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Dave Ramsey Says "Suck it Up Students!"

Dave Ramsey is a financial guru and radio host. (If you've never heard of Dave Ramsey, then you've never pulled a late shift or driven late into the night as most stations have him playing in the wee hours.)

Dave Ramsey advocates that students forgo student loans and instead bootstrap their way through college by working -- or using only scholarships and grants to avoid the student loan trap.

In an article called Student Loan Backlash, Ramsey says "In 2001, $4 billion in student loans were taken out. Recently, that number jumped to $17 billion."

Ramsey tells us that the real problem is expectation of lifestyle, that students are borrowing money to pay for more extravagance than they should. Things such as living on campus and eating at restaurants. (He does concede that some of the rise in borrowing is to pay for rising tuition costs.)

What's Really Driving the Rise In Student Loan Borrowing?

Let's just take a look at what has been happening to educational costs vs. the U.S. median household income (income stats were taken from US Census Bureau reports and costs were drawn from a single US college, the University of Pennsylvania).

Could it be that student borrowing is on the rise because real income has fallen, federal aid (in real dollars) has fallen and educational costs have risen dramatically?

Income vs Educational Cost Chart

It's incredible that the cost of one year at the University of Pennsylvania is now more than one year of income for the average middle class American family. In 1970, that ratio was much, much lower.

In the old days, it really was possible to bootstrap yourself through college.

The University of Pennsylvania is a tad on the expensive side as far as Universities go, but it is a well respected University that issues respectable degrees, and it serves a tremendous student body, so I'm using it as the cost basis for the example of one fictitious family sending one child off to academic hell.

Dave Ramsey is Hot!

In 1970, our fictitious average family would have no trouble tightening its budget and squeezing out the extra dollars to cover the yearly cost of a U of Penn education.

Fast forward to 2009 - 2010, and we're in a wee bit o' trouble. The yearly cost of attendance now exceeds the median yearly income, Dave.

What do you think, dear reader?

Squeezing the Budget - No Blood From a Turnip

Squeezing the budget isn't going to be very effective. People falling below the median income (half of all US households) will find it all but impossible to find extra dollars for a U of Penn education. These families will either have to earn more money or find cheaper alternatives.

I agree with Mr. Ramsey on a couple of points. Reducing the cost of a college degree by reducing expenses is imperative. Secondly, building enormous debt via easy student loans is going to hurt your future in a big way.

Dave's right. Don't do it. Find another way.

It's a real problem for many, many families -- and in light of this, our site is going to refocus and redouble our efforts to bring you ideas and help you find ways to reduce the cost of a post-secondary education.

A college education is a valuable lifelong asset. But, not if it adds years of debt slavery to your bottom line. Subscribe to our newsletter for ideas on how your family can escape the student loan debt trap.

Dave Ramsey Says "Suck it Up Students!"

What's Really Driving the Rise In Student Loan Borrowing?

Squeezing the Budget - No Blood From a Turnip

Sign Up - Escape the Student Debt Trap