overheard on the Dave Ramsey show

[rob in cal]

Thought I'd start a thread about interesting caller situations that come up on this show.  I don't want to discuss whether DR is good or bad on this thread, just interesting stories and such.
Awhile ago I heard a young guy call in who was in medical school and had inherited a lot of money, iirc somewhere around 1 million dollars.  I believe DR said that his money would provide a great cushion and flexibility for his future life, my thought was also that he was pretty much fired right now if he lived modestly.
  Also remember a nurse aged around 60 who didn't seem to realize, acknowledge or take any satisfaction out of the fact that her net worth was somewhere around a million dollars. DR was congratulating her, but I think that the fact that her assets were in retirement accounts was blinding her to her success.

[A Fella from Stella]

DR was asked by caller if he should hold off on knocking out student loans to see if Elizabeth Warren is elected.

DR said that while she is one of the greatest intellectual minds of our time, and someone he really admires, though almost always disagrees with, that she is a fringe candidate, and it's unlikely she will make it to the end. He also said she'll make the election season more entertaining, and that what he just said about her being a fringe candidate was also said about Trump.

In the end, he said don't wait for Elizabeth Warren to solve this debt problem.

[A Fella from Stella]

Guy calls Dave saying he has debt and a new baby, and that he can make good money on OT. But his wife wants to work PT instead.

The guy gets mad as he's talking, and Dave mutes him, saying that "you're wife would benefit from having a little time out of the house after being with the baby all day long."

This, I think, was from seeing his daughters at the office.

[Just Joe]

DR was asked by caller if he should hold off on knocking out student loans to see if Elizabeth Warren is elected.

DR said that while she is one of the greatest intellectual minds of our time, and someone he really admires, though almost always disagrees with, that she is a fringe candidate, and it's unlikely she will make it to the end. He also said she'll make the election season more entertaining, and that what he just said about her being a fringe candidate was also said about Trump.

In the end, he said don't wait for Elizabeth Warren to solve this debt problem.

I figure if a Democrat gets elected next time 'round, the GOP will block them in congress at every turn just like they did with Barack Obama. They aren't ready to seek a cooperative effort to govern with the Dems. Who knows - maybe this is be the status quo for another decade. I hope not. More moderates please...

[A Fella from Stella]

DR was asked by caller if he should hold off on knocking out student loans to see if Elizabeth Warren is elected.

DR said that while she is one of the greatest intellectual minds of our time, and someone he really admires, though almost always disagrees with, that she is a fringe candidate, and it's unlikely she will make it to the end. He also said she'll make the election season more entertaining, and that what he just said about her being a fringe candidate was also said about Trump.

In the end, he said don't wait for Elizabeth Warren to solve this debt problem.

I figure if a Democrat gets elected next time 'round, the GOP will block them in congress at every turn just like they did with Barack Obama. They aren't ready to seek a cooperative effort to govern with the Dems. Who knows - maybe this is be the status quo for another decade. I hope not. More moderates please...

I like how you remember farther back than 2017.

It blew me away when a friend said in March, 2017, how after the dems are stopping Trump, repubs will remember.

"At least we gave Obama a chance," he said, apparently forgetting the 4 years they hung hard on him NOT BEING AN AMERICAN, and campaigning solely in 2012 on repeal of the ACA that ha just made it through.

[A Fella from Stella]

Steering back on track after veering into the political lane

60-yo guy calls DR saying he wants to pull the $40,000 in equity from his house. Dave asks what he does, and when he says "sales," Dave gets excited. Because you can make great money.

I wanted to yell at Dave and say "no! He's obviously a terrible salesman" when he couldn't pull up a fantastic year where he'd once made really good money (all salesman have at least 1 amazing year).

He'd have been better off getting a normal job, or being a substitute teacher, or trying to get a government job where he can at least take a tiny pension after a few years.

[h82goslw]

Steering back on track after veering into the political lane

Thank you

[Just Joe]

In my "speech" above I meant to say I don't think that Congress as a whole are ready to pay off anyone's student loans so if one side gets elected, it'll get blocked by the other. If the other side remains in power, it'll be forgotten. I think the only way anything will really happen is if the WH and congress both go Dems and I doubt that'll happen again just yet.

Would be better to not get anyone's hopes up too much.

[Zamboni]

Owner of two restaurants calls in a panic over being $1MM in debt. She owes $400K in sales tax alone. Dave points out to her that she has been stealing the sales tax, and that she won't be able to discharge that via bankruptcy.

