She Thought Her 529 Plan Was A Gift—Now Her Parents Want It Back. ‘Ramsey Show’ Hosts Say Asking For The Whole $114K Is ‘Diabolical’

A woman who used a 529 college savings plan to pay for her undergrad and graduate education says she was blindsided when her parents recently demanded she pay them back the full $114,000, money she thought was a gift.

Now 30 years old and earning a solid household income of $235,000 with her husband, Sarah called into “The Ramsey Show” recently for help. Her dad, a lawyer, set up the 529 account when she was young. While she took out about $35,000 in federal loans to finish grad school, the 529 covered most of her education.

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She Signed A Contract At 18 She Didn’t Understand

The shock came when her parents told her she owed them the entire amount used from the 529 plan. They even had a signed promissory note.

The document, which she signed at age 18, stated she promised to repay all sums used for her education, including tuition, housing and living expenses, plus interest.

“This relationship just turned into a transaction, and it’s not going to be undone,” co-host George Kamel said. “Thanksgiving is forever going to be different now.”

Co-host Jade Warshaw called the demand “diabolical,” adding, “Who knows if he slid that to you one morning while you were eating a waffle, right? Just, ‘Oh yeah, go ahead and sign this real quick.’”

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Contribution Of $30,000 Or $114,000 Balance?

Sarah said her parents contributed the money when she was a child, and it grew over 15 years to a total of $114,000. The hosts pointed out that repaying compound investment growth, money her parents didn’t actually deposit themselves, isn’t a reasonable ask.

Warshaw encouraged Sarah to lead with gratitude and honesty in her conversation with her parents. “There is no part of me that understood that I would be paying back this money,” she said to tell them. “If I had, I wouldn’t have signed this. And I feel very blindsided. And I don’t have the money.”

When asked whether she should offer to pay something, Warshaw said, “Maybe. Yeah,” while Kamel said he’d want to find out what their contributions were, what they actually put into the account.

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Consulting A Professional Might Be Wise

The hosts also suggested that Sarah get legal clarity on the promissory note. “I don’t know if he has any legal standing to come after you from a dad-to-[daughter], 529 perspective,” said Kamel. “Let him take you to court. I think this would be a hilarious way to end the relationship with his daughter.”

For others facing complex financial situations, it would help to speak with a professional. WiserAdvisor matches you with a vetted financial advisor who fits your situation. The service is free to use and comes with no obligation to hire anyone. It’s designed for households earning over $100,000 and looking for trusted guidance.

As for Sarah, she admitted the situation left her hurt. “My whole life I was like, ‘Oh, my parents kind of set me up.’ I was really grateful for them setting me up,” she said.

Now, she’s bracing for a tough conversation and wondering whether her parents’ idea of support was always tied to a price. “What are we doing, parents?” Kamel asked. “This is insane.”

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