What You Can Actually Pay For With 529 Money

may have access to expenses are the costs a 529 plan will cover tax-free, and they are narrower than many parents think

A 529 plan lets you withdraw money tax-free only for may have access to expenses — the IRS's term for education costs the plan is designed to cover. If you withdraw money for something else, you pay income tax on the earnings plus a 10 percent penalty. The rules changed in 2024 to include some K-12 tuition and student loan repayment, but most everyday costs still do not may have access to. Knowing what counts before you fund the account saves you from a costly mistake later.

Key Takeaways

• Tuition and mandatory fees at any accredited college, university, or graduate school are always may have access to, but room and board have spending limits that vary by school.
• K-12 private school tuition up to $35,000 per student over a lifetime is now may have access to, but public school tuition is not (because it is free).
• Books, supplies, and equipment required by the school count as may have access to, but a laptop or phone bought for general use does not, even if the student uses it for schoolwork.
• Student loan repayment up to $35,000 per borrower is now may have access to under the SECURE Act 2.0, but only for loans taken out before the 529 plan was opened.
• Room and board, computers, and transportation have dollar caps or conditions that depend on whether the student lives on campus or off, so the school's cost of attendance figure matters.

College tuition and mandatory fees at any school level

Tuition and mandatory fees are always may have access to expenses at any accredited college, university, graduate school, or professional school. This includes state schools, private universities, community colleges, and trade schools. The school must be accredited by the U.S. Department of Education or recognized by the Department of Veterans Affairs. Tuition covers the cost of instruction; mandatory fees are charges every student must pay, such as student health insurance, technology fees, or activity fees that the school requires as a condition of enrollment.

Optional fees do not count. If your student can choose not to pay for something — parking, a club membership, a meal plan that is not required — it is not a may have access to expense. The school's bill will separate mandatory from optional charges. If you are unsure whether a specific fee is mandatory, the registrar's office can tell you.

Room and board with a cap based on where the student lives

Room and board is may have access to, but the amount you can withdraw is capped at the school's cost of attendance figure for that category. Every school publishes a cost of attendance estimate that breaks down tuition, fees, room, board, books, supplies, and transportation. The room and board portion of that figure is your limit — you cannot withdraw more than that amount tax-free, even if your student's actual housing and meal costs are higher.

The cap is higher if your student lives on campus than if they live off campus or with family. A school might list on-campus room and board at $15,000 per year but off-campus room and board at $12,000. If your student lives off campus, you can only withdraw up to the $12,000 figure, even if they actually spend $14,000. If they live with family rent-free, room and board is not a may have access to expense at all — the school's cost of attendance for that situation will be zero or very low.

Books, supplies, and equipment the school requires

Books, supplies, and equipment that the school requires for attendance count as may have access to expenses. This includes textbooks, lab notebooks, art supplies for a studio course, or safety equipment for a trade program. The expense must be required by the school or the program — not just helpful or recommended.

A computer or tablet is may have access to only if the school requires it as part of the program. Many schools now list a required laptop or iPad in their cost of attendance, especially for engineering or design programs. If the school requires it, you can withdraw 529 money to buy it. If your student buys a computer on their own because they want one for schoolwork, it does not count, even though they use it for classes. The distinction is whether the school mandated the purchase, not whether the student uses the device for school.

K-12 private school tuition up to $35,000 lifetime

Starting in 2024, you can withdraw up to $35,000 per student over their lifetime from a 529 plan to pay for K-12 private school tuition. This is a one-time change under the SECURE Act 2.0 and applies only to private schools — public school tuition is not a may have access to expense because public school is free. The $35,000 limit is per student, not per year, so if you withdraw $5,000 in ninth grade, you have $30,000 left for tenth through twelfth grade and any earlier grades you did not use it for.

The private school must be accredited and located in the United States. Homeschooling expenses do not count. If you have multiple children, each child has their own $35,000 lifetime limit. This money comes from the same 529 account if you have one for multiple beneficiaries, so you need to track which withdrawals belong to which child.

