<p>I used to listen to him on the radio from time to time. He may be fine for some who really need the structure to get out of debt, and I am all for people being out of debt and fiscally responsible, but his thoughts are narrow and he talks outside is area of expertise. And the religious component is fine for some, but not for all.</p>
<p>I used to work for a faith-based non-profit which used Dave Ramsey’s Financial Peace University series as a training tool for program participants. Some of his advice is good and pretty much common sense, but like any other “guru” you can just take what you like and leave the rest.</p>
<p>I really don’t know Dave Ramsey.
When seeing the thread title two persons appear in my memory association radar: a politician named Donald Rumsfeld and a mathematician with his famous theorem called Ramsey’s theorem.</p>
<p>Believe it. I have Dave Ramsey’s books. He also says NEVER to buy a new car, and to always pay cash for any car you DO buy. We didn’t listen to THAT advice either.</p>
<p>But he does make some good points about debt in his books…which are very conservative to say the least.</p>
<p>“He also says NEVER to buy a new car, and to always pay cash for any car you DO buy.”
-This one is funny. We do not listen to no Ramsey or anybody else.<br>
However, we agree with this one and followed it religiously. Cash for us is an equity check that we usually pay off within 1 year. In some sense, it is cash, since we do not need a loan approval. So we always say to a dealer that we will pay cash and just write a check. We value our time, this way is quicker.</p>
<p>How does Dave Ramsey think people should pay for their homes? Does he tell everyone they shouldn’t take out a mortgage? I don’t think there are very many people who could afford to buy a home if they couldn’t take on debt. </p>
<p>What about something like medical school? Pay cash for that? I don’t think many people could go to medical school without some borrowing.</p>
<p>I took Dave Ramsey’s course. It’s called Financial Peace. I was never horrible at handling money, however, we were at the time using our credit card as our safety net. Not a good idea. Nothing he proposes is rocket science. There are no big secrets. His priorities are designed for people who have reasonable incomes but do not save much and spend more than they make. In that context most of what he says makes sense. For those who make good income some of his advice might not be as important. I will say that it’s probably a good idea for nearly everyone to have $1000 in emergency savings and at least 6 months wages saved up in case of an employment gap. He and many others will tell you to save for retirement first then for college. If your contributing to all of this then how you spend the rest of money is completely up to you. His investment/insurance advice is probably geared towards the typical middle class investor vs. the well to do investor. For the average person I still think his advice on college is sound, save for a state university. In my opinion if you have that saved and your kid is bright and able to get scholarships then you’ll most likely have the money you need pay your portion, if your child doesn’t get a scholarship there will be still be an option to go to school and you and your child will not have to go massively into debt (something he abhors). If you don’t have the money saved to send your child to big dollar U. and you can’t pay it out of current income then I have to agree with him that’s it’s probably not a good idea to send junior there. In my opinion if you are a high income family his rules still work but may not be the best for you or your family. Only you can decide.</p>
<p>Interesting thread. We have offered the Financial Peace University course at our church. I can see that his advice would be okay for most people. But on the other hand he is probably reinforcing misconceptions in the minds of others. For example, my nephew is a strong student and would love to go to Duke. I think he has a shot and would fit right in. But my sister-in-law just assumes it’s not affordable and tells him not to get his hopes up about going anywhere but our in state university. I’ve been working on her to use the NPC, look at need and merit aid, have him prep for the PSAT, etc. Ironically, there are probably many in Ramsey’s target audience whose kids would be great candidates for need based aid at private colleges.</p>
