Can You Use a 529 for Trade School?
Yes. You can use a 529 education savings plan to pay for trade school, vocational school and technical training, not just a four-year degree. The Education Plan® can cover tuition, fees, books, supplies and required equipment at any eligible trade or vocational school in the country.
Can You Use a 529 for Trade School?
Yes. You can use a 529 education savings plan to pay for trade school, vocational school and technical training, not just a four-year degree. The Education Plan® can cover tuition, fees, books, supplies and required equipment at any eligible trade or vocational school in the country.
What Counts as a Trade School
for 529 Purposes?
The rule is simple. A trade, vocational or technical school qualifies if it is eligible to participate in U.S. Department of Education federal student aid programs. Most accredited programs are.
That covers a lot of ground, including community colleges and technical colleges, welding and HVAC programs, automotive and diesel training, cosmetology and barber schools, culinary institutes, medical assisting and dental hygiene programs, information technology (IT) certificate programs, and commercial driving schools.
You don’t have to guess. Every eligible school has a federal school code, and you can look it up using the U.S. Department of Education’s Federal School Code Search. If a school isn’t listed, call the admissions office and ask before you enroll. It’s a quick question that can save confusion later.
Location isn’t a limit, either. Savings can be used at eligible schools anywhere in the country, including in New Mexico or out of state.
What Expenses Can a 529
Cover at Vocational School?
“Qualified education expenses” are the costs you can pay from a 529 account without owing federal tax or penalties. At a trade or vocational school, those include:
- Tuition and fees
- Books, supplies and equipment required for the program
- Computers, software and internet access used for school
- Room and board, for students enrolled at least half time
For hands-on training, that “required equipment” can include a welding student’s helmet and gloves. A culinary student’s knife roll. A nursing student’s stethoscope. If the program requires it, your 529 can cover it.
Some costs don’t qualify. These include transportation, personal living expenses beyond the school’s room and board allowance, and gear the program doesn’t require. When you’re not sure, check with a tax professional, or start with our full list of 529 qualified expenses.
What About Apprenticeships
and Certifications?
Registered apprenticeships count, too. If the program is registered and certified with the U.S. Secretary of Labor under the National Apprenticeship Act, a 529 can pay for the fees, books, supplies and equipment the apprentice needs, including the tools of the trade. The U.S. Department of Labor keeps a searchable list of registered apprenticeship programs.
Credentialing costs count, too. Recent federal changes expanded qualified expenses to include recognized postsecondary credential programs, including tuition, fees, books, supplies and equipment, plus testing fees required to earn a credential and continuing education required to keep one. For an electrician renewing a license or a phlebotomist sitting for certification, that can add up to real money.
It also means a 529 isn’t only for children. An adult already working in the trades can open an account and use it for their own training and certifications.
Why This Matters
for Families
As a nation, we need electricians, nurses, plumbers, welders and technicians. Those careers often begin with training that costs less and takes less time than a four-year degree. A 529 lets you prepare for that path without having to choose it years in advance.
You don’t need to know when a child is 4 whether they’re headed to a university, a technical college or an apprenticeship. The same account works for all three. And if plans shift again, you can transfer the funds to another family member or roll unused money into a Roth individual retirement account (IRA) for the beneficiary, up to a $35,000 lifetime limit.
New Mexico taxpayers get one more advantage: all contributions to The Education Plan are deductible from your New Mexico taxable income each year. Grandparents, aunts, uncles and family friends who pay New Mexico taxes can claim the deduction too, even on an account they don’t own. You can read more about the tax benefits of The Education Plan.
Start Small, Start Now
Whatever path your child takes, the money you save now will be ready for it.
A little today really can go a long way.
Frequently Asked Questions
Yes. A 529 education savings plan can be used at any trade, vocational or technical school that is eligible to participate in federal student aid programs. Qualified expenses include tuition, fees, books, supplies and required equipment.
Yes, when the program requires them. That includes items like welding helmets, culinary knife sets and required safety gear, as well as equipment needed for a registered apprenticeship.
The cost of college continues to rise, including tuition, housing, food and supplies, so it’s important to begin saving as soon as possible. You can learn more about how much a typical college education costs on our Cost of College page. It’s never too early or too late to start.
If you don’t use all the money in your account with The Education Plan, you have several options:
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Change the beneficiary. You can transfer the funds to another eligible member of the original beneficiary’s family.
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Rollover to a Roth IRA. Beginning in 2024, federal law allows certain rollovers from a 529 plan to a Roth IRA for the beneficiary, subject to requirements like a lifetime $35,000 cap and the account being open for at least 15 years.
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Keep the funds in the account. There is no limit to how long funds can be kept in a 529. With career changes, a beneficiary may decide in the future to return to school for another degree or pursue a professional credential.
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Withdraw the funds. You may take a withdrawal at any time. However, if the money is not used for qualified education expenses or rolled over to another eligible account, the earnings portion will generally be subject to federal and state income taxes, plus a 10% federal penalty.
