EVA for a completed seminary degree as being worth $3,000 a year.  That same staff member earns upwards of $78,000/year on average with a doctorate, for an EVA of $19,000/year.

With those dollar signs in mind let me make a parenthetical statement: dollar signs can be an indicator of EVA, but they are not always the true indicator of EVA.  What the SBC database communicates is that there is indeed value for the seminary degree.  And for pastors in Texas churches that value has bearing in the ministry marketplace.

Putting It Into Practicals

Let’s put this into a real life scenario.  Joe is a recent college grad with a BA. Currently, he is choosing between attending seminary and taking a job as a teacher through a Teach For America program.  Teach For America currently pays anywhere between $30,000 and $50,000/year with some other benefits.  For our purposes, let’s take a conservative approach and say that Joe will be potentially making $30,000/year.

Should Joe choose the seminary path, he will likely be paying around $10,000 per year in tuition with an additional $5,000/year in educational costs.  I am getting these figures from a 2002 Christian Century interview with Daniel Aleshire, the Executive Director of the Association of Theological Schools, entitled , The Value of a Theological Education: Is It Worth It?.   Aleshire responds to the accounting costs of seminary:

This year it costs between $75,000 and $100,000 to educate a student through a three-year M.Div. program. The students pay, on average, about 30 percent of this amount in tuition, and the rest comes from endowment, gifts and grants.

So Joe should plan to pay $15,000/year, $5,000 in moving expenses, and should prepare to pay $1,000 in yearly state income taxes.  That is $21,000 in total annual AC.

EC includes AC plus the opportunity cost of giving up the $30,000/year in salary. Dependent on the difference in cost-of-living, living expenses could either be null, a slight increase, or a slight decrease.  Should he choose the Teach For America route, his salary would cover the living expenses.  But, since Joe is currently looking at school without the prospect of a job he is required to pay the rent, utilities, and insurance without the aid of a salary.  Lets tally that (conservatively) at $500/mo in rent, $500/mo in living expense, and $100/mo in insurance/other. That is $1,100/mo for a total of $13,200/year.

EC = $21,000 + $30,000 + $13,200.  That is an EC of $64,200/year to attend seminary training.

Also, keep in mind that this scenario does not take into account that Joe may be able to get a part-time job at a coffee shop.  Or, that Joe may have a wife who works and can help lessen some of the living expenses.  This also does not take into account if Joe is able to secure a church-matching scholarship (available at most seminaries) or has a rich-dead-uncle who bequeathed a large sum of money to cover costs. This scenario assumes nothing and is trying to show a conservative cost versus value estimation.

At this point, Joe might be thinking that he should take the Teach For America job and run.  Maybe after a two-year assignment, he could look for an associate staff pastor position in a Texas church and bump up to making $59,000 per year.  This seems like a sound approach.

However,  I would point to the conclusion of a 1998 and 2005 Francis Schaeffer Institute study on pastors in America:

The result of both studies is this: the pastor must be theologically sound. A pastor who does not have a good theology is like an engineer who does not know math; he or she would totally be unable to do the job of designing. A pastor that is not theologically sound is like a surgeon who does not know anatomy and physiology; would you want him or her to operate on you? Would you want a lawyer representing you who does not know the law or the court system? When we are in the pulpit proclaiming the truth of Christ, it better be just that—the truth of Christ, not our inclinations, new ideas, or the latest trend in theological thinking.

In other words, a sound theological education has lasting value for a pastor and for his church.  But does that value compensate for the $64,200/year in EC?  How might we approximate the estimated value added of a theological degree to see if it compensates the EC?

First, let’s consider the SBC salary projection over the course of a lifetime of ministry.  If Joe graduates from a seminary at 25 and takes a job in a Texas church as staff associate, then he will be technically adding $3,000/year in pastoral value to his church.  Let’s say that Joe works for 10 years as an associate staff member.  That is $30,000 in value by age 35.

Total EC for seminary: ($192,600).  Total pastoral value after 10 years: $30,000. EVA = ($162,600).

Let’s say that after 10 years God calls Joe to a church in Texas where he will become a senior pastor.  The SBC lists the salary of a seminary grad to be $10,000/year more valuable than of a college grad.  Now, let’s say that Joe pastors this church until retirement at age 67.

EVA (10) = ($162,600). Total pastoral value after 32 more years: $320,000. New EVA: $157,400.

And here is where the seminary value starts to come into focus.  According to the SBC compensation calculator — if Joe goes the distance, the value of seminary will be well worth it.  Joe should either jump straight into seminary, or work for a couple of years to save up the funds and then jump straight into seminary.  The cost of working two years ($60,000) could theoretically yield enough savings to cover tuition for seminary and would only reduce the EVA by $20,000 in pastoral value added.

In the end, the seminary education has tremendous value.  However, we still have not considered the other aspects of value in the seminary education as it impacts local church ministry. For rhetorical effect, let’s imagine how one would go about determining the value of:

  • A marriage that stays together because of pastoral leadership and community intervention?
  • A non-Christian who comes to salvation in Jesus Christ because of the faithful preaching of God’s word and the discipleship from the church body?
  • The sanctification of a man or woman, in part due to the Holy Spirit working through faithful Bible teaching?
  • The ministry of prayer and visitation to those in cancer wards?
  • The ministry to the poor, to the strippers, to the truckers, and to other marginalized members of any local society?
  • The faithful mobilization and equipping of the saints for the work of the church?

How would one determine that kind of value over the course of a healthy ministry tenure?  Sociologists of Religion like Byron Johnson have dedicated their careers to wading through this very issue and might add that good pastors add tremendous value for the local church and for American society.

There is mounting evidence that increasing religiosity not only reduces crime and delinquency, but it also promotes prosocial behavior.

Furthermore, the value of a helpful pastor becomes even clearer when considering the opportunity cost of hiring a pastoral staff made up of folks like this? Or this? Or this?

In summary, it is not difficult to understand that the true EVA of a seminary preparation well exceeds the monetary value of the degree, especially for those who are just finishing an undergraduate degree and have 40 + years of ministry ahead of them.  The thing to keep in mind is that churches are not hiring a warm body to execute some tasks or to maintain a program.  Churches are considering whether a hire will add pastoral value to the church.


In review, a sound theological education will yield pastoral value to the pastor’s life, to the local church, and to the local society.  So the question now becomes, What constitutes a sound theological education?  Does it really have to cost thousands of dollars a year?  Can this only be achieved in a traditional on-site seminary?  Or can this be achieved in an on-line option or in a church-based model?

We will tackle this issue in a future post.

About Doug Hankins

Although not a Christian in his youth, Doug came to believe in Jesus during his teenage years. When not playing sports or pastoring Doug is probably spending time with his wife, reading a good book, or drinking some hot tea. Doug's first book Dawson Trotman: In His Own Words is available wherever books are sold. You can follow Doug on twitter.
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4 Responses to Is Seminary Worth It? Part 2: Accounting Versus Economic Evaluation

  1. Élias says:

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  2. Pingback: Is Seminary Worth It Part 4: Some Marks Of A Healthy Seminary » Doug Hankins : Into The World

  3. Pingback: Is Seminary Worth It? Part 3: The Necessary Perspective of Preparation » Doug Hankins : Into The World

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