Dave Ramsey Student Loan Forgivness: 8 Things You Need To Know

Just 26 years of age, Dave Ramsey was making a quarter of a million years annually. He had a $4 million real estate portfolio, but he lost everything two years later. 

Now, Ramsey is one of the most trusted sources to seek financial advice in the United States. His radio program “The Dave Ramsey Show” is part of the top five talk radio shows, with 13 million listeners every week. Dave Ramsey created the baby steps method to eliminate debt and achieve financial freedom.

Ramsey is an evangelical Christian and uses bible-based principles to teach people how to improve their financial situations. For example, he has stated numerous times that people should avoid debt because of Proverbs 22:7

As a financial guru, Ramsey has some pretty good advice on how to repay your student debt. However, not all of his advice regarding student loans should be followed strictly. 

How Much Does College Actually Cost? 

The student loan debt in 2020 was around $1.56 trillion. However, according to Forbes, the latest student loan debt statistics for 2021 reveal that 45 million borrowers collectively owe almost $1.7 trillion. 

The average student graduates with $35,000 in debt with an average payment of $393 every month. But how much does it actually cost? Let’s take a deeper look. 

Please Note: the College Board’s Trends released the data below in College Pricing and Student Aid 2020.

Public Two-Year Colleges 

The average yearly net cost for first-time in-district undergraduates enrolled full-time at a public two-year college was $14,560 in the 2020-2021 academic year. The released sticker price of a year’s attendance cost was $18,550. 

However, the average student received a financial aid of $3,990, which resulted in a final average price of $8,860 in fees and tuition. The price also included board and room and an additional $5,700 in supplies and books. 

Public Four-Year Colleges 

The average net cost for a first-time in-state student enrolled full-time at a public four-year college was $19,490 in the 2020-2021 academic year. The published sticker price was $26,820 for a year of attendance. 

But students, on average, got $7,330 in financial aid. So the final average price the students got was $14,850 in fees, room and tuition, and board. These were a plus addition to $4,640 in supplies, transportation, books, and other personal expenses. 

Non-Profit Four-Year Colleges 

The average net cost for first-time undergraduates enrolled full-time in non-profit, four-year private institutions was $33,220 in the 2020-2021 academic year. The published sticker price was $54,880 in financial aid for a year of attendance. 

So the total average price students faced was $29,110 in fees and tuition and board and room. That was in addition to $4,110 in supplies, transportation, books, and other personal expenses. 

Student loans are affecting many people’s lives, leaving them overwhelmed and frustrated. Even though student loans are a huge problem, according to Ramsey, people have accepted them as a regular part of their lives. 

Of a truth, when student loans are not taken seriously, they can define your life. It has the potential to derail certain things in your life. Student loans have life-altering consequences, and that may be why Ramsey doesn’t like student loans. Let’s talk more about that in the next section. 

Why Dave Ramsey Doesn’t Love Student Loans 

1. Student Loans Are “Stupid.”

Dave Ramsey believe in college, but not student loans. According to Dave Ramsey, we have a student loan crisis because we’ve normalized student loans. And some people think they’re doing something wrong if they don’t take out student loans. Furthermore, he stated that student loans are easily accessible. And because it’s way too easy for you to access, it makes people make “stupid” decisions. 

Ramsey continued, “If it were harder to get, you’d have to find other ways to get this done.” However, it’s not even an option to take student loans out of the alternatives right now. So Ramsey has said numerous times that it’s not a good idea to borrow money to pay for your education. 

He believes that it’s no different to make student loans the only option regardless of your situation. “The most powerful wealth-building tool is your income,” said Ramsey. And using your income to pay for your student debt can’t help you get ahead financially. 

The reason, according to him, why people can’t get ahead financially is simple: they are giving their income to the banks. 

In summary: Ramsey believes that student loans shouldn’t be an option. You should find alternatives to pay for your education, even if it means going to affordable schools. 