<p>^^^Most here at CC would agree that it is important to have some financial safeties. It’s beem awhile since I’ve taken the course but I the main thing I got out of it concerning college is save for it after you’ve saved for retirement. (10-15% for retirement then college) And also don’t go into debt for college. It’s unwise for students and foolish for parents. I don’t remember him specifically saying don’t send your kid to a top tier school. He might have, I just don’t remember. Our D applied to 7 schools. Her choice safety ended up being more expensive than the OOS she chose and another private University. She did turn down an essentially full ride (Ohio University) because she really did not want to attend the school (I made her apply because I knew she’d get full tuition and they waived the application fee) and the OOS (Purdue) she was accepted to is very well regarded in her chosen major (Chemical Engineering). It will not change my financial input but will require some modest loans for my daughter. To me inspite of what Dave might think I believe this will prove to be the better choice for her. However, if Purdue had not given her the needed scholarship money she would be going instate and she was mentally and emotionally prepared to do that.</p>
<p>^D. was on full tuition Merit at state public. That was crucial for her because of her plan to attend a Med. School. While Merit awards are available at Med. Schools, they are very rare. In appreciation for her being responsible andt to choose a free UG, we are funding her Med. School. We would not offer that, if she has decided (as many of them) to attend expansive UG. More so, we told her NOT even consider the price tag of Med. School as she was ready to choose the cheapest one again.<br>
If one is thinking about Med. School, keep in mind Med. School’s adcoms do not care about your UG, they want to see very high college GPA, as close to 4.0 as possible (3.6+ is OK) and a decent MCAT score. I believe that it does not matter for Engineering either (my H. and many friends are engineers and funny enough many of their kids are graduating with Chemical Engineering degrees, seems to be the most common now) and another one is CS (I have been in IT for over 3 decades). So save your $$ for your future house / kids / vacations. Having close to $300k in loans (as many Med. School graduates do) will affect the future very much, some are paying off well into 40s and later.</p>
<p>It is interesting to me that so many early posts on this thread were willing to condemn Dave Ramsey based on what the OP reportedly heard him say.</p>
<p>Fortunately, many subsequent posts have moderated the tone and commented on areas that he has been clearly documented. Here is a quote from his web site:</p>
<p>
</p>
<p>Only about 2% of high school seniors have a realistic chance of admission to “full need met” colleges. While this 2% plays a huge role in the CC forum, it would be foolish for any national figure to caveat a core message to such a small segment of the population, especially since much of this 2% is already wealthy and using expensive private financial advisors. The fact is that most private colleges gap their FA, effectively forcing families into debt. While public colleges do this as well, the impact is lessened due to the lower sticker price.</p>
<p>For anyone interested in Dave’s actual opinions on college financing, he offers a Custom College Guide on his web site. Believe it or not, he does recognize that each student has unique needs and desires in the college search and FA process. The blanket statements he makes on his radio show are intended for a mass audience.</p>
<p>It is so easy to research the colleges that are under your kid radar of interest, why listen to anybody for second hand opinion, do it yourself. Anyway, if a kid hates the place, free or whatever else will not make a dent in a decsion making. Misery will not produce positive results and young person’s precious time is just that, it is way too precious to risk wasting. If a place that fit perfectly to kid’s personality and wide range of interest also happened to be free for him/her, than why to think about anything else, here, you got very lucky, take what is coming your way.</p>
<p>rml, the OP came back to say they all heard him say never go to a private college. I maintain that that’s a ridiculous statement.</p>
<p>I can believe that Dave Ramsey doesn’t want you to spend money on private school. He wants you to spend it on his books and seminars instead. That custom college guide on his website is only $99!</p>
<p>Student loan facts: </p>
<p>[Student</a> Loan Debt Statistics - American Student Assistance](<a href=“http://www.asa.org/policy/resources/stats/]Student”>http://www.asa.org/policy/resources/stats/)</p>
<p>
</p>
<p>It looks like students from private nonprofit institutions don’t borrow a lot more than public four‑year college students.</p>
<p>The cumulative debt level shown on page 22 (figure 11b) in this report <a href=“http://trends.collegeboard.org/sites/default/files/student-aid-2012-full-report-130201.pdf[/url]”>Trends in Higher Education – College Board Research; shows interesting comparison:</p>
<p>Total public four-year: 65%
Total nonprofit four-year: 32%
Total for profit four-year: 2%</p>
<p>Owe more than $75,001 (2%):</p>
<pre><code>Public colleges: 28%
Nonprofit colleges: 54%
For profit colleges: 18%
</code></pre>
<p>Owe $50,001 - $75,000 (3%):</p>
<pre><code>Public colleges: 40%
Nonprofit colleges: 49%
For profit colleges: 10%
