Is College Worth It in 2026? Plus, How to Split Solo 401(k) Contributions to Save More

In this episode of NerdWallet's Smart Money Podcast, hosts Sean Piles and Elizabeth Ayola explore two major financial topics: whether college remains a worthwhile investment in 2026 and how entrepreneurs can optimize their solo 401(k) contributions. The discussion begins with a deep dive into NerdWallet’s 2026 high school grad analysis, revealing that while nearly 70% of Americans believe college is less essential than before for earning a good living, 65% still view a four-year degree as a smart financial move. This tension reflects growing concerns about student debt, the rising impact of AI on white-collar jobs, and the increasing appeal of trade school as a faster, cheaper, and more secure alternative. The episode highlights that AI is already influencing career choices, with 39% of high school students considering college alternatives due to technological disruption. On the financial side, the hosts unpack upcoming changes to federal student loan repayment plans, including a new tiered standard plan and the Repayment Assistance Plan (RAP), which offers income-based payments and 30-year forgiveness. The second half focuses on solo 401(k)s, where wealth advisor Ryan Sterling explains how self-employed individuals can contribute up to $72,000 annually—$24,500 as an employee and up to $47,500 as an employer—offering significant tax advantages. Sterling advises maximizing the employee contribution first, then strategically allocating profits to the employer portion, while cautioning against over-saving at the expense of business growth or personal liquidity. He emphasizes the importance of working with a CPA and considering Roth vs. traditional contributions based on current and future tax brackets. The episode closes with a sobering reminder: many entrepreneurs are underprepared for retirement, underscoring the need to diversify beyond business income. Key takeaways include: 1) College remains a strong financial investment for many, but trade schools and alternative paths are increasingly viable; 2) AI is reshaping career planning, making long-term career confidence harder to achieve; 3) The new federal student loan repayment plans offer more flexibility but require careful planning; 4) Solo 401(k)s allow solopreneurs to save up to $72,000 annually, but contributions must be balanced with business needs; 5) Always prioritize financial planning over emotional or optimistic assumptions about business success; 6) Maxing out retirement accounts is powerful, but liquidity for life goals is equally important; 7) Consider Roth vs. traditional solo 401(k) based on current tax bracket and future expectations; 8) Even small contributions to retirement accounts compound significantly over time.