2. Student Loans Leave People Overwhelmed, Paralyzed, and Terrified 

Every year, millions of borrowers default on their student debt. According to Ramsey, he talks to many people with massive student debt that has left them terrified, paralyzed, not knowing what to do. 

Ramsey doesn’t like student loans because it robs people of their future, which makes it difficult for them to find balance in their life. 

Our Take On The Matter 

We agree with some of the things Ramsey says. Student loans can put a hold in certain parts of your life. That’s why we recommend that you speak to a student loan expert to help you make the right decisions. 

If, in the end, it’s not necessary to take out a student loan, then so be it. However, based on what we’ve experienced over the years, some situations are pretty different. 

But should you go into debt for your education? Here’s our answer: it depends. If you pursue a field that requires a degree, you have to pay for that degree. If you have the money or the means to pay for your degree, that’s great. Go for it. If not, financial assistance is your only alternative. 

Here’s what you need to consider. Without that degree, how much will you make? Will your income be enough to pay off your student while you enjoy your lifestyle similar to what you would have without it? 

If so, determine how long you would take to pay off for example, $40,000 or more in student debt. That way, you can earn extra income.

 Regardless, there are alternatives to student loans such as grants, scholarships, work-study programs, etc. But these alone can’t cover all your student debt, so you may need to find a way to pay off the remaining balance. 

What Are Reasons To Get Student Loans

Here are some of the reasons people take out student loans to help them through college. 

  1. Student loans provide financial support for students who can’t afford to attend college. 
  2. With a student loan, you don’t have to worry about credit history to get one. 
  3. Federal student loans usually have lower interest rates compared to private student loans. 
  4. Due to the federal student loan, fixed rates prevent the student loan term from changing with time. 
  5. Many student loans don’t require repayment until you graduate from school. And they have additional alternatives for loan forgiveness or deferment, when applicable. 
  6. Student loans have flexible repayment plans that can be adjusted to accommodate your income and expenses. 

What Does Dave Ramsey Say Is The Best Way To Pay Off Student Loans? 

There are several steps Dave Ramsey offers to loan borrowers to pay off their student debts. Let’s quickly go through them. 

1. Get On A Budget 

According to Ramsey, a zero-based budget every month will help you know where your money goes and where to cut spending. You may find “extra” money you didn’t know you had and direct them to your student loans. 

2. Pay More Than The Minimum Payment 

If you only make minimum payments every month, it doesn’t help you get rid of your debts faster. It might not even affect the interest already accumulating. But, if you can make larger monthly payments, you increase the speed at which you pay your student loans. 

Our verdict: we understand the logic behind this point. However, if you’re already struggling to make ends meet or just had an entry-level job, it can be a problem. If you can, go ahead, but don’t stress yourself if you can’t. 

3. Make Some Financial Sacrifices 

In this point, Ramsey suggests you find creative ways to save. In other ways, you have to put certain luxuries in your life until you finish paying your student loans. That means making your coffee at home, selling stuff you don’t need, etc. 

4. Pay Off Your Loans Debts Using The Debt Snowball

The debt snowball is a strategy to reduce your debt where you pay off your debt from the smallest to the largest. You put extra money into the smallest debt while still paying the minimum on the other debts. 

According to Ramsey, this strategy keeps you motivated and momentum to tackle bigger loans fast. 

Our verdict: This is a great way to pay off your student loans. Just make sure you can pay more than the minimum if you can afford it. 

5. Direct Every Tax Refund And Raise To Your Student Loans

This point is designed to help you better use your money when you get large sums at once. The idea is that if you’re earning $30,000 as your salary and acquire a $7,000 raise, you direct that money to your student loans instead of renting bigger apartments. The same applies to tax refunds.

6. Increase Your Income With A Side Hustle 

According to Ramsey, get a part-time job and direct that extra cash to your student loans. You can find numerous side jobs that pay well. 

Our Verdict: We approve of this point. If you have the time for side jobs, go ahead. 

