Podcast Summary: So Money with Farnoosh Torabi

Episode 1936: How to Pay for College Without Ruining Your Financial Life

Date: January 26, 2026
Guest: Patricia Roberts, 529 Expert, Author, COO of Gift of College

Overview

This episode tackles the pressing concern of preparing for college costs without derailing your personal or family financial stability. Host Farnoosh Torabi delves into 529 college savings plans with Patricia Roberts, a leading expert and advocate, discussing how to use these accounts strategically, the latest updates, and the persistent myths that often prevent families from maximizing this resource.

Key Discussion Points

1. Patricia Roberts’ Background and Motivation

• Grew up in a low-income household, nearly missed college due to cost.
• A guidance counselor advised her to stick with her waitressing job despite academic achievements.
• With her mother’s support, she persisted, funded her way through undergraduate and later law school, but incurred over $100,000 in student loans that took 20 years to repay.
• This experience inspired her 25-year career educating families and advising institutions about 529 plans. She is also a mother dedicated to alleviating her own child's college debt stress.
• Quote:

  “I think of that poor girl who almost did something else ... I am absolutely cognizant of the value of education, the stress associated with repaying it, and the joy that comes with having done better for my own son.” — Patricia Roberts (10:07)

2. Is College Still Worth It?

• Parents and students increasingly question the value of college given rising costs and uncertain job prospects.
• Roberts maintains education is valuable, but emphasizes college is not the only viable post-secondary path.
• 529s are now more flexible and can be used for various training programs and non-degree credentials due to legislative changes.
• Quote:

  “It’s really not a dream when your child comes out with 10, 15, 20 years of what can be very much a nightmare of student loan debt.” — Patricia Roberts (13:11)

• Families should weigh cost, potential debt, and potential earnings of chosen fields before selecting a school or program.

3. How Much Debt Is ‘Too Much’ for College?

• The commonly cited guideline: Don’t borrow more than your projected first year’s salary out of school.
• Key factors: intended career, projected earnings, where you plan to live.
• Realistic, up-front family conversations about cost and repayment responsibility are vital—ideally before college application season begins.
• Student loan debt affects life milestones: health care, career moves, family formation, and big purchases like homes or cars.

4. 529 College Savings Plans: What Are They?

• Named after Section 529 of the IRS Code.
• Designed for tax-free growth and tax-free withdrawals if used for approved educational expenses.
• Up to 37 states (and DC) offer state tax benefits for contributions.
• The account owner (usually the parent) retains control—unlike UTMA/UGMA accounts, which transfer to the child at majority.
• Not just for four-year colleges: now also trade schools, apprenticeships, non-degree credentials, K-12 (with new rules), tutoring, therapies, and more.

5. Top Misconceptions About 529 Plans

• Myth: Must use your home state’s plan.
  Not true—you can invest in any state’s plan.
• Myth: Only for traditional four-year colleges.
  Not true—covers community college, trade/technical, apprenticeships, more (28:35).
• Myth: You’ll lose the money if your child doesn’t go to college.
  Not true—options include changing the beneficiary, saving for another family member, rolling over up to $35,000 into a Roth IRA (subject to rules), or taking non-qualified withdrawals (with penalties on growth only).
• Myth: Saving in a 529 hurts financial aid eligibility.
  Not substantially—529s are parental assets, assessed at a much lower rate (5.64%) than student assets. And federal aid formulas (FAFSA) do not consider aunt/uncle/grandparent accounts.
• Quote:

  “What you’re fearing is eligibility for student loans. And these are not a major worry ... It’s more important to prepare.” — Patricia Roberts (34:00)

6. Investment Choices Within 529s

• Variety: Age-based (target date), static, individual portfolios, stable value, and some FDIC-insured options.
• Most families choose age-based plans, shifting from equities toward conservative investments as the child nears college.
• Twice a year, you can change these investments.
• Strategy Tip: As college nears, move a portion (e.g., two years’ worth) to low-risk options to protect against market swings (39:50).
• Quote:

  “As my son Ben got closer to college ... I’m going to take 25% off the table ... and put it in a fully insured option.” — Patricia Roberts (39:57)

7. Managing Multiple Children’s College Funds

• Best practice: Open a separate 529 for each child due to different time horizons, tailored investments, and individual family gifts/contributions.
• Research shows kids aware of a college savings account in their name are more likely to pursue and finish higher education.

8. Expanded Uses and New Legislation

• Now covers K-12 tuition, tutoring, test prep, certain therapies, and dual enrollment fees (46:33).
• May also withdraw up to $10,000 per beneficiary (and sibling) over a lifetime to pay student loan debt (44:47).
• Up to $35,000 can be rolled tax/penalty free into a Roth IRA for the beneficiary under recent rules.

9. Workplace 529 Benefits

• Increasingly, employers are offering education about, payroll deduction for, and even matching contributions to 529 accounts.
• Employers recognize the financial stress of college costs and student loan debt—benefits help with employee retention, health, and productivity.
• Quote:

  “Employers are now giving an initial contribution ... instead of that $150 flower arrangement or that onesie and teddy bear.” — Patricia Roberts (52:19)

Notable Quotes & Moments

• Patricia Roberts’ personal journey:
  “I almost missed the opportunity to go to college because of cost.” (06:15)
• On debt and college dreams:
  “[It’s] not a dream when your child comes out with ... what can be very much a nightmare of student loan debt.” (13:11)
• Reality check for parents:
  “Don’t borrow more than what your first year salary would be.” (15:14)
• 529 flexibility:
  “These are not only for traditional four year college.... now, thanks to HR1 ... can be used even for more purposes.” (28:35, 02:04)
• On the widespread ignorance of 529s:
  “Over half of Americans cannot even identify what a 529 plan is.” (24:34)
• On changing legislation:
  “Thanks to a change ... you can now roll up to $35,000 of leftover funds to a Roth IRA.” (31:52)

Timestamps for Key Segments

• Patricia’s backstory and why education matters: 06:15–10:37
• Is college worth it? Weighing options and ROI: 11:36–13:44
• How much debt is too much?: 15:14–19:04
• What is a 529 plan? What makes it unique?: 24:34–28:05
• Top myths and realities about 529s: 28:35–35:46
• How 529 money is invested & investment options: 35:46–41:40
• Best way to manage multiple kids’ 529s: 41:40–44:14
• K-12 and other expanded uses: 44:14–49:36
• Role of employers in supporting college savings: 49:36–52:33

Additional Resources

• Patricia Roberts’ book: Route 529: A Parent’s Guide to Saving for College and Career Training with 529 Plans ([Amazon link])
• Workplace program: giftofcollege.com
• Patricia on LinkedIn and Instagram: @route529mom

(This summary omits all ads, intros, promos, and non-content sections, focusing solely on the expert insights and actionable advice for families planning for college costs.)