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What can I pay for with a 529 plan? Thumbnail

What can I pay for with a 529 plan?

If you’ve been a good saver, you may have spent the last 18 years saving in a 529 plan for the costs of your child’s college. You made it this far, and if your child is now in college or attending next year, you may be wondering “how do I turn the switch to start using this saved money?”

Google it, and you’ll likely be guided to one familiar phrase: 529 assets can be used to pay for qualified educational expenses… But that begs the next question: “What actually is a qualified educational expense?”

Let’s break this down into plain English. Here’s what you can and can’t use your 529 plan to pay for:

  • Tuition and fees – Most importantly for most families, 529 assets can pay for tuition costs and school fees that you’ll see on a bill from the college
  • Books and laptops – On top of tuition, you can use a 529 plan to pay for books (new and rentals) as well as necessary electronics for your child (laptops etc.)
  • Room and board – On campus housing or off campus housing (included only up to the cost of on-campus housing.) In addition, your child must be at least a half time student (typically 6 credits or two courses per semester)
  • Meal plan – This includes on campus dining hall meal plans as well as off-campus groceries (up to the amount of the on-campus meal plan). For off-campus students, remember to save your receipts!
  • K-12 education (public/private school) – An example would be for your child attending a private high school. You may use up to $10,000 annually to pay for these costs.
  • Student loans- If your child graduates with unused funds in the 529 plan but also has student loans, they may pay off up to a lifetime limit of $10,000

What can’t you pay for?

  • Transportation – 529 assets cannot be used to pay for the costs of getting to and from school. This means you can’t use a 529 to pay for plane tickets for your child or a car to get them to and from school
  • Extracurriculars – Club sports fees and those associated with other organizations and/or Greek life are not eligible
  • Pre-college costs – Generally, the costs of exams (SAT/ACT) and college courses in high school (AP courses) are not permitted
  • Health Insurance – 529 plans won’t cover the cost of health insurance charged by the college
  • Anything exceeding cost of attendance – In basic terms: if it only costs $40,000 to attend a university, you can’t pull $50,000 from your 529

529 plans can be used to cover a large majority of the costs of college. As the owner of a 529 plan you have the option of sending the money directly to the school for these costs or you may pay the bills and reimburse yourself from the 529. If reimbursing, make sure to not wait too long as you must reimburse yourself in the same year that the expense occurs.

One important lesson when taking these withdrawals from a 529 plan is to keep track of your receipts! Keep them for the spring when you’ll be reconciling the 529 withdrawals on the form 1099-Q.

If you have any questions on which expenses may be taken from 529 plans, feel free to reach out. I’m happy to help.




Andrew Holmes, Certified College Planning Specialist™



Check out my recent whitepaper: 5 College Planning Mistakes to Avoid


Financial Planning Solutions, LLC (FPS) is a Registered Investment Advisor. Financial Planning Solutions, LLC (FPS) provides this blog for informational and educational purposes only. Nothing in this blog should be considered investment, tax, or legal advice. FPS only renders personalized advice to each client. Information herein includes opinions and source information that is believed to be reliable. However, such information may not be independently verified by FPS. Please see important disclosures link at the bottom of this page.





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