Advertisement
529 Plans

Using 529 College-Savings Plan Money for Part-Time Students

Even room and board counts as an eligible expense for half-time students. And the college doesn’t have to be a four-year institution.

I read your article about 529 withdrawals for a computer and had a question about eligible expenses. My daughter goes to a community college. Can I withdraw money from her 529 for her tuition and other expenses, or does she have to attend a four-year college to be eligible? Also, does she need to be a full-time student to qualify?

You can use your 529 savings to pay eligible expenses at a community college, even if your daughter attends part-time. Money from the account can be used at any college, university, vocational school or other postsecondary educational institution that’s eligible to participate in a student aid program administered by the U.S. Department of Education. That includes virtually all accredited postsecondary institutions in the U.S. and some colleges outside of the U.S., too, says Mary Morris, chairman of the College Savings Foundation and CEO of the Virginia 529 College Savings Plan. You can look up eligible schools using the Department of Education’s federal school code database, or ask the school if it is eligible.

Advertisement - Article continues below

A student doesn’t need to attend full-time to use 529 money for tuition, fees, and required books and supplies. And the new law lets you withdraw 529 money tax-free to purchase a computer, printer, scanner, related equipment and software, and Internet access. The computer-related items qualify as long as they are used primarily by the 529 beneficiary while enrolled at the eligible institution.

To use 529 withdrawals for room and board, however, the student needs to be enrolled in at least half of the full-time academic workload for the course of study he or she is pursuing (as determined by the school). As long as your daughter is at least a half-time student, you can use 529 money to pay for her expenses, even if she lives off campus. Eligible expenses can’t exceed the college’s allowance for room and board included in the cost of attendance for federal financial aid purposes. You can usually find that figure on the college’s website, or you can get it from the financial aid office.

For more information about 529 plans, see The Best 529 College-Savings Plans. Also see IRS Publication 970, Tax Benefits for Education (the “Qualified Tuition Program” section covers the 529 rules).

Advertisement
Advertisement

Most Popular

11 Dividend-Paying Stocks You Should Think Twice About
dividend stocks

11 Dividend-Paying Stocks You Should Think Twice About

Dividend-paying stocks often can be a store of safety, but 2020 has been difficult on income equities. These 11 picks look like shaky plays despite th…
September 21, 2020
Medicare Basics: 11 Things You Need to Know
Medicare

Medicare Basics: 11 Things You Need to Know

There's Medicare Part A, Part B, Part D, medigap plans, Medicare Advantage plans and so on. We sort out the confusion about signing up for Medicare --…
September 16, 2020
Where You Should Invest Now
investing

Where You Should Invest Now

Kiplinger.com senior investing editor Kyle Woodley joins our Your Money's Worth podcast to answer investor questions about tech stocks, the election a…
September 22, 2020

Recommended

Back in School Decades Later
Empty Nesters

Back in School Decades Later

Getting a degree or certificate in retirement or later in life can have its advantages.
September 2, 2020
College During COVID
Paying for College

College During COVID

Students and their families must be ready to adapt to the changes in the way they attend—and possibly pay for—college.
July 30, 2020
How COVID-19 Is Changing the Way Families Save for College Costs
college

How COVID-19 Is Changing the Way Families Save for College Costs

CollegeFinance.com's Kevin Walker joins our Your Money's Worth podcast to discuss how the global health pandemic is impacting the way families plan a…
July 28, 2020
This Olympian Has a New Goal: Closing the Wealth Gap
Financial Planning

This Olympian Has a New Goal: Closing the Wealth Gap

She encourages advisers to introduce students to financial planning.
July 21, 2020