Want to maximize your 529 plan benefits? Get a clear overview of qualified expenses and learn how to use your funds wisely for educational purposes.
Understand what counts as a qualified 529 expense
Saving for a student's education using a 529 plan has a lot of benefits: It's simple, flexible, and packed with tax advantages. While 529 plans have a reputation for covering only 4-year college degree programs, the truth is that recent changes from the IRS have made the list of qualified expenses more flexible than ever, both for students in primary and secondary education and for those who choose trade or vocational schools.
Whether you're just getting started or making a withdrawal soon, this guide will help you tailor your 529 strategy to fit your student's unique needs.
What qualifies as a 529 expense?
You can use 529 funds for various educational expenses, ranging from small to large, including:
- Tuition and fees. Payments made directly to a college, university, vocational school, or other eligible institution for tuition and mandatory fees are always considered qualified. Both public and private institutions typically qualify as long as they're eligible for federal student aid.
- Books and supplies. You can use 529 funds for textbooks, lab equipment, art supplies, calculators, and any other materials required for enrollment or specific classes. Be sure to keep receipts and verify which materials are considered mandatory by the school or instructor.
- Equipment. Costs for computers, software, or internet access qualify if the school or program requires them. This also covers related tech like printers, but only if they're specifically needed for academic work. Nonrequired upgrades or accessories (like gaming laptops or headphones for personal use) aren't covered.
- On-campus housing and meal plans. Students enrolled at least part-time can use 529 funds to pay for on-campus room and board. If your student opts for a single room without a roommate, check that it's within the allowed limits.
- Off-campus housing. Off-campus housing is usually covered up to the school's cost of attendance. This may also include expenses such as rent, utilities, and food.
- Supporting academic services. Tutoring or test prep may qualify if the school requires it for enrollment or as part of the program.
- Trade credentials and vocational programs. Many certificate and diploma programs at technical schools and community colleges qualify. Make sure to check the institution's eligibility before your student enrolls.
Remember, expenses must be for students attending an eligible institution—generally schools that participate in federal financial aid programs. If you're unsure, check the U.S. Department of Education's searchable database or ask your school's financial aid office. Every school publishes the cost of attendance, which outlines the maximum you can use for room, board, books, and supplies. Review it each year, especially if your student's living arrangements change or they study abroad.
K–12 tuition and special exceptions
529 plans aren't just for college. Thanks to recent changes in federal law, you can use your 529 savings for additional education-related costs, such as:
- K–12 tuition. Families can use up to $10,000 per year, per child, for tuition at public, private, or religious elementary and secondary schools. Starting January 2026, the limit increases to $20,000. As of July 2025, books, supplies, tutoring, online educational materials, dual enrollment fees, and standardized test fees also qualify.
- Apprenticeship programs. If your student is pursuing a career through a registered apprenticeship, you can use 529 funds for books, supplies, equipment, and fees. Make sure the program is certified by the U.S. Department of Labor and check their list of approved programs and rules before making a withdrawal.
- Student loan repayment. You can use up to $10,000 per beneficiary to pay down qualified student loans. You can also use $10,000 for each of the beneficiary's siblings. This is a great way to help recent grads get a head start on financial freedom.
Each category has its own limits and rules, so check with your 529 plan administrator or a trusted financial advisor before making significant withdrawals. Some states have additional restrictions, so it's always smart to confirm local rules.
Learn how The Vanguard 529 Plan can help you save
Common nonqualified expenses
Not all education-related expenses qualify for 529 withdrawals. At the federal level, income tax and a 10% penalty are applied only to the earnings portion of any nonqualified withdrawal, which is distributed proportionally with contributions. At the state level, some states may also recapture previously claimed tax benefits on nonqualified expenses.
Here are some common expenses not covered by 529 funds:
- Transportation, including public transit passes, car payments, rideshares, airfare, and parking fees.
- Clothing, laundry, and personal items.
- Health insurance, medical bills, and dental expenses, even if required for school enrollment.
- Sports, club, or activity fees.
- Electronics and nonrequired technology, such as smartphones, laptops, tablets, gaming consoles, and software, unless explicitly required for coursework.
Travel, cars, and general living costs are never qualified, so it's best to keep your 529 withdrawals focused on tuition, fees, books, and required equipment.
If you're unsure about an expense, reach out to your 529 plan administrator or a tax professional.
Maximizing your 529: Tips to cover room, board, and more
Room and board often represent the largest expense after tuition. Here's how to ensure your withdrawals qualify:
- Confirm that your student is enrolled at least part-time. Otherwise, housing and meals aren't qualified expenses.
- Request the school's current cost of attendance details. For off-campus arrangements, this sets the maximum you can withdraw without taxes and penalties.
- Talk to your school's financial aid office. If you're in doubt, they can clarify what expenses qualify for both on-campus and off-campus students.
Choose the best 529 plan for you
Recent expansions and limits
Legislation over the past few years has made 529 plans more versatile. You can now use funds for:
- Rolling over unused funds to ABLE accounts, which support individuals with disabilities.
- Paying for your grandchild's education without affecting their financial aid eligibility.
- Rolling over unused funds into a Roth IRA if certain requirements are met.
These enhancements allow families to tailor their 529 strategy to fit their unique educational and financial needs.
How to prepare your 529 expenses for tax time
To make sure your withdrawals stay tax- and penalty-free:
- Check your state's rules, as some states offer additional tax benefits or have special limits.
- Review your school's cost of attendance each year, including tuition, room, board, books, and fees.
- Match withdrawals to actual qualified expenses in the same year and avoid prepaying or paying late.
- Keep all receipts, invoices, and bank statements showing how you spent your 529 funds.
- Conduct an annual audit or review to ensure your withdrawals and expenses align before filing taxes.
- Consult a tax advisor for unique situations, such as study abroad programs, midyear school transfers, or remaining 529 funds.
Laws and guidelines can change, so it's essential to stay informed each year. 529 savings can help cover the costs that matter most and set up the students in your life for a bright future.