loans, Saving

Are student loans worth it?

There are 44.2 million Americans with student loan debt.

Unbelievable, right?

I, thankfully, graduated with very little debt for my 4 year out-of-state private college. I had $15000 in Federal student loans and I was able to consolidate them into an extremely low rate (like under 5%) for 15 years as soon as I graduated. My husband wasn’t so lucky. He had a lot more debt when he graduated and his loans were a mix of federal and private loans. His interest rates were much higher and tied to prime so unfortunately it never seemed like we were making any progress on paying those off. We were able to pay ours off in full after about 3 years of being married but that’s not the case for most people. Student loans can be crippling for many and unfortunately federal student loan debt cannot be discharged in bankruptcy so you are on the hook and it can really hurt you not to repay them.

Dave Ramsey believes that you really should not worry about funding your children’s education until you’ve already taken care of paying off your debt, have a fully funded emergency fund and have put 15% of your income toward retirement. In an interview from, Ramsey said, “there is no rule that says you have to pay for your child’s college tuition. It doesn’t make you a bad parent. If you can, fantastic, do them that favor. I appreciated that mine covered most of my expenses, but if they hadn’t been able to, I just would have borrowed the money. After all, nothing is truly as important to spend money on as education; you cannot really go wrong with it. However, spending money on it when you have bad debt and no retirement savings is a recipe for disaster.”

Over the last few years though, Dave and his daughter Rachel Cruze have done a lot of research regarding student loans and have realized the crippling effects of those loans on kids just starting out in the world.
The key get through college without a lot of debt is to make the decision. Being on the same page as a family in regards to money is important. Have a family meeting. Talk about finances and where you are in your own financial journey with your kids. Talk about options that are available to them, lay out some ideas that they may not be aware or may not have considered.

Some ideas?

  • Community college for the first 2 years.
  • Attend a state school as opposed to a private college or university.
  • Apply for scholarships – lots of scholarships.
  • Look for companies that offer work/tuition programs
  • Work on the summers and part-time during the school year
  • Consider the military or national guard
  • Delay college for a year and save as much money as you can.

Remember, funding college is done at the exact same time as funding your retirement savings if you are following Dave Ramsey’s baby steps (this would be step 6).