What You Can Actually Spend 529 Money On

may have access to expenses are the purchases that let you withdraw 529 money tax-free

A may have access to expense is any cost that the IRS allows you to pay from a 529 plan without owing taxes on the earnings. If you withdraw money for something that is not on the list, you pay income tax on the growth plus a 10 percent penalty — which is why knowing what counts matters before you spend.

The main may have access to expenses are tuition, fees, room and board at college, and K-12 tuition. But the list also includes some things people do not expect: computers, internet service, student loan repayment, and apprenticeship programs. The rules changed in 2024 to add even more options. What counts depends partly on whether the student is in college or K-12, and partly on the type of school.

Key Takeaways

• Tuition and mandatory fees at any accredited college, university, or vocational school are always may have access to expenses, whether the school is public or private.
• Room and board at college is may have access to only if the student lives on campus or in an approved off-campus residence, and the amount is capped at what the school reports as its cost of attendance.
• K-12 tuition at private schools and religious schools is may have access to, but public school tuition is not — though you can use 529 money for public school supplies and technology.
• Computers, internet service, and required books count as may have access to expenses at the college level, but the rules for K-12 are narrower.
• Starting in 2024, you can roll unused 529 money into a Roth IRA (with limits), and you can use 529 funds to pay down student loans up to $35,000 lifetime per borrower.

College tuition, fees, and room and board

At a four-year college or university, tuition and mandatory fees are always may have access to. Mandatory fees are charges the school requires all students to pay — things like student health insurance, technology fees, or lab fees. Optional fees (like parking permits or club memberships) do not count.

Room and board is may have access to only if the student lives in college-provided housing or in an off-campus residence that the school has approved. The amount you can withdraw is capped at the cost of attendance figure the school publishes — usually found on the financial aid office website. If your student lives at home and commutes, room and board does not count as a may have access to expense.

These rules explore to any accredited college, university, or vocational school that participates in federal student aid programs. That includes public universities, private colleges, and trade schools. The school's accreditation status matters; if the school is not accredited by a recognized body, the expenses do not may have access to.

K-12 private school tuition and public school supplies

You can use 529 money for tuition at private schools and religious schools in K-12, up to $35,000 per student per year (this limit is per account, not per school). Public school tuition is not may have access to because public schools do not charge tuition.

For public schools, you can use 529 funds for certain supplies and technology: computers, internet service, and required books and materials. The school must require these items as part of the curriculum. A laptop the student wants for personal use does not count, but a laptop the school requires for a class does.

The $35,000 annual limit for K-12 private school tuition is separate from college limits. If you use $20,000 for private school tuition in one year, you can still use the full college-level limits when that student reaches college.

Computers, internet, books, and supplies

At the college level, computers and internet service are may have access to expenses. This includes a laptop, tablet, or desktop computer, and the cost of internet service while the student is in school. The computer must be used for education, but the IRS does not require you to prove it will not also be used for entertainment.

Required books and course materials are may have access to at college. This includes textbooks, lab manuals, and software the school requires for classes. Used books and rental books count the same as new ones.

For K-12, the rules are narrower. Computers and internet are may have access to only if the school requires them for the curriculum. A school that says "students may bring devices" does not make them required. Books and supplies are may have access to only if the school specifically requires them.

Student loan repayment and apprenticeships

Starting in 2024, you can use 529 money to pay down student loans. The limit is $35,000 per borrower over their lifetime, and you can withdraw up to $35,000 per year. The loans must be federal or private student loans taken out in the student's name — parent PLUS loans do not count.

You can also use 529 funds to pay for registered apprenticeship programs. These are formal apprenticeships registered with the U.S. Department of Labor or a state apprenticeship agency. The expenses that count are tuition, fees, books, supplies, and equipment required by the program.

Both of these options are relatively new, and not all 529 plan administrators have set up the mechanics yet. Check with your plan provider to see whether they allow student loan repayment or apprenticeship withdrawals, and what documentation they need.

What does not count as a may have access to expense

Room and board does not count if the student lives at home or in an unapproved residence. Transportation and commuting costs do not count. Meal plans are may have access to only as part of the room and board package at college; you cannot use 529 money for groceries or restaurant meals if the student is living off-campus.

Personal expenses — clothing, toiletries, entertainment, phone bills — are not may have access to. Health insurance is may have access to only if it is the student health insurance the college requires or offers. A personal health insurance policy does not count.

Extracurricular activities and sports fees are not may have access to. Test preparation courses (like SAT or ACT prep) are not may have access to. Parking permits, student activity fees, and other optional charges are not may have access to.

What happens if you spend 529 money on non-may have access to expenses

If you withdraw money for something that is not on the may have access to list, you owe income tax on the earnings portion of the withdrawal, plus a 10 percent penalty on those earnings. The principal (the money you originally contributed) comes out tax-free, but the growth does not.

Example: You contributed $50,000 to a 529 plan and it grew to $65,000. You withdraw $15,000 for a non-may have access to expense. If $3,000 of that $15,000 is earnings, you owe income tax plus a 10 percent penalty on the $3,000. The $12,000 that came from your contributions comes out free and clear.

Some expenses can be reimbursed from a 529 without penalty if you follow the timing rules. If you pay a may have access to expense out of pocket and then withdraw the same amount from the 529 within 60 days, the withdrawal is treated as may have access to. This is useful if you want to keep the money invested a bit longer before withdrawing it.

Rolling 529 money into a Roth IRA

Starting in 2024, you can move unused 529 money into a Roth IRA in the student's name, with some limits. The account must have been open for at least 15 years. You can roll over up to $35,000 per student over their lifetime, and the annual amount is limited by the student's earned income that year.

This is a way to use leftover 529 money if the student does not need it all for college. The money goes into a Roth IRA and grows tax-free for retirement. Not all 529 plan administrators offer this option yet, so check with your provider.

Frequently Asked Questions

Can I use 529 money for room and board if my student lives off-campus?

Only if the college has approved the off-campus residence. Most schools approve certain apartment complexes or housing near campus. Check with the financial aid office for a list of approved residences. If the residence is not on the list, room and board does not count as may have access to.

Does a computer for college count if the student buys it used?

Yes. A used computer is a may have access to expense the same as a new one, as long as it is used for education. The IRS does not require you to prove the student will not also use it for personal purposes.

Can I use 529 money to pay for my child's SAT prep course?

No. Test preparation courses are not may have access to expenses. You would owe income tax and a 10 percent penalty on the earnings portion of any withdrawal used for SAT or ACT prep.

What if my student gets a scholarship — can I still use the 529?

Yes, but you need to be careful about the amount. If you withdraw more than the student's remaining may have access to expenses after the scholarship, the excess earnings are taxed and penalized. Many families use the scholarship to cover room and board and withdraw 529 money for tuition instead.

Can I use 529 money to pay a parent PLUS loan?

No. Parent PLUS loans are in the parent's name, not the student's. You can use 529 money only to repay student loans in the student's name. If you have a parent PLUS loan, you would owe taxes and a penalty on any 529 withdrawal used to pay it.