[BTDretire]

In my "speech" above I meant to say I don't think that Congress as a whole are ready to pay off anyone's student loans

I wish congress would pay them off, but it would be the 1/2 of workers that actually pay any taxes that foot the bill. I don't understand it, you took the loan out, you got the benefit, why should any other person have to pay it back.

so if one side gets elected, it'll get blocked by the other. If the other side remains in power, it'll be forgotten. I think the only way anything will really happen is if the WH and congress both go Dems and I doubt that'll happen again just yet.

Would be better to not get anyone's hopes up too much.

[Chris Pascale]

Dave was a guest on Oprah once. Once.

He tells a story on the radio about how he's on Oprah and a couple with tons of financial trouble is worse off than the husband knows because his wife has been taking out credit cards on the side to keep things going. Dave tells the husband, "you owe your wife an apology," because he'd left it all on her.

Oprah disagrees; he delegated it to her. Dave says she is not his employee.

And that's the time he was on Oprah.

[Zamboni]

^Lol, yep, he is all about both partners taking responsibility for knowing about the finances. He is especially intolerant of a husband dumping that responsibility on his wife, probably due to cultural gender norms, but he seems equally annoyed with men who don't value their wives opinions and interests.

[A Fella from Stella]

^Lol, yep, he is all about both partners taking responsibility for knowing about the finances. He is especially intolerant of a husband dumping that responsibility on his wife, probably due to cultural gender norms, but he seems equally annoyed with men who don't value their wives opinions and interests.

Seen that repeatedly. He's always talking about the couple being partners unless there is illness/addiction.

One time a guy kept talking about his wife's terrible spending, and DR says after a while "Is she bipolar?" She is.

"Then she can't help with the finances. It's not possible. She needs your help. just getting through the day to be alive."

[MayDay]

^^ That's more empathy than I expected from DR.

[nereo]

One that got me steamed up was when a 70yo man called in.  He had no heirs and was a widower, and wasn't in particularly good health.  He wanted to ask about setting up a reverse mortgage since he didn't want to sell the home he ahd lived in but had most of his NW tied to it.  DR basically nixed the idea of a reverse mortgage with all that real-estate BS before he could even explain his situation. I was practically yelling at the radio "there's no better person to have a reverse mortgage than this guy!!  Absolutely, do it!!!!" 

Dave's reliance on owning your own home is truly one of his great blind spots.

[Zamboni]

I'm sorry, but, unless the terms are dramatically different than any I've seen, I have to agree with DR and say that I don't think a reverse mortgage is a good deal for anyone in any situation . . . except for the bank, that is. Reverse mortgages are a good deal for the lender, and that's it.

In many situations I would even say reverse mortgages at the very least skirt along the edges of predatory. They are advertised right alongside the "cash now for your injury settlement" and pay day loan places all day long during Judge Judy and the talk shows. They mail elderly people slick brochures over and over and over pestering them about it. Why should DR spend time listening to someone list the terms of a pay day loan, car title loan, or reverse mortgage? He knows these products are a heavily marketed rip off, at best, and in this case it is even worse because they are preying on elderly folks who may or may not have all of their faculties when it comes to making financial decisions. Hard pass.

[nereo]

I'm sorry, but, unless the terms are dramatically different than any I've seen, I have to agree with DR and say that I don't think a reverse mortgage is a good deal for anyone in any situation . . . except for the bank, that is. Reverse mortgages are a good deal for the lender, and that's it.

In many situations I would even say reverse mortgages at the very least skirt along the edges of predatory. They are advertised right alongside the "cash now for your injury settlement" and pay day loan places all day long during Judge Judy and the talk shows. They mail elderly people slick brochures over and over and over pestering them about it. Why should DR spend time listening to someone list the terms of a pay day loan, car title loan, or reverse mortgage? He knows these products are a heavily marketed rip off, at best, and in this case it is even worse because they are preying on elderly folks who may or may not have all of their faculties when it comes to making financial decisions. Hard pass.

The man didn't want to move.  He had no heirs.  His time left on this earth is far shorter than the terms of the reverse mortgage. 
Yes, reverse mortgages can be predatory, just as regular mortgages have often been (see NINA loans). That doesn't mean they are all that way.  And DR is so stuck on people owning their own home (preferably paid 'in cash!') that he just misses these things.

