Dave Ramsey told a 45-year-old Chicago woman with four college degrees, a $115,000 salary and $628,000 in debt that she fell for a lie.
Sandra, a single mother, called The Ramsey Show for guidance on how to tackle her debt, including a $335,000 mortgage, $33,000 in credit card debt and $260,000 in student loans.
“It’s like you fell for the lie that if I get an education, people will give me money, and they’re not,” he said, noting that her salary doesn’t really show for her school (1).
What Sandra has to show for her student debt are two undergrad degrees (biological science 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 still a dead-end career.
Ramsey was surprised she wasn’t a lawyer, as she has a degree in intellectual property law.
“Can’t you stand for the bar?” he asked.
Sandra replied that she was not sure, she would have to research it.
“You got a degree in research,” said co-host Ken Coleman. “You should probably look into that.”
Here’s what Ramsey and Coleman agreed you need to do.
Ramsey and Coleman said Sandra needs to earn ‘serious money’ if she wants any chance of digging herself out of the hole she’s in.
“You have a lot of education and a lot of potential upside on your income if we can figure out 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. I got more degrees than a thermometer.”
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Ramsey warned that a degree means nothing if the skills learned are not needed in the job market.
“The knowledge you get while you’re getting your degree — now that knowledge is a huge power, assuming it’s knowledge that the market wants.”
Ramsey and Coelman suggested that Sandra aim to pass the bar exam and become a lawyer, drawing a potential $300,000 a year.
Coleman suggested that in the meantime, while she is researching what is involved in this, she can pursue side effects by leveraging her knowledge in the field of intellectual property.
Or she could moonlight as a law professor and pull in an extra $100,000 a year, Ramsey suggested.
While not everyone is carrying $260,000 in student loans, the total amount of student debt in America is staggering, and is $1.184 trillion (2).
The average American has a balance of $39,075, and more than 11% of student loan dollars are in delinquency (3).
And clearly, even graduates like Sandra who land healthy 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 missed payments and credit damage, while making it more difficult to qualify for additional loans in the future. (5)
That’s why it’s important to do what you can to tackle your own student debt.
First calculate exactly what you owe in total debt, your loan interest rates and specifically what types of student loans (6) you have, as these can affect your repayment schedule and forgiveness.
Consider using the Avalanche method. This means tackling your loans (student and otherwise) with the highest interest rates first to avoid them popping up.
In the meantime, pay only 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 yourself real progress and maintain your momentum.
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. US News points to such nursing, engineering, finance or even trade skilled programs outside of traditional universities as good options (7).
If you already have a degree and want to go back to another one, there are several things to consider:
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Is the next degree necessary 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 a tuition waiver as a benefit?
Answering those questions can help you make decisions and influence your debt level once you’ve completed your degree.
We rely only on verified sources and credible reporting from third parties. 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. It is provided without warranty of any kind.
