Dave Ramsey told a 45-year-old Chicago woman with four college degrees, a salary of $115,000 and $628,000 in debt that she fell for the lie.
Sandra, a single mother, called The Ramsey Show for guidance on how to resolve their debt, including a $335,000 mortgage, $33,000 in credit card debt and $260,000 in student loans.
“You seem to have fallen for the lie that if I get an education people will give me money and I’m not,” he said, noting that her salary isn’t much to show for her education (1).
What Sandra has to show for her student debt are two bachelor’s degrees (biological sciences and English) and two master’s degrees in library science and intellectual property law, respectively.
And a career in legal research. Until six months ago, Sandra had a side hustle as a library consultant that earned her $25,000 a year — but Ken Coleman said public libraries were a dead end career anyway.
Ramsey was surprised he wasn’t a lawyer, considering he has a degree in intellectual property law.
“Can’t you sit at the bar?” he asked.
Sandra replied that she wasn’t sure, that she would have to research.
“You have a degree in research,” joked co-host Ken Coleman. “You should probably look into it.”
Here’s what Ramsey and Coleman agreed they had to do.
Ramsey and Coleman said Sandra needs to earn “serious money” if she has any chance of digging herself out of the hole she’s in.
“You have a lot of education and potential for growth, therefore, in income, if we can find a way to apply that education in a way that makes you more money,” Ramsey said. “That’s what you need. More money, not more degrees. You’ve collected more degrees than a thermometer.”
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Ramsey cautioned that a degree means nothing if the skills you’ve learned aren’t needed in the job market.
“The knowledge you get while you’re getting your degree — now that knowledge is a great power, assuming it’s knowledge the market wants.”
Ramsey and Coelman suggested Sandra consider passing the bar exam and becoming a lawyer, attracting a potential $300,000 a year.
Coleman suggested that in the meantime, while she researches what that entails, she might pursue a side hustle, capitalizing on her knowledge of intellectual property.
Or he could moonlight as a law professor and bring in an extra $100,000 a year, Ramsey suggested.
While not everyone has $260,000 in student loans, the total amount of student debt in America is a staggering $1.184 trillion (2).
The average American has a balance of $39,075, and over 11% of student loan dollars are delinquent (3).
And clearly, even grads like Sandra who earn high salaries can find their finances strained after taking on substantial student debt.
A high debt-to-income ratio limits disposable income and reduces the amount available for long-term goals, such as building retirement savings or budgeting for travel (4).
It can also increase the risk of default and credit damage, making it harder to qualify for additional loans in the future. (5)
That’s why it’s important to do everything you can to resolve your own student debt.
First figure out exactly what you owe in total, the interest rates on your loans, and especially what types of student loans (6) you have, as these can affect your repayment schedule and forgiveness.
Consider using The avalanche method. That means tackling your loans (student and otherwise) with the highest interest rates first to avoid them going up.
In the meantime, pay just the minimum on low-interest federal student loans until you can contribute more.
Alternatively, use The snowball method. This means paying off the smallest debts first to show you real progress and keep your momentum going.
Of course, the best way to avoid unbearable student debt is to be selective in choosing a higher education program with a higher and potentially faster return on investment. News from the USA point to such nursing, engineering, finance, or even professional programs outside of traditional universities as good options (7).
If you already have a degree and want to go back for another, there are a few things to consider:
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Is the following degree required for your career field, such as a licensed certification?
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Will you be guaranteed a higher salary upon completion?
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Does your employer offer tuition waiver as a benefit?
Answering these questions can help you make decisions and influence your level of debt once you finish your degree.
We only rely on verified sources and credible third-party reports. For details, see our ethics and editorial guidelines.
The Ramsey Show (1); Education Data Initiative (2); Federal Student Aid (3, 6); Wells Fargo (4); Marine Corps (5); US News (7)
This article provides information only and should not be construed as advice. Offered without warranty of any kind.