[Zamboni]

You might be right. A reverse mortgage may have been right for this one caller. I'm not going to say that a financial product is always completely evil, but reverse mortgages are absolutely a product of last resort.

The fact is that DR is in a situation where he needs to draw a hard line of some financial products in order to keep a consistent message to his listeners. It seems like reverse mortgages are a good one to have a hard line on. If they weren't marketed so mercilessly to seniors, then I might agree with you. I bet that old guy who called in didn't actually even need a reverse mortgage. He's just having it shoved in his face so much that he has been convinced. So if DR listens along to this one guy and then says "you know what, go for it! I think a reverse mortgage is the right thing for you!" then he's misleading a bunch of old listeners for whom a reverse mortgage would be totally shitty. He's right not to give that any air time.

DR does it on credit cards as well. Do we here on MMM milk the rewards cards for all they are worth? Hell, yeah! I've had companion passes on SWA and more free hotel nights than I can count. But are credit cards a major source of temptation that lead to problem spending for many people? Yep. Taking away the cards is the first thing that is done by any decent financial planner every time someone is in debt trouble. So I'm not going to try to convince DR that CC's end up being a good deal for me . . . he will just point to the studies that people spend more when they are using a card than when they are using cash, and I can't even argue with that bc it is true.

[Milizard]

I hear what you're saying, but what's the point of calling in with a specific question just to get a canned response?

[nereo]

You might be right. A reverse mortgage may have been right for this one caller. I'm not going to say that a financial product is always completely evil, but reverse mortgages are absolutely a product of last resort.

The fact is that DR is in a situation where he needs to draw a hard line of some financial products in order to keep a consistent message to his listeners. It seems like reverse mortgages are a good one to have a hard line on. If they weren't marketed so mercilessly to seniors, then I might agree with you. I bet that old guy who called in didn't actually even need a reverse mortgage. He's just having it shoved in his face so much that he has been convinced. So if DR listens along to this one guy and then says "you know what, go for it! I think a reverse mortgage is the right thing for you!" then he's misleading a bunch of old listeners for whom a reverse mortgage would be totally shitty. He's right not to give that any air time.

DR does it on credit cards as well. Do we here on MMM milk the rewards cards for all they are worth? Hell, yeah! I've had companion passes on SWA and more free hotel nights than I can count. But are credit cards a major source of temptation that lead to problem spending for many people? Yep. Taking away the cards is the first thing that is done by any decent financial planner every time someone is in debt trouble. So I'm not going to try to convince DR that CC's end up being a good deal for me . . . he will just point to the studies that people spend more when they are using a card than when they are using cash, and I can't even argue with that bc it is true.

You've given a very good explanation, and I don't disagree.  But.... upon reflection this is what has frustrated me about DR's advice and even more so within the DR forums. As you say he's drawn this hard line on many topics and for many who've struggled with finances this hard line helps keep them from repeating disasterous mistakes.  But those hard lines can be a burden for others who utilize them strategically and wisely.  It's such a hard line that many of his followers won't even examine when it might not be a bad decision.  I was witness to one thread where a poster got heckled for taking out a 0.9% car loan rather than selling some of his investments to buy the car in cash.  Some nasty stuff was said when I don't think that was a terrible decision on the poster's part.

Similar reactions can occur here or on bogleheads, but I don't think there's that level of uniform and unquestioning consensus (just look at the competing Pay Down Your Mortgage vs. Don't... threads).

[cowpuncher10]

In my "speech" above I meant to say I don't think that Congress as a whole are ready to pay off anyone's student loans

I wish congress would pay them off, but it would be the 1/2 of workers that actually pay any taxes that foot the bill. I don't understand it, you took the loan out, you got the benefit, why should any other person have to pay it back.

so if one side gets elected, it'll get blocked by the other. If the other side remains in power, it'll be forgotten. I think the only way anything will really happen is if the WH and congress both go Dems and I doubt that'll happen again just yet.

Would be better to not get anyone's hopes up too much.

Screw that. The government shouldn't pay off student loans. Sure prices should be lower than they are but there are a myriad of reasons they are as expensive as they are.

What about all the responsible individuals who made intelligent choices in schools, majors, or already paid off their loans? Why reinforce bad decision making? Shouldn't we be focused on educating people on how to plan financially for the costs associated with their decisions instead of a get out of debt free card? Drives me effing nuts.

