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Think a Roth IRA Is Your Best Bet for Retirement Savings? Here’s Why It Could Backfire.
Roth IRAs (individual retirement accounts) are often praised as one of the best retirement savings tools available. And the appeal is easy to understand.
With a Roth IRA, your money gets to grow tax-free, withdrawals in retirement are tax-free, and there are no required minimum distributions to worry about. It’s that flexibility that makes Roth IRAs so attractive.
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But the flexibility that comes with a Roth IRA could end up being a bad thing. And if you’re not careful, saving for retirement in a Roth IRA could end up being a huge mistake.
The temptation of early access
When you take an early withdrawal from a traditional IRA (meaning, prior to age 59 and 1/2), you generally risk a 10% penalty unless you qualify for an exception. But Roth IRAs give you more options for tapping your savings early.
Since there’s no tax break on the money you put into your account, a Roth IRA lets you access your principal contributions penalty-free at any age. Need $12,000 to fix your roof? If you have a $40,000 Roth IRA balance but only $15,000 of that is gains, you can withdraw up to $25,000 without a penalty since that represents money you put in.
You might think that flexibility is a good thing. In the context of building a retirement nest egg, it’s actually not.
If you keep tapping your Roth IRA when a need for money arises, you risk ending up with a big shortfall by the time your senior years arrive. And remember, every dollar you withdraw from a Roth IRA ahead of retirement is a dollar you can’t invest.
Remember how Roth IRAs give you tax-free gains? That’s a lot of money to give up by taking early withdrawals. A $12,000 distribution at age 35 to fix your roof could mean giving up close to $109,000 in tax-free gains by age 65, assuming your portfolio gives you an 8% yearly return, which is below the stock market’s average.
If you’re going to use a Roth IRA, do this
Saving for retirement in a Roth IRA isn’t automatically a bad idea, since these accounts offer a host of benefits. But if you’re going to choose a Roth IRA, make absolutely sure you have a separate emergency fund for near-term needs.
If you maintain a separate cash emergency fund, you’ll be able to tap that account when your car needs work or a home repair situation arises. You may be a lot less tempted to raid your retirement savings and risk a shortfall later on.
Roth IRAs are often praised for their flexibility, but that could become a disadvantage in the context of retirement savings. To get the most out of a Roth IRA, consider it a long-term savings tool first and keep an emergency fund in a separate account so you don’t accidentally whittle down your nest egg before your retirement begins.
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38% Of Students Graduate College Debt-Free — Here’s What They Do Differently
Only 38% of college students graduate without any student loan debt, but the ones who pull it off don’t always do it the way you’d expect.
Some of the strongest predictors are counterintuitive: students who major in philosophy beat out education majors, study-abroad participants carry less debt than those who stay home, and students who skip the FAFSA are far more likely to graduate debt-free.
Graduating debt-free isn’t just luck or rich parents — though the data shows both help. After analyzing federal student aid data (PDF File), we found a handful of choices that meaningfully raise your odds, from the major you pick to the state you live in to whether you live at home.
Here’s what the numbers say.
Table of Contents
Study Smart
Money Matters
Impact Of College Choice
Impact Of Financial Aid
Impact Of Student Characteristics
Final Thoughts
Study Smart
Students with a better grade point average (GPA) in college are less likely to graduate with student loan debt, as shown in this table. There is a similar correlation between high school GPA and graduating with no loans.
|
College Grade Point Average |
% of All Undergraduate |
% of Students In Bachelor’s |
|---|---|---|
|
Lower than 2.50 |
35% |
21% |
|
2.50 – 2.99 |
37% |
26% |
|
3.00 – 3.49 |
38% |
32% |
|
3.50 or higher |
42% |
37% |
Almost three quarters (74%) of students who graduate with no debt have a 3.00 or higher college GPA.
Curiously, students who take college classes in high school or AP classes are just as likely to graduate with no student loan debt as students who don’t.
Students who take International Baccalaureate (IB) classes, however, are more likely to graduate with no debt, 40% vs. 33%.
Major In Mathematics Or Architecture
Almost half of students who obtain a Bachelor’s degree in mathematics or statistics (47%) or architecture and planning (48%) graduate with no student loan debt. More than half of students who get a Bachelor’s degree in economics (51%) or philosophy (52%) graduate with no student loan debt.
