Personal finance expert Dave Ramsey has strong opinions about expensive colleges, and he put his money where his mouth is.
“All three of my kids got four-year degrees in something they can actually use,” he said recently on “The Ramsey Show.”
“And by the way, we paid cash. And by the way, it was the University of Tennessee State school.”
He doesn’t buy into the idea that elite schools offer a better future.
“There is no data, zero pieces of research that say where you went to school caused you to be successful,” he said.
Instead, he pointed out, 78% of CEOs from publicly traded companies went to state schools. Ramsey believes in education, but not overpaying for it.
“If you want to go to Vanderbilt and you’ve got an extra half million dollars laying around, then dream your little butt over there. But I’m telling you, ours didn’t have that choice. And I had the money.”
Ramsey also recalled a wealthy friend who took his kid on an elaborate college tour. “We told our kids Knoxville, where the University of Tennessee is. It’s over there. Run over and give it a look. It’s over. That’s your college tour.”
Ramsey added, “I went to the University of Tennessee and people that went to Vanderbilt work for me. Where you went to school does not matter. So quit overpaying.”
It’s Time To Say No
What sparked his heated response was a letter from a North Carolina mom who asked a question many parents can relate to: how can we pay off debt when we’re already struggling to cover our kids’ college tuition?
Amy and her husband make $125,000 a year, rent from her parents for $700 a month, and have three kids, including one already in college.
With $5,000 in credit card debt, another $5,000 in a personal loan, and car payments totaling $1,275 a month, their budget is stretched thin.
Amy said her oldest daughter is at her dream college on a scholarship, but the family still has to pay $1,000 per month for nine months. Her second daughter is about to graduate and wants to attend another private university.
The parents want their kids to attend the schools of their choice, but as she put it, “I don’t know how we can pay two tuitions when we’re struggling to pay one.”
Co-host Jade Warshaw didn’t hesitate. “They can’t go to their dream schools,” she said. “They can’t go to these private universities because you can’t afford them and neither can they.”
Ramsey compared the situation to wanting a luxury car. “My dream car is a Bentley.”
The hosts encouraged Amy to draw a hard line. Her oldest daughter, they said, should get a job and start covering that $1,000 tuition herself.
“You’re going to get a job, kiddo, if you want to go to that school, ’cause I’m cutting you off effective at the end of this school year,” Ramsey advised.
A Pattern Of Bad Decisions
Warshaw pointed to deeper issues. The family is still renting in middle age, has no savings or retirement, and is weighed down by debt.
“You would rather drive these cars than pay for your kids’ tuition,” she said.
Warshaw emphasized that these problems didn’t come out of nowhere. “This is a long line of bad choices. This is just the most recent one.”
In the end, Ramsey reminded listeners that education should be about gaining real skills, not chasing prestige.
“The dream is to put some intellectual power in your tool belt so you can go out there, kill something, and drag it home,” he said.
IMAGE CREDIT: ”Dave Ramsey” by Gage Skidmore, via Flickr. Licensed under CC BY-SA 2.0. Image adjusted for layout.