I have the free Dave Ramsey app on my phone, which is basically just a collection of short segments from his radio show, updated almost daily. A few days ago there was a segment, filed under the category Best of Dave, called “Parents, Step Up!” The whole segment was a 10-minute rant by Dave about how the reason that student loan debt is getting so out of control in this country is that parents today are quitting parenting once their kids are teenagers and aren’t guiding them into good financial decisions regarding college. This quote, which came towards the beginning of the segment, pretty much encapsulates the whole 10 minutes:
“I have decided … that the number one reason for student loan debt … [is] parents who will not step into their child’s life … and say, hello, you’re 17, you are not doing this.”
As usual when it comes to Dave, I have mixed feelings about this whole line of thinking. On the one hand, yes, 17-year-olds, even very smart 17-year-olds, usually know absolutely nothing about money and it is a parent’s job to step in and explain what it will be like to pay back $100,000 in student loans. My parents did – they explained that they were willing to pay X amount towards my undergraduate education and if I decided to go to a school that cost more than that amount, I’d be taking out loans. Then my dad went online and told me how much I’d be paying per month if I decided to go to certain schools and had to borrow certain amounts. Ultimately, I decided not to take out those loans (my student loans are from graduate school) and I went to a very good state school, had a wonderful college experience, got a good job, and haven’t regretted the decision at all.
But I think the story I just told illustrates the inherent flaw in what Dave was ranting about. My parents are not idiots with money (a lot of parents are), they cared about me (a lot of parents don’t), and they recognized that this was not a decision that I was equipped to make as a starry-eyed 17-year-old (again, a lot of parents don’t). In other words, not everyone is in the position to be taking advice from their parents about college and/or money. Now to be fair, I don’t think that Dave was talking about the parents who don’t care about their kids, I think he was addressing the parents who won’t say ‘no’ to their kids – which is definitely a problem, albeit a different one. But it’s still a gross oversimplification to say that parents’ failures to provide financial guidance is the “number one” reason that student loan debt is out of control in the U.S.
What do you think? Should parents be blamed for not giving their kids guidance about student loans, or is that someone else’s responsibility? Is American parenting to blame for skyrocketing student loan debt? Discuss, and tell me your own college/student loan decision-making process!