What You Can Pay for With a 529 Plan

529 plans cover tuition, fees, room and board, and required equipment

A 529 plan lets you pay for may have access to education expenses at an accredited college, university, or vocational school without owing federal income tax on the growth. The money can go toward tuition and mandatory fees, room and board (if the student is at least half-time), books, supplies, computers, and required equipment like lab materials or musical instruments.

The list is wider than many people think. You can use 529 funds to pay for a dorm room, meal plan, internet service required by the school, and even a laptop if the institution requires it for coursework. Some schools bundle these costs into a single bill; others list them separately. Either way, if the school says it is required for attendance, a 529 can cover it.

Starting in 2024, you can also roll up to $35,000 from a 529 into a beneficiary's Roth IRA, provided the 529 has been open for at least 15 years. This is a newer option and has specific rules about timing and contribution limits, so check with your plan administrator or a tax professional before attempting it.

Key Takeaways

• 529 funds pay for tuition, fees, room, board, books, computers, and equipment the school requires for attendance.
• The student must be enrolled at least half-time at an accredited college, university, or vocational school for room and board to count.
• K-12 private school tuition and up to $35,000 in student loan repayment are also covered under current rules.
• Money spent on non-may have access to expenses is taxed as income and charged a 10 percent penalty on the earnings portion.
• You can roll unused 529 funds into a Roth IRA under new rules that took effect in 2024, with restrictions on timing and amounts.

K-12 private school tuition is covered

You can use a 529 to pay tuition at a private elementary, middle, or high school. This applies to any accredited private school, whether religious or secular. The school must be located in the United States and meet state accreditation standards.

Room and board do not count at the K-12 level — only tuition and mandatory fees. If your child attends a boarding school, you cannot use the 529 for housing costs, only the tuition bill itself. Check your state's rules, as a few states have additional restrictions on which private schools may have access to.

Student loan repayment up to $35,000 lifetime

Since 2019, you can use a 529 to pay down the beneficiary's own student loans. The lifetime limit is $35,000 total across all loans and all 529 plans. This means if you have two 529 plans for the same person, the $35,000 cap applies to both combined, not to each one separately.

The loans must be federal or private student loans in the beneficiary's name. Parent PLUS loans and loans taken out by a parent do not count. You withdraw the money from the 529 and send it to the loan servicer, just as you would for any other expense.

Apprenticeship programs and trade schools

Vocational and trade schools count as may have access to institutions under 529 rules, as long as they are accredited and the student is enrolled at least half-time. This includes programs in welding, electrical work, plumbing, HVAC, cosmetology, and other skilled trades.

You can use 529 funds for tuition, fees, books, tools, and equipment the program requires. Some trade schools bundle tool kits into the cost of attendance; others require you to buy them separately. If the school lists it as a required expense, the 529 can cover it.

What happens if you use 529 money for something else

If you withdraw money for a non-may have access to expense — a car, a laptop the student wants but the school does not require, living expenses off-campus, or anything else outside the approved list — you owe income tax on the earnings portion of that withdrawal. You also owe a 10 percent penalty on those earnings.

The penalty applies only to the growth in the account, not to the original contributions you made. If you contributed $10,000 and it grew to $12,000, and you withdraw $12,000 for a non-may have access to expense, you owe income tax plus a 10 percent penalty on the $2,000 in earnings. The $10,000 contribution comes out tax-free.

Some states also charge state income tax on non-may have access to withdrawals. A few states offer a state tax deduction for 529 contributions, and they may claw back that deduction if you later use the money for something other than education. Check your state's rules before opening a plan.

Room and board rules for different living situations

Room and board expenses count only if the student is enrolled at least half-time at an accredited school. The amount you can claim depends on where the student lives. If the student lives in a dorm or on-campus housing, you can use the school's official room and board charge. If the student lives off-campus or at home, you can use an amount the school determines as reasonable for that living situation.

Schools publish these amounts in their cost-of-attendance figures, which you can find on the financial aid office website or in the award letter. The 529 can cover up to that amount, even if the student's actual rent is lower. You cannot claim more than the school's published figure, even if you spend more in reality.

Computers and technology requirements

A computer, tablet, or other technology counts as a may have access to expense if the school requires it for attendance. Many schools now list this explicitly in their cost of attendance. If your school does not, ask the financial aid office whether a computer is required for coursework or whether it is optional.

Internet service required by the school also counts. If the dorm or off-campus housing requires you to pay for internet as part of the living arrangement, that cost is covered. Personal subscriptions or services beyond what the school requires do not count.

Frequently Asked Questions

Can I use a 529 to pay for room and board if my child lives at home?

Yes, but only up to the amount the school determines as reasonable for students living at home. This is usually lower than the on-campus or off-campus figure. Contact the financial aid office to find the home-based cost of attendance for your school.

What if my child gets a scholarship and I have leftover 529 money?

You can withdraw an amount equal to the scholarship without penalty, though you will owe income tax on the earnings portion of that withdrawal. The contribution portion comes out tax-free. If you have more than the scholarship amount left over, the excess is subject to the 10 percent penalty on earnings.

Can I use a 529 to pay for graduate school?

Yes. Graduate and professional school tuition, fees, room, and board all count as may have access to expenses, using the same rules as undergraduate school. The student must be enrolled at least half-time at an accredited institution.

Does a 529 cover study abroad programs?

Only if the student is enrolled in a program offered by or through an accredited U.S. school. If your child studies abroad through a foreign university directly, it does not count. Check with your school's study abroad office to confirm the program qualifies.

Can I use 529 money to pay for a meal plan if my child lives off-campus?

No. Meal plans count only if the student lives on-campus or in school-provided housing. Off-campus living expenses, including food, are covered only up to the school's published cost of attendance for off-campus students, which may or may not include a meal allowance.