Should you find yourself in the fortunate situation of having more 529 dollars available than needed, there are several things you can spend those dollars on that you might not have thought of:
- Dual credit high school classes. If your student is taking a dual credit (high school and college) course that requires tuition be paid to a college in order to get the college credit, you can use 529 money to pay for that.
- Room and board allowance for a student who is living at home while attending college. Just as with the off-campus room and board allowance, the school itself sets the allowance for students living at home, so check with your school to confirm the amount before withdrawing from your 529.
- Not just a computer but its related expenses (software, internet access), as long as they’re used primarily for school purposes. (Apartment wifi yes; Call of Duty no.) An iPad or Kindle used for college purposes would qualify as well.
- Off campus living expenses including the room and board portion of fraternity or sorority costs.
- Classes taken online, at a trade school or community college, as long as the school is on the Department of Education’s list of eligible schools.
- International schools (again, check eligibility with the Department of Education).
- In some cases, 529s may be used to pay for some gap year program expenses. Typically this is the case when a gap year program offers college credits in conjunction with a college program, such as Outward Bound’s partnership with Western State Colorado University.
While on the topic, here is something 529 funds cannot be used for: transportation. Whether it’s a car for your commuter student or plane tickets for a student attending school out of state, it’s a no go for 529s.
And if your 529 is overfunded because your student got a scholarship, you don’t pay the penalty on withdrawals of the amount that is overfunded due to the scholarship, only taxes on the gain. If you should find yourself in that position, you can make smaller distributions to your student annually. Just mind the student income protection allowance ($6,570 on the coming FAFSA) if the scholarship is need-based.