Dave Ramsey says: To pay off the student loan debt as soon as possible or hold off?

Nov 28, 2023, 1:00 PM

woman with her head resting on what appears to be textbooks at a table...

(Pexels Photo)

(Pexels Photo)

Dear Dave,

My wife and I are debt-free except for our mortgage and two Parent PLUS loans for our daughters’ college educations. One of the loans totals $18,078, and the other is for $41,500. Both girls want to pay them off using the new extended plan being offered, but I’m 59 1/2, and I’ve got about $500,000 in a 401(k) from a previous job along with $125,000 from a job I started five years ago. We’ve been thinking about just paying the loans off for the girls, but we wanted to know your thoughts.


Dear Mike,

If I were in your shoes, I’d just go ahead and pay them off. Technically, you’re liable for the loans. They are not.

The extended plan you’re talking about is garbage. In reality, it means the loans are never paid back. The extended plan is 30 years of not even making the principal payment. No interest is paid, and they don’t touch the principal. The whole thing works backward for 30 years, and it’s the very definition of a stupid government program.

I really don’t think you want your daughters to be part of something like this. But that means you’re going to be stuck with paying off these loans. You might as well just own it and pay them off now.

I want you to understand this, Mike. I don’t advise people to dip into their savings every time a problem comes up prior to retirement. But you’re 59 1/2, and at that point there’s no penalty. Plus, you’ve got $625,000 sitting there. You’re going to pull less than $60,000 out, plus a little in taxes, to make the problem go away. It’s not as bad as it could be, but I’m afraid you’re going to have to pay a little stupid tax on this one. I’m sure your girls didn’t know all this, but it’s a perfect example of what can happen when you put your faith in a stupid plan coming out of Washington, D.C.

I hate it for you guys—and everyone else in America who took out a bunch of student loans—because you’re getting messed over by your own government. The first way they messed you over was to put a student loan program out there and then tell you the way to success was to borrow tens and hundreds of thousands of dollars for a degree in left-handed puppetry. And now, guess what? You’re a barista! Then, they start shouting they’re going to forgive it all. After that it’s, “No, we’re not. Yes, we are. No, we’re not. Yes, we are.”

The fact is, they don’t intend to forgive it. It’s the biggest scam in history—mathematically speaking—perpetrated on the American public by our government.

— Dave


Dave Ramsey

Couple sits at table, seemingly planning out life....

Dave Ramsey

Dave Ramsey says: My wife thinks she owes me money

Struggling with financial tensions in marriage? Dave Ramsey offers insights on overcoming guilt and building a united front in managing debt.

4 days ago

Woman seeks financial support from father...

Dave Ramsey

Dave says: Work together, and increase expectations gradually

There are ways we can support our children financially without completely pulling the rug out from under them. Here are tips from Dave Ramsey.

7 days ago

(Pexels Photo)...

Dave Ramsey

Dave says: If you’re not going all in, stay out

Think twice before diving into that new business venture! Success requires a hefty 40-50 hours a week commitment.

11 days ago

(Pexels Photo)...

Dave Ramsey

Dave says: Seeking mediation with a neutral third-party advisor”

If someone close to you is having financial problems with their spouse, it might be best to refer them to a marriage counselor rather than insert your own advice.

14 days ago

In this week's article, Dave Ramsey talks about when to buckle down and climb out of that financial...

Dave Ramsey

Dave says: Getting out of a big mess doesn’t always feel good, but it’s necessary

Getting yourself out of a financial big mess doesn't always feel good, but sometimes, it's necessary to get back on track.

18 days ago

People sitting at a table, looking upset about bills....

George Kamel

The normalization of debt: How it happened and why it’s keeping you broke

The financial systems we trust benefit from our struggles. Break free from the cycle and rethink your financial game plan.

21 days ago

Sponsored Articles


Midwestern University

Midwestern University Clinics: transforming health care in the valley

Midwestern University, long a fixture of comprehensive health care education in the West Valley, is also a recognized leader in community health care.


Day & Night Air Conditioning, Heating and Plumbing

Valley residents should be mindful of plumbing ahead of holidays

With Halloween in the rear-view and more holidays coming up, Day & Night recommends that Valley residents prepare accordingly.


Canvas Annuity

Interest rates may have peaked. Should you buy a CD, high-yield savings account, or a fixed annuity?

Interest rates are the highest they’ve been in decades, and it looks like the Fed has paused hikes. This may be the best time to lock in rates for long-term, low-risk financial products like fixed annuities.

Dave Ramsey says: To pay off the student loan debt as soon as possible or hold off?