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529 Funds: What Schools are Included?

When it comes to saving for college, one of your options is to open a 529 plan [3]. These plans come with tax advantages, and use the power of compound interest to help build up money for use in college.

Most of us are aware that it’s possible to use the money from the plan to pay for qualified expenses at a number of colleges and universities in the United States. As long as the school is listed on the as “eligible,” it’s possible to use money from the 529 plan, without penalty, to pay for qualified expenses.

But it’s not just colleges and universities in the United States that qualify. You may be able to pay costs at other educational institutions with money from your 529 plan.

International Schools & Trade Schools

If your student is studying abroad, he or she can stil tap into the 529 plan for funds to cover costs. This is a definite advantage, especially since it can get expensive to live overseas. While tuition and fees are covered, and even room and board in some instances, you do have to realize that the cost of getting your student to his or her overseas destination is not covered. So you will have to pay the airfare out of your own pocket. But it’s still comforting to know that 529 money can be used at international schools.

Another option is to use your 529 money at a trade school. You don’t have to be attending a traditional four-year university in order to use 529 money. Many community colleges are included, as are trade and professional schools. If your student wants to receive professional training, there is the possibility that the cost can be covered with the help of a 529 plan.

Savingforcollege.com has a handy tool [4] that allows you to check to see which schools are included. You can use the tool to identify eligible schools around the world (use “FC” when looking for an international school), as well as professional and trade educational institutions.

Eligible Expenses

Expenses that can be paid for with money from your 529 [5] include tuition and fees required by the school. Additionally, this money can be used to pay for books and necessary school supplies, and even for some needed equipment, like computers. You can also use the money to pay for room and board expenses. However, the amount used can only be up to the amount specified by schools as part of the cost of attending [6].

Many schools offer a cost assessment that usually includes room and board, as well as the cost of supplies, in addition to fees and tuition. As long as the expenses you are no more than the cost of attending put out by the school, you can use the money in your 529 to pay these costs — including costs related to off-campus housing and food.

Before your student withdraws money from the 529 plan, though, make sure to review the expenses, and make sure they really do qualify. If you aren’t sure, consult with a knowledgeable accountant in order to avoid penalties.

(Photo: perfesser [7])