Key takeaways
- College costs have been climbing fast over the last two decades, putting more pressure on families to weigh both affordability and the long-term value of attending college.
- Bankrate’s study found small college towns, such as Champaign, Ill. and Blacksburg, Va., deliver the best mix of lower living costs, high graduation rates and strong 20-year ROIs.
- Big cities like New York City and San Francisco landed at the bottom of the study due to high living costs despite offering strong job markets and networking.
Allison Fitzwilliam, a 24-year-old Bankrate marketing manager who grew up in Maryland, was faced with a tough decision after high school: Attend her dad’s alma mater, Auburn University, or go to Virginia Tech, a more affordable school closer to home.
While attending her dad’s school would have allowed her to cheer for the same football team on Saturdays, Fitzwilliam said part of her decision came down to money. Tuition and housing were nearly $52,000 per year at Auburn in 2019, about $12,000 more annually than it was at Virginia Tech.
“That [affordability] was a big factor in my decision,” she said. “I was fortunate that my parents supported me going out of state, but I still applied for scholarships and took out loans.”
With college costs climbing faster than inflation, prospective college students are under more pressure than ever to figure out not just where to go, but whether that degree will pay off in the long run.
Bankrate’s new ranking of more than 100 college towns and cities shows that the best values are usually found in smaller towns, especially those with some proximity to lucrative job markets in nearby metropolitan areas.
Ithaca, NY, Champaign, Ill. and Charlottesville, Va. topped our ranking for their high graduation rates, strong 20-year return on investment (ROI) and lower unemployment rates. Pricey places that are home to multiple colleges and universities, like New York City and San Francisco, landed at the bottom.
The ranking, which looked at affordability and ROI metrics, focuses on college towns and their associated schools as a whole.
We have to make sure that we’re aligning with our kids, and they’re entering an environment that’s going to have a return on investment. We have to open our eyes to more possibilities and more options.
— Larry Sprung
CFP and founder of Mitlin Financial
Top college towns that offer the best value
When it comes to choosing a college, students and families are often weighing two big questions: how much will it cost, and will it pay off later?
Knowing that affordability and ROI are critical factors in the college decision, Bankrate ranked over 100 towns and cities with large four-year universities based on affordability, 20-year return on investment, graduation rates and unemployment rates in the area. Cost of living carried the heaviest weight in the ranking at 50 percent, followed by 20-year ROI at 30 percent, graduation rates at 10 percent and unemployment rates at 10 percent.
Surveys have shown that students care a lot about earnings and the labor market. They are connecting their academic choices to their career choices.
— Veronica Minaya
Senior research associate and program lead at Community College Research Center
| Top 5 | Bottom 5 |
|---|---|
| 1. Ithaca, New York | 109. New York, New York |
| 2. Champaign, IL | 108. Fort Lauderdale, FL |
| 3. Charlottesville, VA | 107. San Francisco, CA |
| 4. Clemson, SC | 106. San Jose, CA |
| 5. Blacksburg, VA | 105. Colorado Springs, CO |
Top-ranked locations perform well for different reasons. Take Ithaca, N.Y. — home to Cornell University — for example. It landed in first place on the ranking, thanks to its high graduation rate (96 percent), an estimated 20-year ROI nearing $1.9 million, a low unemployment rate and moderate cost of living.
While Ithaca’s cost of living is just slightly above the national average and Cornell has relatively expensive tuition, the cost of attending appears to be worth it. Average annual university-related costs are roughly $32,000 and median earnings for Cornell graduates are north of $100,000, significantly higher than the midpoint for 4-year colleges ($53,727), according to the College Scorecard.
Charlottesville, Va., No. 3 on the ranking, tells a similar story. The picturesque Southern city made up for slightly higher costs of living with estimated 20-year returns above $1.6 million and strong graduation outcomes at Thomas Jefferson’s University of Virginia.
Clemson, S.C, a town built around Clemson University, made up for middling unemployment rates with a low cost of living and a respectable 20-year ROI and graduation rate.
Similarly, Champaign, Ill. and Blacksburg, Va., prove you don’t have to spend a fortune on college to get ahead. Both towns come with living costs well below the national average while still offering more than $1.5 million in our estimated long-term return. For families who have tighter college budgets and live in those states, Champaign and Blacksburg stand out as promising options.
Overall, the rankings highlight a trend: The places that landed at the top are primarily smaller college towns centered around bigger universities that deliver on both affordability and long-term value.
Picking the right major for you
The value that individual students get out of their education heavily depends on what they choose to study. While a bachelor’s degree often leads to better financial outcomes over time, a Bankrate study last year found that STEM majors, in particular, tend to yield higher salaries and more stable careers.
That said, schools positioned in major cities can offer other advantages. Austin, Texas. and Atlanta, Ga. cracked the top 10 in the ranking, for example.
What those large cities offer that many small college towns don’t is access to sizable job markets, which can help graduates land good-paying careers that drive long-term ROI. Unemployment rates in Austin and Atlanta are 3.4 and 3.6 percent, respectively. In these cases, students may pay more upfront but benefit from the networking and career opportunities that come with a big-city campus experience.
Whether you’re drawn to a small college town or a big urban city, Bankrate’s ranking can help give students a starting point in the college decision-making process.
Ultimately, the smartest college choice for students will come down to their finances, the school’s available majors and graduation rates, distance from their home, as well as other personal preferences like campus experience.
