College debt as a smart investment: planning to cut costs

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As college sticker prices keep climbing, more families are changing how they plan for higher education — and the shift is already reshaping student pathways. A surge in dual enrollment and other cost-cutting strategies is giving some students a head start on degrees, while growing loan balances and rising defaults are forcing tougher questions about affordability today.

Stephanie Thomas, a financial planner in Raleigh, remembers finishing college with roughly $20,000 in student loans — a burden she managed over time. Now 49, she and her husband have taken a different route for their daughters: heavy saving in 529 accounts and moves designed to shrink the time and expense of a four-year degree.

Early college credits change the calculation

Thomas’ younger daughter, Ainsley, is earning college credits while still in high school through dual enrollment. By graduation she’s expected to hold an associate degree and be able to enter a four-year program as a junior — a strategy that can cut both tuition bills and the need to borrow.

That approach is spreading. The National Student Clearinghouse Research Center reported a 9.6% increase in dual enrollment in its spring 2026 update, reflecting a growing preference for earlier accumulation of college credits as families hunt for savings.

Why families are feeling squeezed

Tuition and fees have outpaced most household budgets for decades. Adjusted for inflation, the College Board finds that between 1995 and 2025 average prices rose roughly 74% at private four-year colleges and about 101% at public four-year institutions. Those long-term increases, combined with funding cuts at the state level during economic downturns, have shifted a larger portion of the price tag onto students and their families.

Close-up of a calculator and college tuition bill on a table — Tuition and fees have far outpaced typical household budgets.

2025–26 Average Annual Cost	Amount (USD)
Four-year public, in-state (tuition, fees, room & board)	$25,850
Four-year public, out-of-state	$45,780
Four-year private (tuition, fees, room & board)	$60,920

With these costs, parents now cover less than half of college expenses on average (about 39%), while students’ own earnings and savings account for roughly 10%. Grants and scholarships provide about 27% of funding, and the remainder is increasingly filled by borrowing.

Debt totals and repayment strains

Outstanding student debt has ballooned to an estimated $1.85 trillion when federal and private loans are combined, according to a recent industry report, and distress signals are mounting. Education Department data show roughly 9.3 million federal borrowers were in default as of June 30 — about a 50% increase compared with a decade earlier — underscoring growing difficulty in repaying loans.

Stack of loan statements and a pair of reading glasses on documents — Outstanding student debt has risen into the trillions, pressuring borrowers.

Policymakers have proposed measures to restrain borrowing and address tuition growth, including limits on lifetime access to federal loans. Those discussions reflect a broader concern about whether federal lending has unintentionally subsidized escalating college prices.

The stakes are practical: debt is easier to accept when graduates land stable, well-paying jobs. But the entry-level labor market is shifting, in part because of automation and artificial intelligence. Research firms and career organizations report fewer postings for last-step roles and changing demand across fields — a dynamic that complicates predictions about graduates’ earning power.

Shifting enrollment patterns

As families rethink the four-year pathway, other options are gaining traction. The National Student Clearinghouse found modest growth in bachelor’s enrollment last year, but larger gains in certificate and associate programs. Community colleges have seen a pronounced rise in undergraduate certificate students, a jump of about 28% over four years.

That movement reflects two impulses: some students prioritize faster, less expensive pathways into the workforce; others accumulate credits early and transfer to four-year institutions later.

Dual enrollment: Earn college credits in high school to shorten time to a degree.

Community college transfer: Start at a lower-cost school, then move to a four-year campus.

529 savings plans: Tax-advantaged accounts families use to reduce reliance on loans.

Scholarships and grants: Targeted aid that lowers overall out-of-pocket costs.

Short-term credentials: Certificates and workforce programs aimed at rapid employment.

Public sentiment and the value question

Despite the pressures, most parents of children under 18 still want some form of postsecondary education for their kids and often aspire to a bachelor’s degree, according to recent polling by Lumina Foundation and Gallup. For many, a four-year diploma remains the clearest route to mobility; what’s changed is the calculus about how to obtain it without leaving graduates deeply indebted.

“People still see higher education as important, but they’re re-evaluating how to get the most for their money,” said a Lumina Foundation data official, noting that concerns are increasingly centered on cost rather than the principle of a degree itself.

For the Thomases, the plan is pragmatic: if Ainsley completes an associate degree before transferring to a public university, the family estimates the overall cost will be roughly halved and borrowing needs reduced to nearly zero. The strategy illustrates a broader trend: families are blending savings, earlier credits, and selective borrowing to preserve the benefits of higher education while limiting financial risk.

Whether those adjustments will be enough to counter rising prices and an uncertain job market remains an open question — but for many households, the immediate task is clear: stretch every dollar and shorten the road to a diploma.