[A Fella from Stella]

Always heard on DR never to consolidate debt. For this reason it took me FOREVER to take the credit cards at 27%, or whatever they were, and wash them away with a 5 year loan at 9%.

The result? My formerly $1,000 in payments are now a single $700 payment.

There's a reason they are called BABY STEPS. They are for those first phases. Not for when you mature.

[nereo]

What about all the responsible individuals who made intelligent choices in schools, majors, or already paid off their loans? Why reinforce bad decision making? Shouldn't we be focused on educating people on how to plan financially for the costs associated with their decisions instead of a get out of debt free card? Drives me effing nuts.

I hear you... and I agree with you... but here's the problem.  In recent decades we have done a poor job of BOTH.  We've allowed (and actively encouraged) individuals to take outsized loans, often backed by the federal government, in levels they were unlikely to pay back.  We've also made the system so that these loans were virtually impossible to discharge through bankruptcy.  And made little attempt to educate the students on how to financially plan these associated costs.  The worst offenders have been the for-profit colleges, which have entire divisions dedicated to helping students take out the maximum amount of money possible, regardless of their earnings potential.

So I'm with you that we shouldn't discharge all student loans.  But IMO we also share some culpability.  I'd like to see an expansion of the discharge/deferment of loans through public service - give those up s**t creek a path out in exchange for something that benefits society. Moving forward we need to stop the most likely of loans to fail (limitations placed under Obama would have helped - since rolled back by DJT). Finally, we're on a decades-long slide of directly funding out higher education.  I don't want free college for all, but I think a model similar to the UK where tuition is capped (currently at ~$11,400/year equivalent) would greatly help reduce the student loan problem.

[Valvore]

I love listening to DR show because of the craziness of the calls he receives. Sometimes I think "this has to be staged!"

The ones that always kill me is the 401K match. This one guy called in and seemed to be really level headed and dare I say, mustachian minded. He said he is focusing on paying off his debt and reduced his living expenses (moved into a cheaper place, cut out eating out and monthly memberships). He wanted to know if he should be contributing to his 401k and get a 5% match from his employer... I'm sure you can guess what DR said. The guy would miss out on almost 4K/year of free money.

Luckily the guy sounded skeptical and unconvinced. I hope he realized that was bad advice for his long term future. Of course DR hung up on him before he could fully respond, lol. I always love how DR just cuts people off or mutes them to be sure he gets the last word. DR show always entertains me.

[A Fella from Stella]

I love listening to DR show because of the craziness of the calls he receives. Sometimes I think "this has to be staged!"

The ones that always kill me is the 401K match. This one guy called in and seemed to be really level headed and dare I say, mustachian minded. He said he is focusing on paying off his debt and reduced his living expenses (moved into a cheaper place, cut out eating out and monthly memberships). He wanted to know if he should be contributing to his 401k and get a 5% match from his employer... I'm sure you can guess what DR said. The guy would miss out on almost 4K/year of free money.

Luckily the guy sounded skeptical and unconvinced. I hope he realized that was bad advice for his long term future. Of course DR hung up on him before he could fully respond, lol. I always love how DR just cuts people off or mutes them to be sure he gets the last word. DR show always entertains me.

Yup, you can't pass up the match. I'd even say you should get a second job if that's what it takes to take the match.

[Valvore]

If anyone is interested, there are many Youtube compilations of DR show callers. They usually put the funniest or most ridiculous ones together. They are a great way to pass the time and help you realize that your current situation (your current FIRE stage) is so much better than most.

[cowpuncher10]

What about all the responsible individuals who made intelligent choices in schools, majors, or already paid off their loans? Why reinforce bad decision making? Shouldn't we be focused on educating people on how to plan financially for the costs associated with their decisions instead of a get out of debt free card? Drives me effing nuts.

I hear you... and I agree with you... but here's the problem.  In recent decades we have done a poor job of BOTH.  We've allowed (and actively encouraged) individuals to take outsized loans, often backed by the federal government, in levels they were unlikely to pay back.  We've also made the system so that these loans were virtually impossible to discharge through bankruptcy.  And made little attempt to educate the students on how to financially plan these associated costs.  The worst offenders have been the for-profit colleges, which have entire divisions dedicated to helping students take out the maximum amount of money possible, regardless of their earnings potential.

