The oft-used cliché “The only certainty in life is uncertainty,” rings true when it comes to educational expenses. As education options continue to expand from the traditional undergraduate model, the list of qualified expenses you can use a 529 plan to pay for has grown as well. Today, a 529 education savings account with The Education Plan® covers much more than standard undergraduate tuition, room and board, and books.

This will come as good news if the student you’re saving for plans for a non-traditional educational approach after high school, such as an apprenticeship program, or if you have educational expenses before they hit college, such as K-12 tuition. If you’re saving for a child or other relative's education through a tax-advantaged 529 plan, or if you’re considering opening a 529 plan, there are many qualified educational expenses you might not know about. These include:

1. Online Colleges. Naturally, this option includes online courses offered by established academic institutions. However, it also covers accredited online universities and college programs.

2. Trade Schools and Community Colleges. Beauty schools, air conditioning and refrigerator repair, massage therapy, I.T. training, and automobile repair – accredited versions of all these trades are allowable uses of 529 funds, as are community colleges that offer academic and trade programs.

3. Graduate Schools. 529 eligibility doesn't stop after your child completes a four-year undergraduate degree. Medical school, law school, MBA programs, as well as master's and doctorate degrees in a range of academic disciplines also qualify.

4. International Schools and Study Abroad Programs. Studying abroad used to be considered a luxury that only select few students could enjoy. But you can use a 529 plan to pay for programs at hundreds of schools worldwide from the U.K. to Switzerland to Australia. You can use 529 plan funds to pay for study abroad expenses if the study program at the foreign institution is eligible for credit at the student's US home institution, and if the foreign institution is eligible for Title IV federal student aid, which can be determined by looking for the federal school code. Keep in mind that 529 funds cannot be used to cover travel expenses such as airfare for study abroad programs.

5. Gap Year Programs. Certain Ivy League schools, as well as certain state universities, have begun offering structured gap-year programs for credit by partnering with higher education institutions to qualify for funding from 529 accounts. This is typically the case when a gap year program offers college credits in conjunction with a college program. One private university, for example, offers a 9-month, tuition-free gap year program that sends students on service projects to China, Bolivia, India, Indonesia, and Senegal. As long as the program offers credits through an accredited institution, it will likely be permitted as a qualified expense, but make sure to check with the program coordinator to be sure before withdrawing funds from your 529 for a gap year program.

6. K-12 Tuition and Expenses. This may be the happiest surprise for many families. Up to $20,000 a year can be used for K-12 tuition and expenses. This includes:

   • Tuition (public, private and religious)
   • Curriculum materials and books (including digital/online)
   • Tutoring and instructional classes
   • Standardized test fees (SAT, ACT, AP, etc.)
   • Dual enrollment program fees
   • Educational therapies for students with disabilities

Some families might be concerned that unused 529 funds could go to waste or be penalized. Don’t worry, there’s good news. Over the past few years, new federal legislation has allowed savers to use 529 funds for additional purposes. Two of the biggest are:

7. Student Loans. Up to $10,000 of 529 funds can be used to pay down federal and private student loans taken out by 529 beneficiaries or their siblings. Note that the funds can only be used to pay for eligible student loans and cannot be used to pay down credit card balances, personal loans, or other debts.
8. Roth IRA Rollover. Beginning January 1, 2024, you can transfer up to a lifetime limit of $35,000 (over the course of 5 years) in unused 529 account funds to a Roth IRA owned by the 529 plan's designated beneficiary, with a few caveats. The 529 plan must be open for the designated beneficiary for at least 15 years, and any contributions made within the last five years, and the investment earnings associated with them, can’t be rolled over tax free. There are other important provisions that apply under the Secure 2.0 Act.

When you’re planning your student’s education budget, be mindful that funds from 529 plans cover a lot, but they don’t cover everything. While the scope of allowable expenses continues to expand, some costs closely or distantly related to higher education and job training programs ARE NOT covered by tax-advantaged 529 plan funds. These include, but are not limited to:

• Transportation Expenses
• Smartphones
• Clothing
• Gaming computers or other tech not directly related to schoolwork
• Insurance Premiums
• Gym memberships, yoga classes, or equipment for extracurricular sports

The benefits are extensive, and getting started is easy. If you haven't opened a 529 plan for a child, family member (or even for yourself) it's easy to do, and it’s never too late to get started.

Visit our Learning Center for more information on saving with a 529 plan, including instructions on how to open an account, ideas for saving, when and how to take withdrawals, how to choose or change a plan beneficiary, and more.

Ready to get started? You can open your account in about 15 minutes.