What Qualifies as a Higher Education Expense? (Updated: 07/11/2017)
With fall—and the start of a new school year—just around the corner, it's important to know what qualifies as a higher education expense, so you or your college-age child can take withdrawals from 529 plans tax- and penalty-free.
Which of the following is not an example of a qualified higher education expense?
The cost of a computer to be used at school
Room and board
Transportation costs to and from college
Transportation costs to and from college (e.g., flights, gas) are not considered a qualified higher education expense, so you may not use 529 plan account savings to pay for these costs. For a complete list of qualified expenses, refer to IRS Publication 970.
We understand that it can be tricky navigating the world of personal finance. Everyone seems to have an opinion, and it can be hard to know what to believe. We created this series as a way to present and debunk some of the most common financial myths.
Fiction: Off-campus housing is the most budget-friendly option for college students.
Fact: Figuring out which living situation is the most economical requires some math and side-by-side comparison. The rent of an off-campus property may be less than an on-campus apartment, but living off campus may come with additional costs. Be sure your student's rent budget covers key expenses such as utilities (if not included), food (which may be more costly if the student is not participating in the school's meal plan), and transportation to and from campus. Another potential expense is renter's insurance, which helps protect your student's property in the event of fire or theft.