So I'm with you that we shouldn't discharge all student loans.  But IMO we also share some culpability.  I'd like to see an expansion of the discharge/deferment of loans through public service - give those up s**t creek a path out in exchange for something that benefits society. Moving forward we need to stop the most likely of loans to fail (limitations placed under Obama would have helped - since rolled back by DJT). Finally, we're on a decades-long slide of directly funding out higher education.  I don't want free college for all, but I think a model similar to the UK where tuition is capped (currently at ~$11,400/year equivalent) would greatly help reduce the student loan problem.

Holy guacamole civil conversation. I agree that society, as a whole, has done a bad job educating younger folks on the impacts on their decisions. That being said, both parties are at fault but I still don't believe in paying it off through the government. I would like to think I am on the younger members here on the forum and had both my spouses and other loans paid off in VERY short order post graduation due to prioritization.

On your second paragraph I will comment on the UK model is interesting. I could agree, as a strong conservative, to some form of true government assistance but with restrictions or emphasis on collective societal needs. So say there is a scale based on a profession or skill set that society needs. STEM field majors get the full $11,400 benefit (using the UK number) while business majors, such as myself, get less than the full $11,400 (if any at all due to the glut of individuals with that degree/credential). This wouldn't be at the expense of additional scholarships due to GPA or private funding etc but should drive more intelligent decision making that would directly benefit the individual and society as a whole.

Any thoughts on my second paragraph folks?

[Samuel]

The man didn't want to move.  He had no heirs.  His time left on this earth is far shorter than the terms of the reverse mortgage. 
Yes, reverse mortgages can be predatory, just as regular mortgages have often been (see NINA loans). That doesn't mean they are all that way.  And DR is so stuck on people owning their own home (preferably paid 'in cash!') that he just misses these things.

I've listened to enough Dave Ramsey to know he considers reverse mortgages to be like payday loans, such a terrible product he would never recommend them to anyone. He typically tells the people who have a legitimate case for them to get a regular mortgage on their paid off house instead and live off that pile of money. It'll all settle out in the estate anyways, and you won't be enriching predators in the process.

[Samuel]

Always heard on DR never to consolidate debt. For this reason it took me FOREVER to take the credit cards at 27%, or whatever they were, and wash them away with a 5 year loan at 9%.

The result? My formerly $1,000 in payments are now a single $700 payment.

There's a reason they are called BABY STEPS. They are for those first phases. Not for when you mature.

I've never heard Dave say to never consolidate debt. He typically just shrugs and says "go ahead, but don't let shuffling debt around fool you into thinking you've taken action on getting out of debt".

[NorthernBlitz]

The man didn't want to move.  He had no heirs.  His time left on this earth is far shorter than the terms of the reverse mortgage. 
Yes, reverse mortgages can be predatory, just as regular mortgages have often been (see NINA loans). That doesn't mean they are all that way.  And DR is so stuck on people owning their own home (preferably paid 'in cash!') that he just misses these things.

I've listened to enough Dave Ramsey to know he considers reverse mortgages to be like payday loans, such a terrible product he would never recommend them to anyone. He typically tells the people who have a legitimate case for them to get a regular mortgage on their paid off house instead and live off that pile of money. It'll all settle out in the estate anyways, and you won't be enriching predators in the process.

This seems like a way more sensible way to go vs. reverse mortgage.

[nereo]

The man didn't want to move.  He had no heirs.  His time left on this earth is far shorter than the terms of the reverse mortgage. 
Yes, reverse mortgages can be predatory, just as regular mortgages have often been (see NINA loans). That doesn't mean they are all that way.  And DR is so stuck on people owning their own home (preferably paid 'in cash!') that he just misses these things.

I've listened to enough Dave Ramsey to know he considers reverse mortgages to be like payday loans, such a terrible product he would never recommend them to anyone. He typically tells the people who have a legitimate case for them to get a regular mortgage on their paid off house instead and live off that pile of money. It'll all settle out in the estate anyways, and you won't be enriching predators in the process.

This seems like a way more sensible way to go vs. reverse mortgage.

The problem in doing a refi for people like the caller is banks typically refuse to do so for people that old, and/or with no earned income.  Terminally ill 70 year olds don't get approved for regular mortgages.

[Nate79]

I love listening to DR show because of the craziness of the calls he receives. Sometimes I think "this has to be staged!"

