Interrupter CheckmarkInterrupter IconFacebookGoogle PlusInstagramGroupRamsey SolutionsTwitterYouTubeExpand MenuStoreCloseSearchExpand MenuBackStoreSign in
Skip to Main Content

Ask Dave

What Happens to an ESA if My Child Does Not Go to College?

Wendy asks what happens to the money in an Education Savings Account (ESA) if they decide not to go to college.

QUESTION: Wendy on Twitter asks what happens to the money in an Education Savings Account (ESA) if they decide not to go to college.

ANSWER: We told our children we would use it to pay for their funeral because we’re gonna kill ’em.

College is not optional. You’re going. And I tell you that from the time you’re 3. “This is your college fund. This is your college fund. This is your college fund.” And if the whole time you’re growing up you know you have a college fund, then it kind of presupposes that you’re going to college.

I think education is really important. I don’t think it makes you successful. I think character qualities make you successful. But being smart is also helpful. Being knowledgeable is helpful. Walking around dumb is not a good plan. And you can be smart and not go to college. Don’t misunderstand, but the college fund is there.

If your kid doesn’t use the ESA to go to college, the money can be transferred over to a sibling, and they can use it for college. If they do take it out, however, they’re going to get punched in the face by the government. They’re going to get a 20% penalty plus their tax rate, which is probably going to amount to 50% of their money’s going to go to the government. Really sucks, so you really need to brainwash them that they’re going to school if you’re using an Education Savings Account—and I do recommend you do both of those: brainwash and save.

Ultimately, your kid CAN go to college without debt. Our BRAND-NEW book will teach you how to pay for your kids’ college without student loans. Don’t let your kids fall into the student loan trap!

Get a FREE Customized Plan for Your Money!

Get a FREE Customized Plan for Your Money! 

Answer a few questions, and we'll create a plan tailored just for you. It only takes three minutes!
Take the Assessment

Get a FREE Customized Plan for Your Money! 

Answer a few questions, and we'll create a plan tailored just for you. It only takes three minutes!
Take the Free Assessment