7. Don’t Bank On Student Loan Forgiveness. 

Ramsey explains that student loan forgiveness is not always a guarantee. You have to meet numerous requirements for you to qualify, like working in a specific field. And even with that, it’s not a guarantee. So he recommends paying off your loan debts upfront just in case the forgiveness doesn’t work out. 

Our verdict: we disagree with this point. Most of the loan forgiveness programs are industry-specific. So you may be working in a field while you earn loan forgiveness. In short: it’s a win-win scenario. 

Of course, you have to understand the terms of the forgiveness program before you proceed. We don’t advise that you pay more than minimum if your loans are forgiven in ten years or less. So take advantage of any forgiveness program if you can. 

8. Refinance Your Student Loans, If it Makes Sense 

Dave Ramsey recommends that you carry out your research to find a loan lender with better interest rates than your current loans. That way, you can lower your minimum payment. 

But if you use Ramsey’s snowball method and proceed with the amount you were paying, you can clear off your student loans faster.  

Our verdict: It’s great for borrowers with high student loan interest rates. 

Is Student Loan Consolidation Legitimate? 

Yes. Loan consolidation is legitimate. When you consolidate your loans, you combine all your federal student loans for one manageable monthly payment. Additionally, it gives you the chance to lower your monthly payments by extending your repayment term. 

Dave Ramsey recommends that you don’t consolidate your debt. He believes loan consolidation creates an “illusion” of lower interest rates and monthly payments. 

We disagree with Ramsey. However, you have to keep in mind that student loan consolidation is not always a good idea. We, however, agree when he says that a lower interest is not always a guarantee when you consolidate. 

We also agree that some fraudulent companies can scam you, taking away thousands of dollars. And that’s because debt consolidation is not debt settlement. So before you consolidate your loans, make sure you have an expert’s take on it before you proceed.   

Dave Ramsey’s Best Ways To Payoff Student Loans

Let’s explore the professional advice of Dave Ramsey about tackling student loans while also informing students on the basics of budgeting, payoff rules, and general advice on how to address their student loans. Let’s get started. 

Dave Ramsey talks in detail about paying off debt, including student loan debt. For example, he advised this caller with $200,000 in student loans to get out of the career path she was currently in and get back to using her gifts because that’s where the money is for everybody. 

Another example of his student loan payoff advice is the guidance he gave to this couple with $250,000 in student loan debt. He advised the husband to take on as many extra job opportunities as possible and work like a maniac while his wife was pregnant, as the more profound the sacrifice now, the faster they’d be out of debt.  

According to Ramsey, the best way to get out of student loans and any type of debt is by using the debt snowball method. The steps to this method are as follows:

  • List your debts smallest to largest
  • Pay minimum payments on everything but the smallest debt 
  • Attack the smallest one with a vengeance — pick up extra jobs, extra hours, and sell everything  
  • Suspend investing temporarily and focus all your energy on the smallest debt
  • Once that debt is paid, take the payment you were making on the smallest debt and any other extra money you can come up with, and throw it at debt number two
  • Then when debt number two is paid off, take the payments from debts one and two and throw them at number three. 
  • Repeat this until all of your debt is paid off

Ramsey says that the average person who’s done the debt snowball method with force, intensity, and intentionality, has gotten out of debt in about 18-24 months (except for their mortgage). 

There are other ways to approach paying off your student loan debt, like the debt avalanche method or the savvy debt payoff method. That said, it’s entirely up to you to choose what process works best for you and your student loan situation. 

Next, let’s explore student loan consolidation. 

Student Loan Consolidation

Student loan consolidation is taking smaller loans and combining them into one large loan with one monthly payment. The main benefits of student loan consolidation are a lowered payment amount and a lower interest rate. 

Ramsey doesn’t approve of student loan consolidation outright. He confines his approval to a few circumstances:

  • It will give you a lower interest
  • You actually save money
  • You go from a variable interest rate to a fixed interest rate 

Student loan consolidation can be an advantage for you if you do your research. In addition, you must spend ample time calculating exactly how much money you’ll save if you do decide to consolidate to determine if it’s worth it. 

