Harvard goes tuition-free for families making less than $200,000. Should this change your approach to college savings?

It’s getting more and more expensive for students to get a degree. With the average cost of private college reaching $43,505 in 2025 per U.S. News & World Report — and that’s just tuition and fees — it’s no wonder so many students graduate with piles of debt.

You may be saving for college in the hopes of sparing your kids that fate. But a recent announcement from a well-known university may have you rethinking that plan.

Harvard has just announced that it will be tuition-fee for families making less than $200,000. And there’s a chance other schools will follow its lead.

So should you stop saving for college given this news? Not necessarily.

Why college savings should still be a priority for you

It’s not an easy thing to save for college. If you’re doing it, you’re probably giving something up, whether it’s vacations, a nicer home, or more money for your retirement savings.

You might think that it’s time to scale back on college savings now that Harvard is going tuition-free for moderate income families. But if you’ve been saving for college so far, it pays to continue if you can afford to.

First of all, you never know what school your children might want to attend. But if theirs doesn’t have a similar offering, then somebody is going to have to come up with that money — either you or them.

Even if more universities move to a tuition-free model for undergraduate studies, there’s no telling what they’ll opt to do at the graduate level. And graduate school can be expensive. So worst case, if you keep saving for college and your kids end up having their undergraduate tuition covered, they can potentially use that money for more advanced degrees.

Use the right account to save for college

This new announcement should not serve as motivation to stop saving for college. But what you may want to do is change your approach.

It’s not necessarily the best idea to house all of your college savings in a 529 plan. It’s true that you’ll get the benefit of tax-free growth, but these plans are also restrictive.

If you don’t use your money for qualifying education expenses, you risk taxes on withdrawals and a costly penalty on gains. And while there’s now the ability to roll some unused 529 plans into a Roth IRA, there’s still the risk of ending up with a large balance.

Of course, one can argue that this is a good problem to have. But it’s also not a great thing to risk being penalized on money you worked hard to save.

So while you should continue saving for college, you may want to limit the amount of money you contribute to a 529 plan and keep a good chunk of your education fund elsewhere. Options to look at could include a Roth IRA or a taxable brokerage account, where you won’t be subject to any restrictions whatsoever.

Finally, remember that while it’s a nice thing that Harvard is changing its tuition policy, if you’re in a position to put your kids through private college, then you probably earn too much for your children to attend there tuition-free anyway. So that’s another reason to continue saving for college, albeit perhaps more strategically.

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