Navigating Student Loan Debt: Dave Ramsey's Advice to a New Graduate (Full Transcript)

Speaker 1: Austin's in Chattanooga. Hey, Austin, welcome to the Dave Ramsey Show. Hey, Dave. Hey, what's up?

Speaker 2: So, I just graduated physical therapy school, and my wife and I just finished the Complete Guide to Money, and so we've got our emergency fund, or our $1,000, and we're about to begin Baby Step 2. We have $135,000 in student loan debt combined. So, the question I have about that is, about $46,000 of that, of my wife's loans, are in Parent PLUS loans that are in my father-in-law's name, and they're really high interest, between 6.5% to 7.5%. So, it's kind of hard for me to think about paying off the small guys when the biggest loans are not in our name and are such high interest. Our plan is to get this paid off in three years, but still, I'm just wondering if I should even consider putting those at the top of the debt snowball, or leave them down at the bottom where they are.

Speaker 1: You should leave them at the bottom where they are. They're not your loans.

Speaker 2: But we have agreed to pay them.

Speaker 1: No, I'm talking about legally, they're not your loans.

Speaker 2: Okay.

Speaker 1: And so, they're the last thing you take care of, number one, but number two, they're the largest loans. And you're going to pay them off so fast, the interest rate's almost irrelevant.

Speaker 2: Okay.

Speaker 1: I mean, we're talking about, what, $30,000, right? Sorry, $135,000 total, but how much of that is Parent PLUS? $46,000. Oh, $46,000. Okay. So, $50,000, and they're at 7%. And your other loans are at what?

Speaker 2: They're between $3,500 to $5,000.

Speaker 1: Okay, so 2% spread on $50,000. Mm-hmm. You following me here? Yeah. It's $1,000 a year. Okay. Over, what'd you say, three years? Yeah, you're going to do it in three years. But it's not going to be a full $1,000 a year because you're not going to be in debt the whole time. So, we're having a $2,000 discussion about a $135,000 problem. Gotcha. That's not your problem. The problem is getting extra income, working like maniacs to get your income up as fast and as aggressively as you can. Good news about PT is you can pick up all kinds of side gig stuff, and you need to. Okay. Whether it's ER or whatever it is, wherever you've got to go, whatever you've got to do to add to your base pay. I mean, you can probably add 50% to your income, but you're going to be working 80 hours. Yeah, yeah. I mean, you've got the best part-time job in the world. It's more of your regular job. Yeah. And you can probably land that in Chattanooga. It's a big enough market. You can probably find the work. Yeah, I can get PR and work. Exactly. And so, you're already on track. So, again, I don't want you to live like that for very long, but if that turns three years into two years, what I just described, then I would. I'd go crazy for two years and get a year of my life back and the rest of my life. And, you know, that changes the equation we were just discussing on the interest rate spread even more if you did it that fast. So, you're on track, but you cannot fix, well, it's not a math problem as often as it feels like it is. It's more often an intensity and a focus problem than it is a math problem. And that's what we just illustrated by walking through your situation. Get after it, dude. You can do this. You got this. And I'm here if you need some help. You call me. You get a little tired one day, you call me. I'll jack you up. Let's do it. Let's do it together, man.