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529 Qualified Expenses: What You Can Use a 529 Plan For

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With tuition and other college expenses skyrocketing, using tax-advantaged investment accounts like a 529 college savings plan can be an excellent way to pay for your degree. According to Sallie Mae’s How America Pays for College 2022 report, about one-third of families used a college savings fund or 529 plan to pay for some of their college costs.

However, 529 plans can only be used for qualified education expenses. If you use the money for noneligible expenses, such as travel during spring break or a gaming laptop, you could incur income taxes and penalties on the withdrawals. Learn about 529 qualified expenses to avoid those penalties.

List of qualified 529 expenses

With a 529 college savings plan, your contributions to the account grow tax-deferred. When you withdraw money, the withdrawals are tax-free as long as the money is used for qualified education expenses. If the funds are used for something other than 529 eligible expenses, you have to pay income tax and a 10% penalty.

Qualified expenses for 529 withdrawals include the following:

Tuition and fees

During the 2022-2023 school year, the average cost of tuition and fees at a private college was $39,400 per year. If you went to a four-year public college in-state, the average cost was $10,940 per year.

Luckily, you can withdraw money from your 529 to cover the cost of tuition for the duration of your education.

Room and board

Whether you live in the college dorms or in an apartment off campus, the cost of room and board can be significant. The average yearly cost of room and board at four-year public colleges was $12,310 and $14,030 at private universities.

Room and board is a qualified expense, but the amount you take from your 529 cannot exceed the cost of university-provided housing or the school’s allowance for room and board in its total cost of attendance.

For instance, a dorm room would be a qualified expense, but a luxury apartment with extra amenities would probably exceed the school’s allotment for room and board, so it wouldn’t be an eligible expense.


Students at four-year colleges spent an average of $1,240 in the 2022-2023 school year on school books and supplies. Books required for your classes are qualified expenses, so you can use your 529 funds to pay for them.


Most college students need a computer in order to complete and submit their assignments, so it’s typically a qualified expense for 529 withdrawals. However, the computer must be necessary for classes; a computer or laptop primarily meant for entertainment, such as a gaming computer, does not qualify.


Computer software counts as a qualified expense if it’s required to complete your coursework. Software that is primarily used for entertainment purposes is not a qualified expense.

K-12 tuition

Although most people think of 529 plans as tools for college, these accounts can have other uses. Families can use up to $10,000 per year per beneficiary for tuition at private or religious elementary or secondary school. K-12 is considered a qualified expense, so your withdrawals aren’t subject to federal income taxes or penalties.

However, not all states consider K-12 tuition to be a qualified expense. For example, in New York, 529 withdrawals used for elementary or secondary school tuition would be subject to state income taxes and penalties. The money would not be subject to federal income taxes and penalties, though.

Apprenticeship expenses

If you plan on enrolling in an apprenticeship program to learn a trade, you can use 529 funds to pay for the apprenticeship fees, books, supplies and equipment necessary for your participation. For an apprenticeship to be a qualified expense, the program must be registered with the Secretary of Labor under Section 1 of the National Apprenticeship Act.

Student loans

Under the Setting Every Community Up For Retirement (SECURE) Act, the government expanded the definition of qualified expenses to include student loan repayment. Under this act, borrowers could use up to $10,000 from their 529s to repay student loan debt without having to pay federal income taxes or penalties.

However, not all states have followed this federal guidance and prohibit the use of 529 funds for student loan repayment. For example, Colorado does not consider student loans to be a qualified expense, so if you took out money from a Colorado 529 and used it to pay down your debt, you would have to pay state income tax and applicable penalties.

To find out how your state handles 529 withdrawals, visit your state 529 plan website.

List of expenses your 529 won’t cover

Your 529 dollars can be used for more than just college tuition and textbooks. That being said, there are restrictions on how you can use account withdrawals. The following costs do not count as qualified expenses and would be subject to income taxes and penalties.


Even though you’ll likely need to travel to and from your college, flights and hotel stays are not qualified expenses for 529 plans.


Even if you commute to class on a regular basis, transportation is not a qualified expense, so you would have to pay taxes and penalties on any 529 dollars you used for that purpose.

Phone or tablets

Although computers needed for coursework can be a qualified expense, phones, tablets and other devices are not. These items are labeled as discretionary or optional expenses, so you’ll ideally use your 529 funds for other college costs.

Fraternity, sorority or club fees

Although fraternities, sororities or other clubs may be an integral part of campus life, they’re not essential expenses that you need to pay to graduate. As a result, the fees for these organizations aren’t qualified expenses.

Supplies or equipment for hobbies

Extracurriculars are an important part of the college experience, but supplies, equipment, or other costs related to those activities are not qualified expenses for 529 funds.

Health insurance

Even though your college may require you to have health insurance, it’s not a qualified education expense for 529 withdrawals. The only exception is if the school includes the cost of insurance as part of tuition.


Whether you need new jeans or just want a sturdy backpack to lug your textbooks around campus, you should know that clothing isn’t a qualified expense for 529 withdrawals. The only exception is if your school has a required uniform, or clothing that is paid for as part of your tuition.

529 plans are family accounts

A 529 plan is an investment account you can open on behalf of a child, even if it’s a niece, nephew or grandchild. Multiple people can contribute to the 529 to help it grow over time, and you aren’t limited to the 529 plans in your state. You can open a 529 plan in another state to take advantage of lower fees or better investment options, so do your homework to pick the best 529 plan for your situation.

How much you can contribute to an individual’s 529 plan depends on which state offers the 529 plan. Each state has its own limits. For example, the maximum account balance in Virginia is $550,000 per student. In California, the maximum is $529,000, although you can still earn more money through your investments.

If the beneficiary of the 529 decides against going to college, you may still be able to use the money for qualified educational expenses

  • Wait: Your child may change their mind, decide to go to vocational school or get a college degree later in life. If you wait and hold the funds in their name, they can use the money when they’re ready to pay for their education.
  • Transfer to another beneficiary: You can transfer the 529 plan to another beneficiary, such as another child or a relative. There is no penalty for doing this.
  • Pay off student loan debt: You can change beneficiaries and use up to $10,000 to repay that person’s student loans.
  • Accept the penalties: If you don’t have anyone else in your family that would benefit from the 529, you can opt to withdraw the entire balance. If you follow this approach, you will have to pay both income taxes and a 10% penalty.

If you have money in a 529 and receive a scholarship, you can withdraw up to the amount of the scholarship without penalty. However, you may have to pay income taxes on the earnings.

Under the SECURE Act 2.0 that was passed in 2022, the beneficiary can transfer up to $35,000 of unused 529 funds to a Roth Individual Retirement Account (IRA). For students that received scholarships or decided against going to college, this change allows them to transfer their money to their retirement funds and save for the future.

A 529 plan never expires, and you aren’t required to take out money by a certain age. You can leave the money in the 529 plan until the beneficiary needs it — even if that’s well into adulthood.

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