By Kyle Wasson, CFP®
Families usually come to us asking how to save for college. It’s a fair question, but it shouldn’t be the first question. The first is harder: degree actually worth the investment?
A six-figure decision, not a default
A four-year degree is among the largest purchases most families ever make, and the return is far from guaranteed. The Foundation for Research on Equal Opportunity (FREOPP) calculated ROI for more than 50,000 programs and found that roughly 31% of students are enrolled in programs with negative ROI, meaning the lifetime earnings gain never covers the cost. Nearly a quarter of bachelor’s degree programs fall short.
The variation is staggering. Degrees in engineering, computer science, nursing, and economics often return $1 million or more over a career. Many programs in the arts, psychology, and religious studies return little, or leave the graduate worse off. When that many graduates finish at a loss, both the school and the major deserve scrutiny.
Georgetown’s Center on Education and the Workforce makes the same point from the other side. Bachelor’s holders earn a median of $2.8 million over a career, yet at least one in four high school graduates outearns the typical associate-degree holder. The credential is not destiny. Field of study, school, and skills are. And by skills, I mean technical ability, communication, and the network you build.
The good news is that you can check before you commit. Tools like FREOPP’s free ROI calculator are outstanding: you can search ROI by school, major, and credential.
Is college really for you?
Be honest about the motivation for considering college. Going to kickstart a career that genuinely requires a degree is a sound reason. Going to follow friends or a partner, to delay adult life, or to satisfy social pressure is an expensive one. That is four or five years out of the workforce, not to mention the cost of attendance.
Whether it’s private school, community college, state school, or another certification program, the best advice I got was to fully consider your decision and wait to commit until you’re ready.
There is also no shame in starting at a community college. Completing your general-education requirements there, then transferring, can cut a bachelor’s cost nearly in half. For others, a certificate or associate degree in a high-demand field is the better financial decision.
That said, for some students a pricier private school earns its premium. In network-driven fields like finance, law, and consulting, the recruiting pipelines and alumni connections a selective school provides can carry real economic weight. Financial aid aside, the cost of an expensive college should survive the same ROI test as any other choice. If the network genuinely maps to your target career, it can pay for itself.
Once you land that first job, your skills, network, and planning matter more than the name on the diploma. College is worth it for most who go, but execution matters.
Insert section: Tips to plan to make the college decision
Ways to save for college
The right savings vehicle depends on your tax situation, your timeline, and how flexible you want your funds to be. There is no single best account, only the one that fits your circumstances.
- 529 plan. Tax-advantaged account specifically for college savings. Contributions grow tax-free, and withdrawals for qualified education expenses are tax-free. Many states add a state tax deduction for contributions. It counts as a parental asset, so it has minimal impact on financial aid, and unused funds can now be rolled into the beneficiary’s Roth IRA, up to a $35,000 lifetime limit, subject to rules. As of 2026, up to $20,000 per year can be used for private K-12.
- Direct (taxable) savings. This would be using your savings and taxable brokerage account to fund college expenses. This provides the most flexibility, with no penalties or restrictions on use. The trade-off is no tax advantages, and earnings are taxed along the way.
- Custodial accounts (UGMA/UTMA). An irrevocable gift to your child for any purpose. Anyone can gift $19,000 if filing single/$38,000 if married. Note two trade-offs. The child takes full control at the age of majority, leaving the full account to their immediate disposal. Custodial accounts are also student assets, which reduces financial aid more heavily than a 529.
- Roth IRA. The Roth is rarely included on college-savings lists, and that is deliberate. A Roth is arguably the strongest retirement account available, and for most people it should be prioritized for exactly that purpose. Spending it on tuition forfeits decades of tax-free growth you cannot get back. That said, with deliberate planning it can play a role. Contributions can be withdrawn anytime tax-free and penalty-free, and retirement accounts are not counted as assets for aid. It can serve as a backstop if your child takes a different path. Just know that any withdrawal counts as income on the next year’s aid application, and the retirement cost is real.
No advisor can tell you whether a degree in penguinology is the right path. But with careful planning you can make the most of your college savings.
Sources: FREOPP, “Does College Pay Off? A Comprehensive Return on Investment Analysis” and the FREOPP ROI calculator (freopp.org/roi-in-higher-education/roi-undergraduate); Georgetown University Center on Education and the Workforce, “The College Payoff.”
This article is for educational purposes and is not individualized financial, tax, or legal advice. Account rules, including FAFSA treatment and 529-to-Roth provisions, change over time and carry conditions. Consult your advisor before acting.