The ones that always kill me is the 401K match. This one guy called in and seemed to be really level headed and dare I say, mustachian minded. He said he is focusing on paying off his debt and reduced his living expenses (moved into a cheaper place, cut out eating out and monthly memberships). He wanted to know if he should be contributing to his 401k and get a 5% match from his employer... I'm sure you can guess what DR said. The guy would miss out on almost 4K/year of free money.

Luckily the guy sounded skeptical and unconvinced. I hope he realized that was bad advice for his long term future. Of course DR hung up on him before he could fully respond, lol. I always love how DR just cuts people off or mutes them to be sure he gets the last word. DR show always entertains me.

$4k for 1 or 2 years would have very little impact on their future. Getting serious about the debt causing them to make much bigger decisions not to take on debt by buying things they can't afford and increasing income will have a far long lasting I'll impact on their financial future.

Sent from my SM-G950U using Tapatalk

[Nate79]

Always heard on DR never to consolidate debt. For this reason it took me FOREVER to take the credit cards at 27%, or whatever they were, and wash them away with a 5 year loan at 9%.

The result? My formerly $1,000 in payments are now a single $700 payment.

There's a reason they are called BABY STEPS. They are for those first phases. Not for when you mature.

I've never heard Dave say to never consolidate debt. He typically just shrugs and says "go ahead, but don't let shuffling debt around fool you into thinking you've taken action on getting out of debt".

He is actually all for reducing interest rates since it helps you pay off the debt faster but as you say comes at the risk of thinking you actually paid off debt but you only shuffled it around. 1 to 2 years of the reduced interest usually isn't that much money in the grand scheme of things unless the interest rate is super high like credit cards.

Sent from my SM-G950U using Tapatalk

[libertarian4321]

In my "speech" above I meant to say I don't think that Congress as a whole are ready to pay off anyone's student loans

I wish congress would pay them off, but it would be the 1/2 of workers that actually pay any taxes that foot the bill. I don't understand it, you took the loan out, you got the benefit, why should any other person have to pay it back.

so if one side gets elected, it'll get blocked by the other. If the other side remains in power, it'll be forgotten. I think the only way anything will really happen is if the WH and congress both go Dems and I doubt that'll happen again just yet.

Would be better to not get anyone's hopes up too much.

Screw that. The government shouldn't pay off student loans. Sure prices should be lower than they are but there are a myriad of reasons they are as expensive as they are.

What about all the responsible individuals who made intelligent choices in schools, majors, or already paid off their loans? Why reinforce bad decision making? Shouldn't we be focused on educating people on how to plan financially for the costs associated with their decisions instead of a get out of debt free card? Drives me effing nuts.

I agree 100%.  This seems to yet another case where the government effectively punishes those who bust their butts and finish with low or no debt, while rewarding those who irresponsibly run up massive debts.  Far too often, the government punishes success/responsible choices and rewards failure/irresponsibility.

DR is right about another thing.  The government needs to STOP guaranteeing loans to any 18-year old who can fog a mirror and wants to spend 6-years and $120,000 getting a useless baccalaureate degree in Modern Ukrainian Womyn's Dance Appreciation (or whatever), only to end up making $9/hour at Burger King where the only requirement is the ability to say "want fries with that?"

Kids tend to make stupid choices because they are kids.  Allowing them to take out massive loans, with no plan on how to repay them, is simply insane.

[nereo]

DR is right about another thing.  The government needs to STOP guaranteeing loans to any 18-year old who can fog a mirror and wants to spend 6-years and $120,000 getting a useless baccalaureate degree in Modern Ukrainian Womyn's Dance Appreciation (or whatever), only to end up making $9/hour at Burger King where the only requirement is the ability to say "want fries with that?"

Kids tend to make stupid choices because they are kids.  Allowing them to take out massive loans, with no plan on how to repay them, is simply insane.

Agree... with a caveat.  The people who are unable to pay for their student loans aren't ones who have finished a 4 year degree at a liberal arts college.  The ones who default most often (i.e. cannot handle their debt) are the students who don't finish (leave with no degree) and students who borrow large sums to attend for-profit institutions.
Those that get a degree at a traditional college or university have very low default rates (though SL's still can be a large burden to them).

[Zamboni]

The federal student loan program actually has a reasonable limit of just over $30K spread over 4 years for dependent undergraduate students (aka normal college age, moving from living with parents to college.)
https://studentloanhero.com/featured/federal-student-loan-limits/
I think this is not an unreasonable amount, as long as you finish your 4 year degree and then proceed to get a job in your field.