This compared with education and healthcare, where less than a quarter (24%) of Bachelor’s degree recipients graduate with no student loan debt.
Related: How To Pick A College Major: 3 Top Strategies
Attend On-Campus Classes
A third of students who took no distance education classes graduated with no student loan debt, while only a quarter of students whose entire Bachelor’s degree program was provided through distance education were able to avoid debt.
This statistic is a bit surprising as distance education courses are often advertised as more economical.
Participate In Study Abroad Programs
Roughly 40% of students who participate in study abroad programs graduate with a Bachelor’s degree and no student debt compared to 30% of students who don’t participate in these programs. Students who participate in study abroad programs also have a higher adjusted gross income (AGI) than students who don’t.
Money Matters
As this table shows, undergraduate students with parents who have an adjusted gross income (AGI) of $100,000 or more are more likely to graduate with no student loan debt.
Four-fifths of undergraduate students who graduated with no debt received financial help from their parents. Among students in Bachelor’s degree programs who graduated with no debt, 87% received financial help from their parents.
Students whose parents have doctoral degrees, such as PhDs and MDs, are more likely to graduate with no debt, perhaps because their parents tend to be wealthier.
Become Financially Literate
Around 36% of students who answered three financial literacy questions correctly graduated without student loan debt, compared with 29% of other students.
Similarly, 36% of students who don’t carry a balance on their credit cards graduate with no student loan debt. This compares with less than a quarter (22%) of students who don’t pay off their credit cards in full each month.
Related: 10 Best Personal Finance Books (That Will Change Your Life)
Establish Financial Security
A student’s ability to come up with $2,000 in the next month correlates strongly with whether the student graduates with no debt, as shown in this table.
|
Financial Security: $2,000 Within The Next Month |
% With No Debt |
|---|---|
|
Certainly could come up with the $2,000 |
47% |
|
Probably could come up with the $2,000 |
30% |
|
Probably could not come up with the $2,000 |
22% |
|
Certainly could not come up with the $2,000 |
17% |
This statistic make sense as it’s an indicator of the “margin” that a student has in their finances and the ability to cover financial stressors without borrowing.
So, for example, if you’re able to build up some emergency fund cash reserves by working some summer jobs or side hustles throughout your high school years, it could significantly help you avoid student debt during college.
Impact Of College Choice
We talk a lot about the importance of school choice if you want to minimize student debt. And the data from NPSAS:16 once again shows how this decision can impact your finances during your collegiate years.
Choose A College With A Lower Net Price
Net price is the difference between the cost of attendance and all grants. It’s the discounted sticker price, the amount that the student will have to pay from savings, contributions from income, and student loans.
As the net price decreases, the student will be better able to cover college costs with resources other than loans.
|
Net Price |
% With No Debt |
|---|---|
|
Zero |
60% |
|
$1 to $5,599 |
40% |
|
$5,600 to $10,899 |
31% |
|
$10,900 to $18,799 |
25% |
|
$18,800 or more |
33% |
More than three quarters (79%) of undergraduate students who graduated with no debt enrolled in colleges with tuition and fees less than $10,000. Among students in Bachelor’s degree programs, more than half (56%) of the students who graduated with no debt enrolled in colleges with tuition and fees less than $10,000.
More than half (53%) of undergraduate students and more than a third (36%) of students in Bachelor’s degree programs who graduated with no debt enrolled in colleges with a net price less than $10,000.
Students are more likely to graduate with no debt at colleges with generous “no loans” financial aid policies. These colleges replace loans with grants in the financial aid packages of students with demonstrated financial need. Likewise, students are more likely to graduate with no debt at colleges with a lower cost of attendance, such as in-state public colleges.
College Affordability
When tuition is a lower percentage of income, the student is more likely to graduate with no debt, as shown in this table.
|
Tuition As % Of Income |
% With No Debt |
|---|---|
|
0% |
67% |
|
1% to 25% |
35% |
|
26% to 50% |
30% |
|
51% to 75% |
27% |
|
76% to 100% |
28% |
There is a similar result based on the college affordability index, as shown in the next table. The college affordability index is the net price after grants as a percent of income. A lower college affordability index leads to a lower likelihood of graduating with student loan debt, especially when the college affordability index is less than 25%.
|
College Affordability Index |
% With No Debt |
|---|---|
|
0% |
61% |
|
1% to 25% |
37% |
|
26% to 50% |
28% |
|
51% to 75% |
28% |
|
76% to 100% |
27% |
Cut College Costs By Living At Home With Your Parents
Half (50%) of undergraduate students who live at home with their parents graduate with no debt, compared with 36% of students who live on-campus. However, they’re less likely to graduate.