</code></pre>
<p>Owe $50,001 - $75,000 (16%):</p>
<pre><code>Public colleges: 54%
Nonprofit colleges: 40%
For profit colleges: 6%
</code></pre>
<p>Owe $1 - $25,000 (42%):</p>
<pre><code>Public colleges: 68%
Nonprofit colleges: 31%
For profit colleges: 1%
</code></pre>
<p>Did not borrow (36%):</p>
<pre><code>Public colleges: 71%
Nonprofit colleges: 28%
For profit colleges: 1%
</code></pre>
<p>So, what does Dave Ramsey say?</p>
<p>Emily - no he doesn’t think you need to pay cash for a house. He says keep the mortgage payment at 25 - 30% of take home pay. This way you have $ for living and aren’t house poor. </p>
<p>Remember, most of these people are shooting for the general population, not the exceptions. </p>
<p>I have had personal conversations with him and we talked a few personal financial things, he’s quite personable, quite reasonable and helped me prioritize some business vs personal issues. We had a disagreement - as an employer of under 50 I provide health insurance, he doesn’t for his employees. I certainly went with my opinion on the matter.</p>
<p>I certainly don’t think anyone should blindly follow someone else’s opinion without researching and deciding for themselves. </p>
<p>Right now I have an employee getting their paycheck garnished over student loans. She didn’t even graduate. She could have used his advice.</p>
<p>Youdon’tsay wrote:</p>
<p>
</p>
<p>It is easy to build a strawman and attack its absurdity. It is even easier to distort the meaning of a sentence by taking it out of context. FWIW, I agree that stating, “never go to a private college” is ridiculous. However, it is inconsistent with other statements that I have heard Dave Ramsey make.</p>
<p>classicf wrote:</p>
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</p>
<p>It seems to me that $99 is a reasonable price for a college reference book - it is roughly the same as the price of applying and sending materials to a single college. I feel confident that most CCers spend much more than this during the college search process.</p>
<p>@coolweather - First, I don’t claim to speak for Dave Ramsey. If you are genuinely interested in his response, contact information is included on his web site.</p>
<p>Your statistics suggest that private college graduates are more likely to be in debt on graduation as well as owe more, so I’m not sure what point you are trying to make. The statistics on your link also include only graduates, although I would guess that there are more dropouts (with significant debt) from public colleges than private, non-profits. </p>
<p>The sample size of public grads vs. private grads is unfair since there are significantly more public grads, perhaps ten times as many. Similarly, the demographics of the two groups are self-selected - families who are cost-conscious and/or where money is tight are more likely to select public colleges while weathly full-pay families are more likely to opt for privates. It seems reasonable that allowing for these differences would make the debt spread significantly wider.</p>
<p>MiamiDAP wrote:</p>
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</p>
<p>This is a bizarre statement for someone who has posted his/her “second hand opinion” on colleges almost 8,000 times.</p>
<p>
</p>
<p>No. That’s not my point. The statistics shows:</p>
<ol>
<li><p>Private college students don’t borrow a lot more than public college students ($29,900 vs $23,800 on the average).</p></li>
<li><p>Public college students have higher accumulative debt in the range $25,001-$50,000 (54% vs 40%) and 1$-$25,000 (68% vs %31). These two ranges take a big chunk in student loan debt (16% + 42% = 58%).</p></li>
</ol>
<p>
</p>
<p>I think the figures you cite in post #55 show just the opposite, coolweather: students attending private not-for-profit colleges DO borrow a lot more than students at 4-year public universities, at least at the top-borrowing end. Of those coming out of college with a cumulative debt of $75,001 or more, 54% were graduates of private non-profit 4-year colleges, even though graduates of such colleges represented only 32% of Bachelors degrees awarded for the relevant period. Only 28% of those in this highest-borrowing category were graduates of public 4-year institutions, even though 65% of all Bachelors degrees awarded came from such institutions. So the heaviest borrowers come disproportionately from private non-profit 4-year colleges.</p>
<p>At the next rung down, 49% of those borrowing $50,001 to $75,000 were graduates of private non-profit 4-year colleges–again, a disproportionately large share relative to the 32% market share for the private non-profit 4-year colleges. Only 40% in this group of borrowers were graduates of public institutions, again far less than the 65% market share for the publics.</p>
<p>It’s only when you get down to those borrowing $25,000 or less that the percentages of borrowers come to resemble the relative market shares of public and private non-profit institutions.</p>