Some ways people are getting into trouble with student loans include:

• Taking out loans and then not finishing the degrees (this is probably #1).
• Taking out a bunch of loans on top of the federal student loans, such as those offered by your friendly neighborhood Wells Fargo. I actually think these loans are predatory and should be illegal.
• In cases of goofing around as opposed to working to offset costs of school, taking extra years (and thus extra loans) to finish the first degree.
• Staying in school for multiple degrees without due diligence about the actual value and employability of those with the particular graduate degrees . . . Graduate students can take out considerably higher loan amounts per year than undergraduates.
• Pushing parents to also take out additional loans . . . the infamous "Parents Plus" loans and their ilk.
• Declaring themselves "independent" or transferring guardianship to a non-parent so that they can take out higher loans. This one is unethical and I knew people who were doing it even 30 years ago, so it's not new like they make it sound in this article: https://www.propublica.org/article/university-of-illinois-financial-aid-fafsa-parents-guardianship-children-students

If we are to blame the government, then we should blame them for not better regulating the banks on these additional student loan "products", or not regulating the predatory for-profit schools better. I know that's probably the opposite argument than the one a libertarian would make, but the government-backed loans are only a small part of the loan problem.

In my case, I'm going to be very strict with my kids: NO LOANS FOR COLLEGE. ZERO.
DR is right about this one: go to your in-state university and cash-flow it if you can't get scholarships. No out of state or private schools without scholarships or grant money to at least make up the difference between that and the in-state costs. It burns my shorts that some schools advertise that they meet 100% of students' financial aid needs, but then you look into it and find that they are actually pushing loans and calling that "meeting need."

[A Fella from Stella]

What about all the responsible individuals who made intelligent choices in schools, majors, or already paid off their loans? Why reinforce bad decision making? Shouldn't we be focused on educating people on how to plan financially for the costs associated with their decisions instead of a get out of debt free card? Drives me effing nuts.

I hear you... and I agree with you... but here's the problem.  In recent decades we have done a poor job of BOTH.  We've allowed (and actively encouraged) individuals to take outsized loans, often backed by the federal government, in levels they were unlikely to pay back.  We've also made the system so that these loans were virtually impossible to discharge through bankruptcy.  And made little attempt to educate the students on how to financially plan these associated costs.  The worst offenders have been the for-profit colleges, which have entire divisions dedicated to helping students take out the maximum amount of money possible, regardless of their earnings potential.

So I'm with you that we shouldn't discharge all student loans.  But IMO we also share some culpability.  I'd like to see an expansion of the discharge/deferment of loans through public service - give those up s**t creek a path out in exchange for something that benefits society. Moving forward we need to stop the most likely of loans to fail (limitations placed under Obama would have helped - since rolled back by DJT). Finally, we're on a decades-long slide of directly funding out higher education.  I don't want free college for all, but I think a model similar to the UK where tuition is capped (currently at ~$11,400/year equivalent) would greatly help reduce the student loan problem.

Holy guacamole

I am offended by your worshipping of guacamole. Only tomato can save you. Repent! CowPuncher, or perish.

[DadJokes]

@Zamboni @libertarian4321 @cowpuncher10 @nereo (and any others I missed) - please quit trying to turn this into a political thread. It would be most appreciated if you could continue that conversation in the Off Topic subforum.

[Zamboni]

Ummm, you do listen to Dave Ramsey, right?

He tosses in political commentary regularly. "Spending like you're in congress" is one of his favorite scolding phrases.

[Davnasty]

Ummm, you do listen to Dave Ramsey, right?

He tosses in political commentary regularly. "Spending like you're in congress" is one of his favorite scolding phrases.

I don't listen to Dave Ramsey, but that example is just a joke. He's not discussing politics when he says it.

Even if he did discuss politics on his show, the current political side conversation is not based on something political that was heard on Dave's show. As much as I like discussing politics myself, I would agree that this isn't the thread for it.

[nereo]

I agree we've gone off on a tangent from DR's commentary about student loan debt and his thoughts about whether one should wait until the 2020 election to a discussion on how laws/regulations/practices could potentially address student loan debt.  I will try to stick closer to the OT.

[Chris @ Saturday Financial]

I love that my browser is currently displaying a Lending Tree ad for a reverse mortgage at the bottom of this page.  ...yeeeah, no thanks.

