The short version: undergraduate federal loans carry a 6.52% fixed rate for 2026-27, and average debt at graduation is $29,560 — a figure that has been falling in real terms. If you have any earned income, a Roth IRA opened at 20 has more value than anything else on this list, and there is no minimum age to open one.
Almost all financial advice aimed at college students is either scolding or fantasy. Here are the numbers that actually apply, and the two or three decisions that matter.
What college actually costs, and what people actually pay
Published prices and paid prices are different things, and the gap is enormous. From the College Board’s 2025-26 data:
| Published tuition & fees | Average net after grants | Total cost of attendance | |
|---|---|---|---|
| Public four-year, in-state | $11,950 | $2,300 | $30,990 |
| Public four-year, out-of-state | $31,880 | — | $50,920 |
| Private nonprofit four-year | $45,000 | $16,910 | $65,470 |
The net figures are why “I can’t afford that school” is often premature. Run each school’s net price calculator before ruling it out. A private college with a large endowment sometimes costs a middle-income family less than a flagship state university.
Note also that tuition is a minority of the total. Housing, food, books, and transportation make up most of the difference between $11,950 and $30,990 — and those are the costs you have some control over.
Borrowing: the 2026-27 numbers
Federal loan rates are set each spring from a Treasury auction and then fixed for the life of the loan. For loans first disbursed between July 1, 2026 and June 30, 2027:
| Loan type | 2026-27 rate | 2025-26 |
|---|---|---|
| Direct Subsidized & Unsubsidized, undergraduate | 6.52% | 6.39% |
| Direct Unsubsidized, graduate | 8.07% | 7.94% |
| Direct PLUS (parent and graduate) | 9.07% | 8.94% |
Take subsidized loans before unsubsidized ones — the government pays the interest while you are enrolled, which is free money. Exhaust federal options before private loans, which lack income-driven repayment and forgiveness provisions.
Here is a fact that runs against the usual narrative: student debt at graduation is improving. Among 2023-24 bachelor’s recipients, 47% borrowed at all, with an average of $29,560. Six years earlier, 56% borrowed an average of $35,310 in comparable 2024 dollars. Fewer students are borrowing, and they are borrowing less in real terms.
That is not a reason to be casual. Proverbs is unsentimental about what debt does to a life: “The rich rule over the poor, and the borrower is slave to the lender” (Proverbs 22:7). The Hebrew is a statement of social fact rather than a moral prohibition — Scripture regulates lending extensively rather than banning borrowing. But the observation holds. Debt transfers a measure of control over your future choices to someone else, and that includes which job you can afford to take after graduation. A youth pastor’s salary services a much smaller loan than a software engineer’s.
The Roth IRA nobody mentions at 19
If you earned money this year, you can open a Roth IRA. There is no minimum age. The contribution limit for 2026 is the lesser of $7,500 or your taxable compensation — so a student who earned $4,200 at a summer job can contribute $4,200.
Why this matters more at 20 than it ever will again: a single $4,000 contribution at 20, left alone at a 7% real return, is worth roughly $60,000 in today’s purchasing power at 65. The same $4,000 contributed at 40 becomes about $15,000. You are buying time, and you have more of it than any other investor.
What counts as compensation: W-2 wages, self-employment income, commissions, tips. What does not: gifts, allowances, investment income, interest, dividends.
Now a correction to advice you will see repeated everywhere. It is not simply true that “scholarships don’t count.” Undergraduate tuition scholarships are not compensation. But since 2020, certain taxable non-tuition fellowship and stipend payments for graduate or postdoctoral study do count as compensation for IRA purposes, even when they are not reported on a W-2. If you are a grad student with a taxable stipend, you may well be able to fund a Roth. Plenty of published guidance still gets this wrong.
A parent can fund a custodial Roth on your behalf, up to your own earned income. The dollars do not have to be the ones you earned. Keep pay stubs or an invoice ledger, since a student with modest earnings often files no return and would otherwise have no record. Our guide to Christian IRA investing covers where to hold it and which faith-screened funds accept small balances.
