Dave Ramsey: “Those Parent Plus Loans Are Going to Balloon to $175,000 If We Just Fight Over This”

A caller to The Dave Ramsey Show in January 2026 faced a debt situation trapping thousands of families: $170,000 in combined student loans on a $91,500 salary. The caller had knocked out credit cards and owned their car outright, but remained paralyzed between tackling their own $20,000 in student debt ($13,000 federal, $7,000 private) or helping parents with $150,000 in Parent PLUS loans taken out for their education.

Ramsey’s answer cut through the moral confusion. “I would debt snowball it. Smallest to largest minimum payments and knock out the smallest one first and put these $150,000 in parent plus loans right in there wherever they fall,” he advised. Then came the urgent math: “The longer you let this hang, those parent plus loans have a higher interest rate. The longer you wait on this, it’s going to balloon to $175,000.”

When Interest Costs $13,000 Annually

Parent PLUS loans carry a fixed rate of 8.94% for the 2025-2026 academic year, according to Federal Student Aid. On a $150,000 balance, that generates $13,410 in annual interest alone. Without aggressive principal reduction, the caller’s family would pay over $25,000 just in interest over the next two years while the balance climbs toward Ramsey’s $175,000 projection.

This scenario mirrors a Reddit post from May 2025 where parents faced taking out Parent PLUS loans for a son attending a $67,000-per-year private California university. The parent wrote: “We technically can take out the Parent Plus Loan but it will wipe out all our retirement funds.” After community feedback, they declined to cosign, recognizing the financial devastation ahead.

The debt snowball method attacks the smallest balance first regardless of whose name appears on paperwork. For this caller, that meant the $7,000 private loan, then the $13,000 federal loan, then systematically dismantling the Parent PLUS debt. Momentum matters more than optimizing interest rates when psychological paralysis keeps families from making progress.

Stop Treating Family Debt as Separate Problems

Parent PLUS loans occupy uncomfortable territory. They’re legally the parents’ responsibility, but many adult children feel morally obligated to help. That debate becomes expensive when interest compounds daily. Treating the $150,000 as “someone else’s problem” doesn’t stop it from ballooning.

The actionable path: List every debt smallest to largest, make minimum payments on everything, and throw every available dollar at the smallest balance. Once eliminated, roll that payment into the next debt. With $91,500 in income and no other consumer debt, aggressive budgeting could eliminate $20,000-$30,000 annually. The math isn’t complicated, but it requires treating all $170,000 as one shared emergency rather than separate obligations to argue over.