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Louisville Presbyterian Theological Seminary, a small institution in Kentucky associated with the Louisville-based Presbyterian Church (U.S.A.), announced this week that it would give full scholarships to students in the seminary’s master’s degree programs starting in 2015.

The seminary’s announcement follows on the heels of an announcement earlier this week that Cooper Union, which has been tuition-free for much of its existence, will consider charging tuition to make its budget sustainable. While Cooper Union’s announcement caused many to wonder whether the tuition-free model could continue to thrive, the seminary’s decision provides some hope that the model still has legs in certain sectors of higher education.

Administrators hope that the proposal, designed to ease debt burdens on a group of students who likely won’t make much money upon graduation, could help attract and retain bright students to the field who previously could not afford it. “One of the problems facing so many students graduating seminaries is the crushing debt load,” said Susan R. Garrett, a professor of New Testament at the seminary who served as vice-chair of the committee that drafted the strategic plan outlining the new tuition proposal. “It has a direct effect on the kind of ministry work they feel like they want to go into. Many of them can’t afford to take a lower-paying job and cannot afford to take any risks, such as start up a new church. It’s hampering the ability to do the kind of work we’re training them to do.”

The cost of educating students has been a concern for seminaries, which are often too small to create the money-saving economies of scale found at larger universities but still must maintain high-cost instructional modes, particularly the use of technology and small classes. At the same time, such institutions often cannot charge as much in tuition, given that students don't make much upon graduation. Several have considered merging with other institutions to generate savings and keep costs down. Louisville seminary administrators hope the tuition-free plan may serve as a model for similar institutions trying to educate students for fields where graduates might not make enough to pay off student loan debts. “This could be a game-changing situation,” said Patrick Cecil, the seminary’s vice president and chief financial officer. “It really could be the model for theological education in the future.”

Last year, the seminary lost seven students who had already made enrollment deposits because they could not afford tuition, Garrett said.

The move to tuition-free would not be a huge change for the seminary financially. Unlike a lot of small private educational institutions, it does not rely on tuition as a major revenue stream. Of an annual budget of about $9-10 million, tuition only accounts for a few hundred thousand dollars. While the seminary has a sticker price of about $10,000 for a master’s degree, most students receive substantial financial aid packages. The seminary relies mostly on returns from its $80 million endowment, which make up about 50 percent of the budget. Much of the rest comes from annual fund gifts.

To balance the equation once tuition is removed, the seminary is shrinking enrollment from 150 students to 130 students. It will also launch a fund-raising campaign in the next few months to grow the endowment. The seminary needs about $2.5 million to cover the costs of the 130 students, which it hopes to be able to do by 2015, and $15.5 million to fund a stipend to cover living expenses for students, which the college hopes to do by 2021.

The change affects three master’s programs at the seminary: divinity, marriage and family therapy, and religion. Doctoral students would still pay tuition.

Cecil said the seminary looked to nearby Berea College, an undergraduate institution that provides a tuition-free education to low-income students. In 2007, Berea funded 90 percent of its budget through private gifts, investment returns, and endowment income, according to the Delta Project on Postsecondary Education Costs, Productivity and Accountability.

Cecil said he thinks the model could be applied more broadly to colleges that have a very narrowly defined mission, such as other seminaries or colleges like Berea. “It’s very tied to the fundraising ability and the size of the endowment,” he said. “If you’ve got a message that resonates with a donor base, it's feasible."

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