Work, money, and the four years you are in
A campus job is worth more than its wage. It creates the earned income that makes a Roth IRA possible, it builds a work history, and on-campus employment is usually exempt from the FICA taxes a student worker would otherwise pay.
A few things worth knowing about student income and taxes. If you are claimed as a dependent, your standard deduction for 2026 is the greater of $1,350 or your earned income plus $450, capped at the ordinary $16,100. Practically, a student earning under about $16,000 owes no federal income tax — which is also the argument for making Roth rather than traditional contributions. You are paying tax at 0% or 10% now; almost any future rate will be higher.
File a return anyway if any tax was withheld, because that is how you get it back. Plenty of students leave a few hundred dollars with the Treasury every year by not filing.
Check whether you qualify for education credits, or whether your parents are claiming them. The American Opportunity Tax Credit is worth up to $2,500 per student for the first four years, with up to $1,000 refundable. Only one person can claim it for a given student, so a five-minute conversation with your parents avoids a duplicated claim and a letter from the IRS.
On budgeting, the honest version is that most students do not need a budgeting system. They need to know two numbers: what comes in each month, and what the fixed costs are. Everything left is discretionary, and the discipline is spending less than that. Our guide to Christian budgeting covers the mechanics if you want a framework.
Giving when you have almost nothing
The temptation is to postpone giving until it feels affordable. That threshold never arrives on its own, because expenses expand to fill income at every level.
Jesus makes the point with a widow putting two small coins in the temple treasury: she “put in more than all the others” because they gave from surplus and she gave from poverty (Luke 21:1-4). He is not praising imprudence. He is establishing that proportion, not amount, is the measure — which is unusually good news if your income is $6,000 a year.
The related principle is about formation rather than finance: “Whoever can be trusted with very little can also be trusted with much” (Luke 16:10). The habits you build at $6,000 are the habits you will have at $60,000, because nobody spontaneously becomes generous upon receiving a raise.
Start with a percentage you can actually sustain. Ten percent of a $300 paycheck is $30, and the discipline transfers; ten percent of a salary you do not yet have transfers nothing.
Contentment is the actual skill
College is a comparison-rich environment. Roommates with different budgets, spring break trips you cannot afford, and a social calendar priced for someone else’s parents.
Paul’s line is worth memorizing precisely because it is so counter-cultural: “But godliness with contentment is great gain. For we brought nothing into the world, and we can take nothing out of it. But if we have food and clothing, we will be content with these” (1 Timothy 6:6-8). Food and clothing. Not a comfortable standard of living — subsistence. He is not saying that is all you should ever want; he is saying that is where the floor of contentment sits, and everything above it is surplus.
He also names the mechanism by which money damages people. Not wealth itself, but “the love of money” as “a root of all kinds of evil” (1 Timothy 6:10), and the specific failure mode is people who “want to get rich” falling into temptation. Wanting is the hazard. Students are wanting-rich and cash-poor, which is exactly the combination the passage addresses.
Three practical things to skip
- Credit cards you cannot pay in full monthly. Building credit is real, and one card paid off every month does it. Carrying a balance at 20-something percent while investing at 7% is arithmetic working against you.
- Trading apps and single stocks. The features designed to feel like a game are designed to increase how often you trade, and frequent trading reliably underperforms. Our guide to Christian investing apps covers which tools are genuinely useful.
- Whole life insurance. If someone offers a 20-year-old a cash-value policy as a savings plan, that person is being paid a commission. You almost certainly need no life insurance at all yet.
What to do instead is short: take the subsidized loans, work enough to fund a small Roth, give a percentage, and keep one credit card paid in full. Our guides to Christian financial planning for young adults and a biblical approach to debt pick up where this leaves off.
Related reading
- Christian Financial Planning for Ministry Workers and Pastors
- Christian Widow and Widower Financial Guide
- Financial Stewardship for Christian Business Owners
- Christian Marriage and Money: Financial Unity for Couples
- Christian Retirement Planning
- Christian Financial Planning
- Christian Financial Planning for Newlyweds
- Saving and Investing When Starting a Family
- Single-Income Family Finances: A Christian Guide
- Christian Personal Finance