4 effective ways to save for rising college costs
College is one of the biggest expenses parents face when raising children. In the U.S., the average yearly cost for attending a four‑year public, in‑state university — including only tuition and fees — comes to $11,610 per year, according to CollegeBoard.
That means parents can expect to shell out more than $45,000 for a degree from a four-year, public in-state university before accounting for any housing costs, books or miscellaneous expenses, student aid or loans. Those costs are typically even higher for private four-year universities.
Bankrate spoke with financial experts to get their best tips on how parents and students can start preparing early and saving for future college costs.
1. Start saving as soon as possible
The earlier you start saving for your kid’s future college costs, the better. Setting aside just $100 a month when your child is born in a specialized college savings account, like a 529 plan, could grow into tens of thousands of dollars by the time they head to campus. Thanks to the magic of compounding, even small monthly contributions can snowball into a sizable fund over a decade or more.
I started a 529 plan six years before I even had a child because I knew that it was going to be a big expense. I put more money in early on, and then I tailed it off later in life when the expenses got bigger and larger. Now I’m using it for my first son’s education.
— Larry Sprung
CFP and founder of Mitlin Financial
It’s also smart to figure out your target goal early on. Some parents feel comfortable committing to saving the total cost of an in-state university per child, while others prefer to save more.
Sprung recommends using online resources and tools, such as College Scorecard, which lays out average annual costs and median graduate earnings for thousands of institutions across the country, to get an estimate of how much college might cost per child, then work backwards to set a monthly savings goal that feels realistic. Bankrate’s college savings calculator can help you figure out your numbers and help you stay on track to meet your goals.
Automate saving for college
Set up an automatic transfer into your college fund each month so it feels like just another bill. That way, you’re consistently saving without having to think too hard about it.
Many parents have found themselves sacrificing their own retirement savings to pay for college, but financial experts say that’s counterintuitive. Students can take on loans to fund their higher education, but it’s not possible to borrow for retirement. If you shortchange your nest egg, you may have to delay retirement or make other sacrifices during the later stages of life. You also risk becoming a financial burden to your adult children later in life.
2. Contribute to specialized college savings accounts
Setting aside money in the right type of account can give your college funds a leg up.
Sprung said the best account to save for future college costs is a 529 plan, but you’ve got several solid options depending on your goals and tax preferences:
- 529 plans: A 529 plan is one of the best tools out there, but they’re largely underused. A report by Sallie Mae found about 30 percent of families used them last year. These state-run accounts let your investments grow tax-free, and as long as the money’s used for qualified education expenses, withdrawals aren’t taxed either. Many states also offer tax deductions or credits on contributions. Sprung recommends having a 529 plan for every child in your family. But be careful: these plans will require you to follow certain rules. Funds can only be used for education expenses. If your child doesn’t go to college or gets a full scholarship, you’ll need to transfer the account to another beneficiary or face penalties if you withdraw for non-educational expenses. A new rule passed in 2024 under the Secure 2.0 Act allows account holders to roll up to $35,000 of unused 529 plan funds into a Roth IRA for the beneficiary if certain conditions are met. Additionally, 529 accounts owned by a parent count as an asset on the Free Application for Federal Student Aid (FAFSA), which can slightly reduce need-based aid eligibility.
- Coverdell education savings accounts (ESAs): This type of account is similar to 529s, but contributions are capped at $2,000 per year per beneficiary and depend on the contributor’s modified adjusted gross income. It’s more flexible and especially useful if you want to save for K–12 expenses as well as college. The account has to be established before the beneficiary is 18, and the funds generally have to be used by age 30.
- Custodial accounts (UGMA/UTMA): This type of account can be opened in your child’s name but is managed by the parent until they reach majority age (18 or 21, depending on the state). It has no tax perks, but you can use the funds for anything that benefits the child.
- High-yield savings accounts (HYSA): This type of account is ideal if college is coming up soon. These accounts offer easy access, low risk and slightly better interest than a standard savings account, though typically with lower returns than investment accounts. Make sure your high-yield savings account is FDIC-insured so your funds are protected.
3. Participate in researching colleges and programs
Choosing the right school matters just as much as saving for college. Sprung recommends looking at a range of colleges, from in-state public schools to private universities, and weighing the differences in tuition, fees and living costs alongside your child. Sometimes, a well-regarded in-state school can provide just as strong a degree at a fraction of the cost.
It’s also worth exploring programs that offer accelerated degrees or guaranteed job placements, which can improve the return on investment. Talking openly about the financial side of college can help set realistic expectations, Sprung said.
“We promised our kids that we would basically pay the equivalent of a state university for their education,” Sprung said. “Anything above that would be on them unless there was a mitigating circumstance.”
4. Reduce costs with scholarships, community college or work-study
Encourage your child not to leave free money on the table. Scholarships and grants are out there for almost every type of student: merit-based, need-based, for athletes and artists and more. Work with your child and an academic advisor to figure out which scholarships and grants are worth applying to.
Students can also proactively reduce costs in other ways. Taking AP, IB or dual-enrollment courses in high school can earn college credit in advance. Beginning at a community college and transferring later is another way to save – especially if your child is unsure of their career goals or interests.
“Community colleges are a little bit broader and students have more flexibility to choose fields later on,” Minaya said. “Community colleges are also more affordable for tuition and fees.”
Once on campus, encourage them to look into work-study programs or part-time jobs with tuition reimbursement to help lighten the financial burden.
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