Enroll At An Out-Of-State College, But Only If You Can Afford It
Almost half (49%) of students pay out-of-state tuition graduate with no loans, compared with less than a third (31%) of students who pay in-state tuition.
Even though out-of-state tuition is higher, wealthier students are more likely to enroll in an out-of-state college.
Live In The Right State
Students who live in certain states are more likely to graduate with no debt.
These states include:
- Alaska (58%)
- California (39%)
- Florida (40%)
- Hawaii (44%)
- Louisiana (37%)
- New Mexico (36%)
- Utah (36%)
Don’t Enroll At For-Profit Colleges
A third of students at public 4-year colleges (34%) and private non-profit 4-year colleges (31%) graduate with no debt, compared with 14% of students at private for-profit 4-year colleges.
Among all undergraduate students, 81% of students who graduated with no debt enrolled at public colleges, compared with 13% at private non-profit colleges and 6% at for-profit colleges. (79% of the students enrolled in public colleges who graduated with no debt were in-state students.)
Among students in Bachelor’s degree programs, two-thirds (68%) of students who graduated with no debt were enrolled at public colleges, more than a quarter (28%) were enrolled at private non-profit colleges, and only 4% were enrolled at for-profit colleges.
Related: For-Profit College Student Loan Forgiveness List
Enroll At A Very Selective College
Students who enroll at the most selective colleges are more likely to graduate with no loans, in part because these colleges have more generous financial aid policies.
|
Selectivity (4-Year Nonprofit Institutions) |
% With No Debt |
|---|---|
|
Not public or private nonprofit 4-year |
14% |
|
Very selective |
44% |
|
Moderately selective |
29% |
|
Minimally selective |
23% |
|
Open admission |
34% |
Impact Of Financial Aid
When many students think of “financial aid,” they think of loans. But there are many types of financial aid that don’t involve debt. And, in fact, these resources can play a critical role in helping college students avoid taking out student loans.
File The FAFSA
Students who apply for federal student aid by filing the Free Application for Federal Student Aid (FAFSA) are actually much less likely to graduate with no student loan debt, 15% vs. 66%.
Why is this the case? Well, first of all, not filing the FAFSA is often an indicator of wealth. Students who receive a Federal Pell Grant, for example, are also much less likely to graduate with no student loans, 16% vs. 39%.
Second, students who don’t file the FAFSA are also ineligible for federal student loans, making it more difficult for them to borrow.
Go To College At The Same Time As Siblings
More than a third (39%) of students who have siblings in college graduate with no loans, compared with less than a third (31%) of students who do not have siblings in college.
This may be due to financial aid formulas that divide the parent contribution portion of the expected family contribution (EFC) by the number of children in college.
This changed in 2024-2025, though, when the simplified FAFSA dropped this aspect of the federal need analysis methodology. However, some colleges may still provide a sibling discount.
Win Private Scholarships
Students who win private scholarships are less likely to graduate with student loan debt, especially students who win at least five figures in scholarships.
Roughly 42% of students who win more than $10,000 in private scholarships graduate with no debt, compared with 31% of students who don’t win any scholarships. More than half (56%) of students who win more than $25,000 in private scholarships graduate with no student loan debt.
Student Characteristics
Wondering how factors like your age and marital status impact your odds of graduating college with student debt? We break down the data below.
Age
Younger, more traditional college students, are more likely to graduate with no debt. More than a third (36%) of students age 15-23 when they graduate with a Bachelor’s degree graduate with no debt, compared with less than a third of students age 24-29 (27%) and age 30 and older (21%).
Dependency Status
More than a third (34%) of dependent students graduate with no debt, compared with about a quarter (27%) of independent students.
Marital Status
A third (32%) of students who are single graduate with no debt, compared with 29% of students who are married and 23% of students who are separated.
Children And Other Dependents
About a quarter (26%) of students who have dependents graduate with no debt, compared with about a third (32%) of students who do not have any dependents.