Student loan repayment up to $35,000 lifetime

The SECURE Act 2.0 also allows you to roll over 529 money into a Roth IRA for the beneficiary, or to withdraw up to $35,000 per borrower to pay back student loans. The student loan repayment option is simpler: you withdraw the money from the 529 and use it to pay down federal or private student loans. The $35,000 limit is per borrower, not per loan, and it is a lifetime cap.

The loans must have been taken out before the 529 plan was opened. If your student took out loans in 2020 and you opened a 529 in 2023, those 2020 loans are covered. If they took out loans after the 529 was opened, you cannot use 529 money to repay them. This rule prevents people from opening a 529 just to get a tax-free way to pay off recent debt.

What does not count: common expenses parents ask about

Transportation to and from school is may have access to only if it is included in the school's cost of attendance figure. Some schools list travel costs; many do not. Check your student's school cost of attendance document. If transportation is listed, you can withdraw that amount. If it is not listed, you cannot use 529 money for plane tickets, gas, or parking passes, even though your student needs them to get to campus.

A computer or phone for general use is not may have access to, even if your student uses it for schoolwork. The device must be required by the school as part of the program. Clothing, toiletries, and household items are not may have access to. Meal plans that are optional are not may have access to — only mandatory meal plans count as room and board. Parking permits, student activity fees, and club memberships are not may have access to unless they are mandatory charges on the bill.

Tutoring and test prep courses are not may have access to expenses. Neither are room deposits, security deposits, or damage fees. If your student takes a semester off or withdraws from school, you cannot use 529 money to cover living expenses during that time.

How to avoid the 10 percent penalty on non-may have access to withdrawals

If you withdraw 529 money for something that is not may have access to, you owe income tax on the earnings portion of the withdrawal plus a 10 percent penalty on those earnings. The contribution portion (the money you originally put in) comes out tax-free, but the growth does not. If you withdraw $10,000 and $2,000 of that is earnings, you pay income tax plus 10 percent penalty on the $2,000.

The penalty does not apply if the student receives a scholarship. If your student gets a scholarship for $5,000 and you have $10,000 in the 529, you can withdraw $5,000 without penalty (the scholarship amount), though you still owe tax on the earnings in that withdrawal. The contribution portion always comes out tax-free.

Keep receipts and bills from the school showing what each withdrawal paid for. If the IRS questions a withdrawal, you need to show that the money went to a may have access to expense. A bill from the registrar, a receipt from the bookstore, or a lease agreement for on-campus housing all serve as proof.

Frequently Asked Questions

Can I use 529 money to pay for my student's apartment off campus?

Only up to the off-campus room and board amount listed in the school's cost of attendance. If the school lists off-campus room and board at $12,000 per year, you can withdraw up to $12,000 for rent, even if your student's actual rent is higher. You need a lease or rental agreement showing the address and amount to document the expense.

What if the school requires a laptop but I already own one I can give my student?

If the school requires a laptop and your student did not own one before, you can withdraw 529 money to buy one. If your student already owned a laptop, the school's requirement does not make it a may have access to expense — they are using equipment they already had. The rule is about the cost of meeting the school's requirement, not about equipping your student generally.

Can I use 529 money for graduate school?

Yes. Tuition, fees, and room and board at any accredited graduate or professional school are may have access to expenses, subject to the same rules as undergraduate school. The cost of attendance figure for graduate programs is usually higher than for undergraduate, so your withdrawal limits may be higher too.

Do I have to use all the 529 money before my student graduates?

No. You can withdraw money for may have access to expenses at any time the student is enrolled, including after graduation if they are in a graduate program. If money is left over after your student finishes school, you can roll it to another family member's 529 or withdraw it (paying tax and penalty on the earnings). Some states also allow you to hold the money and use it later if your student returns to school.

What counts as a required book or supply?

The school or program must require it as a condition of enrollment or completion. If a syllabus says "required textbook" or a program says "students must purchase safety equipment," those are may have access to. If a professor recommends a book or a student chooses to buy extra materials, those are not may have access to. The school's bookstore receipt or course materials list can show what is required.