Ramsey Everyday Millionaires: “How Much Do You Really Need to Put in a 529 for College?”

Date: October 1, 2025
Hosts: Dave Ramsey, Ken Coleman
Guest: Gerard from Texas
Theme: Practical, realistic planning for college savings using 529 plans, future trends in higher education, and the true value of a college degree.

Episode Overview

In this episode, Dave Ramsey and Ken Coleman tackle the practicalities and realities of college savings—specifically, how much families should be setting aside in 529 plans. Listener Gerard calls in seeking clarity after seeing alarmingly high savings suggestions from online calculators. The conversation then expands to include inflation trends in college costs, speculation on the future of higher education, and the importance of focusing on educational ROI over prestige. The hosts challenge outdated assumptions about both the need for a four-year degree and the impact of an elite alma mater.

Key Discussion Points & Insights

1. How Much to Save in a 529?

• Gerard’s Situation: In Baby Step 2, nearly out of debt, planning for children aged 4 and 7’s college funds.

• Gerard was “confused” when the Dave Ramsey college calculator suggested “like 1100 bucks a month” ([00:46]), asking:

  "Is that normal to set that much aside in a 529?" — Gerard ([00:46])

• Dave’s Response:

  • The calculator number is not normal; $1,100/month is excessive for most families’ needs.

  • Recommended approach:

    "A couple grand a year is going to take you a long, long way towards doing this." — Dave Ramsey ([03:09])

  • Explanation: If you put ~$2,000/year per child (instead of per month), compounding and tax-free growth in the 529 could build into $100,000–$150,000 over time.

  • No taxes on growth:

    “If you put in $2,000 a year for 10 years, that’s $20,000 you put in. If there’s $120,000 in there, there’s $100,000 in growth. You got me? No taxes on that $100,000 is important because that’s a $20,000, $30,000 tax bill that you’re avoiding.” — Dave Ramsey ([02:41])

2. Realistic College Cost Projections

• Historically, tuition inflation has run 7–8%/year, higher than general inflation ([01:17]).
• Example: University of Texas in-state tuition is ~$14,000/year; four years is $56,000 now but could be much more in a decade.
• However, Dave and Ken both argue that runaway tuition increases are unlikely to persist ([04:35]):

  “I don’t think you’re going to see the exorbitant costs... I think we’ve kind of jumped the shark.” — Ken Coleman ([04:24])

3. The Future of Higher Education

• Decentralization & Alternatives:

  • Degrees in medicine/law will remain, but general four-year degree requirements may splinter, with more trade/program certifications ([03:26]).
  • AI and Private Sector Training:

    “I think people are going to come along, go wait a second, we can provide training for what corporate America really wants for a whole lot less money.” — Ken Coleman ([05:02])

  • Example: Google’s six-month career program ([05:18]).

• Student Loan Crisis Impact: Public backlash against college cost excess and demand for ROI ([04:35], [08:33]).

  “The student loan debacle has highlighted that some of the higher ed stuff is out of control. And so it’s not sustainable.” — Dave Ramsey ([04:35])

4. What Matters Most for Success

• Where You Go to School Doesn’t Matter:

  “The number of times that people become successful due to the particular school that they went to is precisely zero.” — Dave Ramsey ([07:21])

  • Data Point: “78% of Fortune 500 CEOs went to a state school!” ([07:50])
  • “They didn’t go to Wharton. They didn’t go to Princeton... Penn State, Michigan State, that’s where they went to school.” — Dave Ramsey ([07:51])
  • ROI example: It makes no sense to pay $250K for a master’s in social work to land a $38K/year job ([08:33]).

• Key Success Factor: Grit and self-development, not an elite diploma.

Notable Quotes & Memorable Moments

• Dave Ramsey, on over-saving for college ([01:09]):

  “No, it’s not. I would not do that.”

• Dave, on the value of 529s ([02:41]):

  “No taxes on that $100,000 is important because that’s a $20,000, $30,000 tax bill that you’re avoiding…”

• Ken, on future of college ([05:02]):

  “You’re going to see private sector competition for traditional education... Google’s doing their own training program, six month program.”

• Dave, on educational elitism ([07:21]):

  “The number of times that people become successful due to the particular school that they went to is precisely zero.”

• Dave, on educational ROI ([08:33]):

  “I can’t spend $250,000 to become a social worker for the state of Tennessee with a master’s degree and make $38,000 a year. That’s dumb butt.”

Timestamps for Important Segments

• 00:22 – Gerard introduces his college savings concern
• 01:09 – Dave refutes excessive 529 savings recommendation
• 02:41 – Tax-free growth of 529s explained
• 03:09 – “A couple grand a year” is enough
• 03:26–05:38 – Ken and Dave on the changing landscape of higher education
• 07:21–08:33 – The myth of prestigious institutions and real ROI analysis

Tone & Language

The conversation is candid, no-nonsense, and peppered with the hosts’ signature blend of folksy wisdom and data-driven insights. The tone is encouraging but realistic—challenging listeners to be both sensible and skeptical when planning for college.

Takeaways

• Don’t panic at high savings calculator numbers: Around $2,000/year per child is likely sufficient, thanks to compounding over time in a tax-free 529 plan.
• Expect big changes in higher education: Tuition inflation may slow or reverse; alternative paths (trades, certificates, private sector-led training) will likely proliferate.
• Focus on career ROI, not school prestige: Most top earners attended state schools, not Ivy Leagues.
• Be adaptable: Monitor trends, stay informed, and don’t fall for the “expensive college = success” myth.

This episode gives practical, actionable advice for families anxious about college costs—and strong reasons to question the conventional wisdom surrounding the value of a degree.