Military Status
Almost half (46%) of students who are serving on active duty in the U.S. Armed Forces graduate with no debt. This compares with a third (34%) of veterans and less than a third (31%) of students with no military service.
Related: Guide To Military And VA Education Benefits To Pay For College
Race
Asian students are the most likely to graduate with no debt, while Black or African-American students are the least likely to graduate with no debt.
|
Race/Ethnicity (With Multiple) |
% With No Debt |
|---|---|
|
White |
31% |
|
Black or African American |
15% |
|
Hispanic or Latino |
34% |
|
Asian |
55% |
|
American Indian or Alaska Native |
24% |
Black or African-American students who enroll at Historically Black Colleges and Universities (HBCUs) are also slightly less likely to graduate with no debt, 11% vs. 16%.
Gender
Men are more likely to graduate with no loans than women (34% to 29%). This trend is especially prevalent among:
- Less selective colleges
- Older non-traditional students (age 30 and older)
- Married students
- Students who have dependents
- Students who are serving on active duty in the U.S. Armed Forces.
There are also some academic majors in which there is a significant difference by gender, as shown in this table.
|
Academic Major |
% of Men With No Loans |
% of Women With No Loans |
|---|---|---|
|
Agriculture |
28% |
45% |
|
Architecture |
36% |
65% |
|
Computer And Information Sciences |
33% |
19% |
|
General Studies |
39% |
24% |
|
History |
27% |
43% |
|
Liberal Arts |
45% |
24% |
|
Physical Sciences |
42% |
24% |
|
Public Administration/Social Services |
49% |
20% |
Final Thoughts
Some of the factors listed above, like your age and race, are obviously out of your control. But other factors, like the school you attend or the major your select, are your personal choices.
Pay attention to the areas that are within your sphere of influence and do whatever you can to minimize your chances of needing to take out student loans during college. Even if you can’t avoid student debt completely, mindfulness can help you take out fewer loans than you would have otherwise.
Finally, realize that taking out some student loans during college isn’t the end of the world. With the right student loan repayment strategy, you can effectively manage your student debt after you graduate even while you work towards your other financial goals.
Editor: Robert Farrington
Reviewed by: Chris Muller
The post 38% Of Students Graduate College Debt-Free — Here’s What They Do Differently appeared first on The College Investor.
Housing crisis is a driver of domestic violence and school dropouts: think tank
A Quebec think tank says the province’s housing crisis is a driver of domestic violence and negatively affects school dropout rates.
The AI Economy Demands Generalists, Not Specialists
The future belongs to people who connect the dots.
If you’re surprised by how well the stock market is doing, so is Jamie Dimon
Markets across the world have had plenty to worry about in the past decade. A global pandemic, a major war between Ukraine and Russia in Europe, steady inflation across major economies, including the U.S., rising tensions between China and the U.S., and, most recently, a conflict in the Middle East.
And yet the S&P 500 is up nearly 80% over the past five years, the Nasdaq up more than 86%. Even with the global oil supply shock in over the past three-plus months, Wall Street has remained bullish—thanks, in large part, to the promise of artificial intelligence.
If investors are surprised by seeing their portfolios continue to tick up in the face of such headwinds, so is JPMorgan Chase CEO Jamie Dimon.
The Wall Street veteran admitted he’s a little taken aback by the market’s apparent complacency at present. Speaking in a discussion held by the Council on Foreign Relations, Dimon said: “I am surprised because I think that you have Ukraine, Iran, oil, Russia, and our relationship with China. That stuff is really important for the free world, but it’s not necessarily the economy today.”
While consumers and analysts may be focused on the short term, Dimon said he was concerned about the shifting “tectonic plates” shaping the economy’s trajectory over the much longer term.
“I am quite worried about it,” the banker added. “They may determine the economy, but it may be a year from now, a few years from now, or maybe it will all be reserved somehow. But I’m quite concerned about it, so put me in the more cautious category about how that plays out.”
To be in a category among the more skeptical on Wall Street is nothing out of the ordinary for Dimon. The JPMorgan chairman wrote in 2024 that he ran America’s largest bank with a military leadership tactic in mind: the “OODA loop.”
The acronym stands for observe, orient, decide, act—with Dimon adding: “One cannot overemphasize the importance of observation and a full assessment—the failure to do so leads to some of the greatest mistakes, not only in war but also in business and government.”
How long does the cycle last?
