College planning used to feel pretty straightforward.
Save into a 529, borrow if you have to, send the kids off, and hope it all works out.
But now?
Tuition keeps climbing, borrowing is getting tighter, and AI is reshaping entire industries. That “default” path doesn’t feel so default anymore. In fact, Gen Z men with college degrees now have the same unemployment rate as non-grads
As such, we’ve been having more conversations with clients about not just how to fund college, but whether the old playbook still even makes sense.
Education Funding: Starting with the Basics
When it comes to education funding, most families use a mix of:
529 Plans: Still a strong option. Tax-free growth, state tax perks, and now, thanks to recent changes, any leftover funds can roll into a Roth IRA for your kid (up to $35k under certain conditions). That’s a great backstop – college savings that can double as retirement savings if plans change.
UTMAs: More flexible (can be used for non-education expenses), but they hit harder on financial aid forms, and the money becomes your child’s at the age of majority. Use these if you want optionality and don’t mind relinquishing control down the line.
Out-of-pocket (Parent-funded): Works well for high-income families with strong cash flow, but can become a stressor if it competes with other goals (like funding your own retirement).
New Twist: Borrowing Just Got Harder
We wrote about the One Big Beautiful Bill Act (OBBBA) last month after its passing. Included in it was a reduction of federal student loan limits.
On the surface, that might feel like a loss, especially for families who planned to “bridge the gap” with borrowing.
But zoom out a bit, and there may be a silver lining.
For years, colleges could raise tuition without real consequence, knowing families could just borrow more. That’s part of what’s driven runaway costs. Tighter lending rules might be the first meaningful pressure to slow that growth.
We saw a version of this during the 2008 financial crisis: when banks tightened lending, the housing market corrected. Now, we might see something similar (finally) in higher ed.
So, yes – less access to credit is tough in the short-term. But it may help rebalance the system long-term.
Is College Still Worth It?
It depends. We know families on both ends of the spectrum.
John has put three daughters through college (with a fourth on deck). He’s lived it. The decision-making, the financial strain, the pride, the stress – all of it.
Lisa and I, meanwhile, have four kids under 7 (with baby McNamara #3 due in December!). We’re still in the early innings. But I’d be lying if I said I wasn’t thinking hard about what college (and really, the world) will look like when Manny and his 8-day older cousin, Damien, reach 18.
Will K-12 provide them the skills they need to thrive in this new world?
Will the linear path of high school to college still make sense?
Will AI have transformed what it means to be “employable”?
How To Prepare Our Children For The Future:
Tech leaders like Elon Musk and Pavel Durov (founder of Telegram) believe math and physics are the two most valuable subjects kids can master in this new world. Not because everyone needs to be an engineer – but because these subjects teach systems thinking, logic, and problem-solving. AI-proof skills, essentially.
Others, including my compadre (ahem… ChatGPT), echo Musk and Durav’s sentiment but also suggest layering in communication, behavioral psychology, and philosophy – timeless skills that sharpen how we relate to others, understand ourselves, and make thoughtful decisions in a world moving faster than ever.
Either way, it’s no longer about “go to college, get a degree, get a job.”
It’s about learning how to think, how to learn, and building the kind of core skills that make you adaptable for life.
So What Should You Do?
Here’s what we’re encouraging families to consider:
– Get clear on your values.
Do you want to fully fund your kid’s education? Share responsibility? Encourage a gap year, trades, entrepreneurship?
There’s no one right answer – but there is your right answer.
– Don’t overfund 529s.
They’re great tools, but not your only option.
Balance them with other accounts (like a personal brokerage account or UTMA) that give you more flexibility if your kid doesn’t go the traditional route.
– Understand the new loan rules.
Tighter lending = more planning. You might not be able to borrow your way through like past generations did. While that might not be a bad thing (long-term), it could present funding challenges in the short/medium-term.
– Invest in timeless skills.
Math. Communication. Resilience. Emotional intelligence. Curiosity. Regardless of what the world looks like 15 years from now, those skills will still matter.
Final Thought
College planning used to be a math problem. Now it’s a values question.
What kind of life do you want to help your kids build? What tools do they actually need? And how can you give them the best shot without sacrificing your own goals in the process?
If you’re navigating these questions, or just want to make sure your education strategy is keeping up with the times, we’re here.
Let’s figure it out together.
