Dave Ramsey recently advised a single mother from Boston on The Ramsey Show regarding the financial feasibility of sending her son to a $93,000-a-year private college, emphasizing that the prestige of an institution is secondary to the actual out-of-pocket cost and student performance.
The Reality of College Costs vs. Sticker Price
Renee, a single parent earning $113,000 annually, faced a dilemma: her son, an economics major and recruited Division III football player, received $72,000 in need-based scholarships. This left a remaining annual balance of $14,000. While Renee earns above the median U.S. income, balancing this tuition alongside daily living expenses in an era where average household expenditures hover near $78,535 presents a significant financial hurdle.
Ramsey’s verdict was blunt: "Where you go to school does not matter. Whether you go to class or play beer pong matters. Whether you learn something while you’re there matters."
The Math Behind the Degree
Ramsey framed the $14,000 annual expense as a manageable figure, noting that the institutional aid effectively brought the private school’s cost down to the level of a typical state university. He argued that the "sticker price" is often a prestige signal, while the "net price" is the only number that impacts a family’s long-term financial health.
"If you can do this and he can play football for four years and you can come out of pocket $14,000 a year and cash flow it for four years and he gets a degree for the equivalent of $60,000 out of pocket, then that’s not going to be a bad deal," Ramsey stated.
Risk Management and Financial Boundaries
Despite his approval, Ramsey set a rigid boundary: the plan only works if the aid remains consistent. He warned that if scholarships are rescinded or if the student suffers an injury that ends his football career, the family must be prepared to pivot immediately.
"If they rescind these scholarships and he gets hurt playing football, then he’s going to a different school if he’s mine," Ramsey cautioned. "Because we’re not coming out of pocket $50 grand so you can finish up where they started me with a $70,000."
Credentials vs. Competence
Ramsey’s core philosophy remains that employers prioritize skills over the name on a diploma. He pointed out that 78% of Fortune 500 CEOs graduated from state schools, reinforcing the idea that for an economics major, internships, GPA, and practical experience far outweigh the branding of an expensive private institution.
Ultimately, the advice serves as a reminder to parents: if the net price of a private education aligns with that of a state school, it is a viable option. However, if the discount disappears, the student should be prepared to transfer rather than resort to student loans, which already total $1.85 trillion across the U.S. market.
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