What Is The Best Option For College Savings?


starts off this hour in Little Rock

Arkansas hey Lena welcome to the Dave

Ramsey show how are you doing today

better than I deserve how can I help

I have a question for you I have

listened for a long time and I've never

heard this question asked so I figured

I'd have to ask you myself

we argue with our first baby in July and

we are currently on baby step 3 being me

although we don't own a house we kind of

a house that we have a mortgage on and

we are working to get back up to our six

months emergency fund after we had to

buy a new AC and heater system okay and

so we're just a few thousand dollars

away from that so we'll be doing step

four next doing that right but what I'm

wondering for our baby that's due in

July do you believe in higher education

leavers on college degrees I just don't

necessarily know what that's going to

look like in 18 years and so I would

like to save for college with higher

education but I want to know if there is

a different type of savings account that

you would use other than an ESA that is

only limited to college does that make

sense yeah no there isn't because the

only one that grows tax-free is the say

or the 529 they're basically a wrong i

right so here's your numbers okay if you

put in two thousand dollars a year for

18 years you put in thirty six thousand

dollars if that grows at a typical

mutual fund rate eighteen years later

that 36 thousand will have grown to over

a hundred and twenty eight so you have

roughly a hundred thousand dollars worth

of growth in that account that is going

to be taxable if it's in a different

kind of account and so this is a twenty

five or thirty thousand dollar

discussion we're having so I'm gonna

take that risk I don't know what college

is going to look like in eighteen years


I sure hope it is different because

guaranteed a federally insured student

loans have been done away with I think

we ought to stop guaranteeing loans for

students because it's a wrong call it's

it's hurt more people than it's helped

and the government should get out of the

business of hurting its own people and

so anyway that's just an opinion but I

don't know what's going to happen I know

that there's a 1.6 trillion dollar

problem on the horizon that somehow is

going to be addressed so but all of that

to say I suspect that let's say let's

say Elizabeth Warren became King Queen

okay if she became Queen and just waved

her wand and did away with college cost

to the individual and the government was

going to raise taxes to end pay for

college which is her wish okay

socialized college which i think would

be a disaster but that's what she wants

to do so let's just say that that

happened okay and you had the money in

this account I suspect part of the

legislation for changing our whole world

would involve freeing up that money for

you I don't think they're suddenly going

to penalize you because you saved for

college I don't know they might they're

liberals you never know but it's not

it's kind of you know brain disease so I

don't know but the we'll see what would

happen but you know the I'm gonna save

for college with what I know with what's

in front of me right now if I'm in your

shoes I've got six grand babies under

the age of five

all of them have es A's thank you so

that's you know because I don't know I'm

with you I don't know what's gonna

happen I think there's you know there's

crap on the horizon without a doubt if

something's gonna change because we got

too big a problem to not address it it's

gonna cave in on itself if they don't

address it so they're gonna have to

address it but the policy wants that be

what they're going to do with us regular

people who knows but in the meantime the

ESA I'm gonna load that sucker up or the

529 in the 529

you only do the kind where you control

your investment options not where

they're Auto controlled for you and it's

not prepaid college it's saving for

college in mutual funds that you select

and they don't get moved unless you move

them that's the proper kind of 529 and

that's all you can do with an ESA so