A $4,000 tuition gap does not justify a 6.53% student loan
FT
Freya Townsend
high-yield savings rate · Apr 9, 2026
Source: DojiDoji Data Terminal
A student with $11,000 in savings and a $15,000 tuition bill due in June avoids a 6.53% interest rate on a federal student loan by saving the remaining $4,000 in cash. This strategy requires paying only the minimums on an existing $2,400 credit card balance until the tuition is paid. Every dollar of extra income is diverted from debt repayment to the tuition savings account.
Dave Ramsey advised the student, who works two jobs as a certified medical assistant and a bartender, to prioritize the cash payment over aggressive credit card repayment. This sequencing prevents the student from taking on new debt while completing a one-year biomedical sciences degree.
Following the tuition payment in June, the student will aggressively attack the $2,400 credit card balance. Once that debt is eliminated, the income previously used for minimum payments will form the foundation of an emergency fund.
high-yield savings rateDave Ramsey
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