College planning has never been more complicated—or more expensive. With tuition costs soaring past $100,000 per year at some institutions, increasing competition for admission, and financial aid rules evolving, families need a strategy to navigate the process.

Instead of crossing your fingers and hoping for the best, here’s what you need to know about the state of college education in 2025 and how to plan for it.

1. All Time High Tuition Costs…and “Purchasing an Education”

Let’s start with the obvious: college is expensive. But $100,000 per year?  Yikes.  That’s the reality at some top-tier schools.  From a Financial Planning point-of-view, college education is usually the third highest cost in terms of financial goals after Retirement and Owning a Home.  

Over the last couple of decades, as college costs have inflated at a greater rate than almost anything other than healthcare, our mindset is beginning to shift – you are “Purchasing an Education“.  In essence, we’re buying the tools, knowledge, skills and experience that provide our students a path to earn an income and make an impact in adulthood.

So – why are costs still climbing? Colleges face rising operational expenses, competition to attract students, and financial pressures that force them to keep up with their peers. At the same time, the demand for top schools has never been greater.  There are fewer spots for a rising number of applicants.  It’s a case of supply and demand.

What You Should Do:

• Before your child falls in love with a school, start with a budget—what can you realistically afford?
• Research tuition discounting programs, but read the fine print—what’s truly covered, and what isn’t?
• Treat college like a major purchase, just like buying a home. Plan your finances accordingly.

2. A Third of U.S. Colleges May Close or Merge in the Next 10 Years

Think your child’s dream school will be around forever? Think again. The U.S. college landscape is shrinking, with one-third of institutions expected to close or merge in the next decade due to financial instability and declining enrollment.

In 2024 alone, at least one school per week either shut down, restructured, or merged. Colleges, once seen as untouchable institutions, now face real business pressures. They’re cutting underperforming programs, reducing faculty, and merging to survive.

What You Should Do:

• Evaluate your motivations—choose the college that’s right for you, not the one everyone else says is right. 
• Ask the tough questions—is the school financially sound? Have they cut programs recently?
• Consider the long-term value—a degree from a struggling institution may not hold as much weight in the job market.

3. College Admissions: Harder Than Ever to Get In

If it feels like college admissions are more competitive, that’s because they are. Some top universities receive 90,000+ applications for just 2,300 spots, leading to acceptance rates as low as 2-5%.

This isn’t just due to more applicants—colleges are encouraging more applications to appear selective and boost rankings. Many charge $70 per application, making admissions a lucrative business in itself.

What You Should Do:

• Apply to a balanced mix of schools—not just the ultra-competitive ones.
• Engage early—visit campuses, connect with admissions officers, and show genuine interest.
• Be realistic—just because a school is ranked highly doesn’t mean it’s the best fit for your student.

4. The Best Time to Start College Planning? Much Sooner Than You Think

When should you start planning for college? Earlier than most families do. Waiting until senior year is a mistake—by then, you’re scrambling. Here’s a better approach:

• Ages 0-6: “Get Started” – Open a savings or investment account dedicated to education as soon as possible. 
• Ages 6-12: “Get Serious” – Assess your savings and increase contributions if possible. Start discussing the concept of college with your child.
• Ages 12-18: “Get Focused” – By sophomore year, students should begin career exploration, campus visits, and considering potential majors.

Ideally, by the time your student is entering college, there will have been consistent savings over the last 18 years.  This, along with financial aide research, scholarships and understanding each school’s requirements will provide flexibility and options that may not have existed without that rigor.

What You Should Do:

• Start saving early—even if you’re unsure about your child’s college path, having money set aside will give you options.
• Talk to your child about careers and interests before they lock into a major.
• Visit campuses early—exposure to different types of schools can help students make better decisions.

5. Financial Aid: What’s Changed & What You Need to Know

Many families assume financial aid is only for low-income households. Not true. Aid eligibility is determined by multiple factors:

• Household Income & Size – A family earning $200,000 with four kids may receive more aid than a family earning $150,000 with one child.
• Assets (But Not as Much as You Think) – Non-retirement assets (like a 529 plan) are assessed at 5.6% for aid purposes—far less than income.
• 529 Plans Are More Flexible Than Ever – New rules allow for apprenticeship programs, k-12 education, and now unused 529 funds may be rolled into a Roth IRA, eliminating the fear of “over-saving” for college.
• Loans Are a Reality for Many Families – Federal student loans are capped at relatively low amounts, meaning families often turn to private loans, personal savings or home equity to cover costs.

What You Should Do:

• Run the numbers—use financial aid calculators to estimate what you might qualify for.
• Don’t assume you won’t get aid—apply even if you think you won’t qualify.
• Contribute to a 529 plan—it’s one of the best tax-advantaged ways to prepare for education costs, especially early on to take advantage of compound interest.

The Bottom Line: A Smart Strategy = Less Stress & Less Debt

College planning in 2025 requires a proactive, informed approach—not last-minute panic. With rising costs, increasing competition, and shifting financial aid policies, here’s what you need to remember:

• Start early – The sooner you plan and save, the more options you’ll have.
• Be strategic with applications – Select schools that fit both academically and financially.
• Understand financial aid – Need-based aid isn’t just for low-income families.
• Prepare for change – Colleges are merging, closing, and shifting policies. Choose wisely.

A degree is still one of the best investments for a child’s future—but only if it’s approached wisely. The key to avoiding excessive debt? Early planning, realistic expectations, financial literacy, and smart decision-making.

Families who take these steps can confidently navigate the college process without sacrificing their entire nest egg.