[solon]

I love that my browser is currently displaying a Lending Club ad for a reverse mortgage at the bottom of this page.  ...yeeeah, no thanks.

I love that my browser isn't displaying any ad at all at the bottom of the page.

You should check out AdBlockPlus... https://adblockplus.org/

[englishteacheralex]

Posting to follow--I've listened to DR's podcast almost every day for about ten years. It sounds fun to have a thread to shake my head at some of the callers...and sometimes at DR!

Hey, sorry to turn this back into a political thread, but re: student loans--what bothers me about DR on the student loan issue is that he constantly tells people to go to their state school, but then is always bashing taxes/government.

Cancelling student loans across the board seems crazy to me--I agree with DR on that. Increasing government funding to public universities/colleges seems much more sensible and consistent with DR's messaging around student loans. How come he never mentions this? As a proud graduate of a state school for both my BA and my Master's, this omission bugs me. 

[The_Big_H]

Buy $40,000 truck on $45,000 income, live w folks, quit job w $800/mo car payment.

DR went remarkably easy on this guy

https://www.youtube.com/watch?v=reAltgzylmM

[rob in cal]

Last week there was a millionaire theme hour, my favorite part of the DR show. One caller was the American coach of the Nurnberg Germany team in the German Hockey League.  He was worth about 3 million dollars and most of his career he was a coach for minor league hockey teams in the US or Canada. Another had very similar assets to us and about the same age. IIRC she was manager of a health care related facility and her husband had been North American sales manager of a textile company.  Why weren't they wealthier? I believe her purchase of 13 new cars over the years had a huge part of it.
   So often these millionaire callers could easily be retired but I never get the sense that they are in jobs they hate, and Dave certainly isn't one to bring up the idea. It would be interesting to hear what someone in their early 50's with say 2.5 million invested, in other words a fairly typical millionaire hour caller, would say if they were asked the question.

[englishteacheralex]

Last week there was a millionaire theme hour, my favorite part of the DR show. One caller was the American coach of the Nurnberg Germany team in the German Hockey League.  He was worth about 3 million dollars and most of his career he was a coach for minor league hockey teams in the US or Canada. Another had very similar assets to us and about the same age. IIRC she was manager of a health care related facility and her husband had been North American sales manager of a textile company.  Why weren't they wealthier? I believe her purchase of 13 new cars over the years had a huge part of it.
   So often these millionaire callers could easily be retired but I never get the sense that they are in jobs they hate, and Dave certainly isn't one to bring up the idea. It would be interesting to hear what someone in their early 50's with say 2.5 million invested, in other words a fairly typical millionaire hour caller, would say if they were asked the question.

Most of the millionaires on the millionaire theme hour should have a lot more money, in my opinion. The lady who bought all the new cars...sigh.

[WSUCoug1994]

Posting to follow--I've listened to DR's podcast almost every day for about ten years. It sounds fun to have a thread to shake my head at some of the callers...and sometimes at DR!

Hey, sorry to turn this back into a political thread, but re: student loans--what bothers me about DR on the student loan issue is that he constantly tells people to go to their state school, but then is always bashing taxes/government.

Cancelling student loans across the board seems crazy to me--I agree with DR on that. Increasing government funding to public universities/colleges seems much more sensible and consistent with DR's messaging around student loans. How come he never mentions this? As a proud graduate of a state school for both my BA and my Master's, this omission bugs me.

Check out this podcast to see what Purdue is doing about the Student Loan problem.  I thought it was pretty inventive.

http://freakonomics.com/podcast/student-debt/

[Zamboni]

This summer I talked to a Purdue professor who really liked what was happening there with the President in terms of how students/tuition was being handled. Too long the universities have had no accountability . . . I think this system puts some accountability for educating employable graduates on them.

In terms of the young man with the truck who had quit his job, I think Dave took the right tone with him. You could hear in his voice that they kid already knew he fucked up big time . . . he had already looked into selling the truck to find out he was $7K under water. Sometimes Dave puts on his kindly uncle hat, and that is actually when I think he's at his best with the younger callers.

[nereo]

This summer I talked to a Purdue professor who really liked what was happening there with the President in terms of how students/tuition was being handled. Too long the universities have had no accountability . . . I think this system puts some accountability for educating employable graduates on them.

What system exactly are you talking about?  How are students/tuition being handled differently at Purdue now?