With the best ways to pay off student loans and the benefits of student loan consolidation in mind, the next step would be to create a budget. 

What’s The Best Student Budget And Student Worksheet? 

The best student budget is unique to each person. However, a general student budget rule is making more and spending less. In other words, live below your means, focus on saving, and intentionally lower your debt. 

You’ll also want to start saving early for student loans and the costs associated with college. For example, teens preparing to enter college can start their financial journeys early with a summer job. Taking on a summer job makes future education expenses like books, supplies, and transportation less daunting. It also gets teens in the habit of saving and budgeting early while also growing their financial mindsets. 

The 50/30/20 budget or the budget down to zero are excellent options for student budgets. In addition, it’s a good idea to use a worksheet to manage your budget and track your student loans. Furthermore, manage your student loan and other debt balances with a debt payoff app to keep you organized. 

Aside from a budget and worksheet to manage your finances, using a student loan calculator is also a good idea. 

Is There A Best Student Loan Calculator?

A student loan calculator can help you estimate your monthly loan payments and how long it will take you to pay off your debt. Be sure you’re entering the most accurate information about your student loans to ensure you get an on-point result. 

Check on your student loan servicer’s website to see if they have a debt calculator you can use. Or, here are four other excellent student loan calculator options: 

  • Federal Student Aid’s Loan Simulator
  • Findaid.org’s Loan Payment Calculator
  • Sallie Mae’s Student Loan Payment Amount Estimator
  • Nerdwallet’s Student Loan Calculator 

Ultimately, the best student loan calculator for you should be easy to access, use, and present the most accurate outlook of your student loans possible. 

What about student loan forgiveness? Here’s what Dave Ramsey thinks about it.  

What Does Dave Ramsey Think About Student Loan Forgiveness?

He thinks it’s a scam. By that, we mean the public service student loan forgiveness. If you have a disability, you’ve always been able to get your student loans forgiven—the same thing with getting defrauded by a school that goes out of business.

But he’s adamant about not waiting for public service loan forgiveness to save you and for logical reasons:

  • About 98% of people who’ve applied have been rejected 
  • Staying in debt for ten years for a slight chance at getting a portion of student loans forgiven isn’t worth the risk 
  • The government is questioning if they’re even going to honor this program or not 
  • You’re essentially waiting ten years to start your life
  • The requirements are complex and challenging to meet 

All in all, Ramsey believes that if you’re going to pursue public service loan forgiveness and wait for the government to pay off your student loans, you’re screwed. Instead, it’s better to develop and commit to a plan that will allow you to pay off your student loan debt as fast as possible. 

To conclude this article, let’s look at a list of student loan payoff rules to abide by. 

Are There Any Student Loan Payoff Rules To Abide By?

Everyone’s student loan experience will be different. Therefore, you must factor in all that encompasses your individual life to accumulate a realistic set of rules to abide by when paying off your student loans. 

Here are some general student loan payoff rules to get you started: 

  • Pay off your student loans as fast as possible — the longer you have student loans, the more you’ll have to pay. Interest adds up quickly. Don’t give it time to do so.  
  • Choose a payoff structure or routine and stick with it — there’s no bigger momentum killer than doing something once, stopping for a while, starting again, and doing that over and over throughout the years. If you aren’t consistent with your payoff routine, it will take you that much longer to get out of student loan debt. 
  • Sacrifice for a short period for a longer debt-free life — in other words, work your butt off for the next couple of years to fast track your payoff. Start freelancing and pull in some extra money by providing art or photography services, tutoring services, or another freelance service.
  • Don’t be late — just don’t do it. Late payments can affect your credit score. You’ll also be on the hook for late fees. So, keep track of payments and take advantage of autopay


Dave Ramsey has made tremendous progress since he filed for personal bankruptcy during his early years. His estimated net worth is about $200 million, proving that anyone can turn any bad financial circumstance around. 

He has guided millions of Americans to financial security and wealth through his teachings. However, not all of his advice works for everyone. If Ramsey’s advice works for you, go ahead.

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