There are a handful of tailwinds supporting market optimism at present, despite the broad-based global issues that have dampened Dimon’s spirits. He acknowledged that confidence can be derived from AI capex, which is booming to the tune of $700 billion this year and is expected to continue, from unemployment holding steady at 4.3%, and from GDP expanding at approximately 2%.
Consumers have also been given a boost by the One Big Beautiful Bill Act. While research suggests much of that relief has been offset by fuel price rises resulting from the Middle East conflict, it is nevertheless a stimulus injection that helped the economy.
But all cycles must come to an end, which Dimon is well aware of. While he said these factors aren’t necessarily “bad” right now, he added: “You don’t know what they’re going to do a year from now, or two years from now. We’re in a bull market. It’s like a little tsunami. When that kind of thing happens, it’s very hard to stop.”
Bitcoin And Crypto Markets Face Significant Challenges Amid Strategy’s Preferred Stock STRC Turmoil
The cryptocurrency sector is experiencing fresh volatility as investor concerns mount over Strategy Inc.‘s (NASDAQ:MSTR) innovative but now-stressed preferred stock offering. The company’s Variable Rate Series A Perpetual Stretch Preferred Stock, traded under the ticker STRC and often referred to as “Stretch,” has suffered a significant decline, trading well below its $100 par value and pushing yields higher.
This development has added pressure to the Bitcoin price and broader digital asset sentiment, highlighting the intricate links between corporate Bitcoin strategies and market stability.
Strategy, a major corporate holder of Bitcoin with hundreds of thousands of coins in its treasury, introduced the STRC preferred shares in mid-2025 as a mechanism to raise capital for additional Bitcoin acquisitions while offering investors a relatively stable yield product.
Designed as a perpetual instrument with adjustable monthly dividends aimed at maintaining the stock near par, it was positioned as a lower-volatility entry point for those seeking Bitcoin exposure through credit-like returns rather than direct price swings.
Early on, it attracted attention for its structure, which treated distributions in a tax-efficient manner and was backed by the firm’s substantial Bitcoin holdings.
However, recent market conditions have tested this setup. Bitcoin‘s price stagnation and periodic selloffs have strained the economics of maintaining dividends.
In late May, the company disclosed the sale of 32 Bitcoin—its first such move in a while—to help cover STRC payouts, a decision that surprised some observers given Chairman Michael Saylor‘s long-standing emphasis on never selling the asset.
The preferred stock has since tumbled to record lows around the mid-$80s range in recent sessions, with heightened trading volumes reflecting investor unease.
This drop has effectively increased the implied yield above 11%, signaling that the market demands greater compensation for perceived risks tied to the company’s leveraged Bitcoin-centric model.
Compounding the issue, Strategy’s common stock (MSTR) has also declined notably year-to-date, amplifying worries about the overall capital structure.
Critics and analysts have pointed to potential challenges if Bitcoin remains range-bound for an extended period, as sustained sideways movement could erode confidence in the sustainability of dividends without further asset sales or adjustments.
Some market participants have called for more direct communication from leadership on long-term viability, especially as the firm has paused certain equity issuance programs used for Bitcoin purchases.
In response to the growing chatter on social media, Saylor offered a concise public statement on the Juneteenth holiday when markets were closed.
He acknowledged the difficulties of market swings, reaffirmed faith in Bitcoin‘s underlying strength, and expressed gratitude for supporter loyalty.
“Volatility is never easy,” he noted, while emphasizing that “Bitcoin keeps working” and that the team remains committed.
This measured comment served as the primary official acknowledgment of the STRC pressures but stopped short of detailing specific remedial steps or forecasts.
The situation underscores broader themes in the evolving Bitcoin corporate treasury narrative.
Strategy‘s aggressive accumulation has inspired many, yet it also demonstrates how intertwined leverage, dividend obligations, and crypto price action can create feedback loops.
While Saylor has historically maintained optimism—viewing temporary capital shifts toward other sectors like AI as ultimately bullish for Bitcoin’s scarcity appeal—the immediate fallout has contributed to cautious trading across digital assets.
As the crypto sector digests these events, attention turns to whether Strategy can stabilize its preferred offerings through cash reserves, further innovations, or Bitcoin’s eventual recovery. For now, the incident serves as yet another reminder of the risks and rewards in Bitcoin-backed financial products.
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