Can a 529 Plan Be Used for Law School Expenses?

Yes, you can use a 529 plan for law school. Juris doctor programs and other graduate legal degrees count as post-secondary higher education under the Internal Revenue Code, so distributions used for qualified expenses at an eligible law school come out tax-free.¹ The catch is that “law school cost” and “qualified 529 expense” are not the same list. Tuition, fees, books, a laptop, and rent up to a cap are in. Bar prep, bar fees, and health insurance are out.

Which Law Schools Count

A law school qualifies if it participates in federal student aid under Title IV of the Higher Education Act.¹ That covers essentially every accredited law school in the country, public, private nonprofit, and for-profit alike.² What matters to the IRS is Title IV participation, not ABA accreditation specifically. Some state-accredited schools without ABA approval still qualify if they appear in the Department of Education’s database.

Verify a specific school by looking up its federal school code at studentaid.gov. A handful of foreign law programs, including some Canadian and U.K. universities, also participate in Title IV, so international students can check the same tool.² Skipping this step is expensive. A distribution sent to a school that doesn’t qualify triggers ordinary income tax on the earnings portion plus a 10% penalty.¹

What Law School Expenses Qualify

The statute defines qualified higher education expenses as tuition, fees, books, supplies, and equipment required for enrollment or attendance.¹ For a law student, that means:

Tuition, the largest line item
Mandatory fees charged to all enrolled students, including technology and student activity fees³
Required casebooks, supplements, and course materials

Computers and technology get their own carve-in. The statute specifically allows 529 funds for computer equipment, peripherals, software, and internet access used primarily by the student during the years of enrollment.¹ Your laptop, a printer, legal research software, and your home internet all potentially qualify. The school does not have to require a specific device. Software for sports, games, or hobbies is excluded unless it is predominantly educational.

Room and Board

Room and board is a qualified 529 expense if the law student is enrolled at least half-time.¹ Full-time JD students clear that easily; part-time evening students should confirm their credit load meets the threshold.

The amount you can withdraw depends on where you live:

On-campus housing: the actual amount the school charges
Off-campus: capped at the room and board allowance in the school’s published cost of attendance¹
Living with parents: board portion only, up to the lower “living at home” allowance the school publishes

Law school rents in New York or San Francisco often exceed the off-campus allowance, and the excess has to come from non-529 money.

What 529 Funds Will Not Cover

This is where the gap between the total cost of becoming a lawyer and 529-qualified expenses gets wide. The following are not qualified expenses:

Bar exam fees
Bar review courses like Barbri or Themis
Character and fitness application costs
Health insurance premiums, even when billed through the school
Transportation and parking
Professional clothing
Voluntary membership dues for law review or student bar associations, unless mandatory for all students

The IRS treats bar exam fees as professional accreditation costs rather than educational expenses. Bar prep courses are not required for enrollment at your law school, so they fall outside the statutory definition. These costs land right after graduation and can easily run several thousand dollars, and they have to be paid from something other than the 529.

Scholarships Reduce What You Can Withdraw

Before calculating a tax-free withdrawal, subtract any tax-free educational assistance you received. That includes merit scholarships, need-based grants, Pell grants, veterans’ education benefits, and employer tuition assistance.⁴ With $55,000 in qualified expenses and a $20,000 merit scholarship, the tax-free 529 ceiling is $35,000. Anything over that triggers taxes and the 10% penalty on the excess earnings.

The penalty has exceptions. If you take a non-qualified distribution because the student received a scholarship, attended a military academy, died, or became disabled, the 10% additional tax is waived up to the relevant amount, though the earnings are still taxable.¹

Paying Down Law School Loans With 529 Money

Since 2020, 529 funds can pay principal or interest on qualified education loans. The lifetime cap is $10,000 per person, applied to the beneficiary and separately to each of the beneficiary’s siblings.¹ The cap is cumulative across all years and all 529 accounts and does not reset. Once $10,000 has been paid toward one person’s loans from 529 sources, that is it.

The $10,000 limit tracks the person whose loans are being paid, not the 529 account. Families with more than one child can use leftover 529 money from one graduate to pay up to $10,000 toward a sibling’s loans, either by changing the beneficiary or by directing a distribution for the sibling’s benefit.

One coordination rule matters at tax time: loan interest paid with 529 money cannot also be claimed under the student loan interest deduction.⁴ Keep servicer records showing which payments came from the 529.

Leftover Funds After Graduation

Roth IRA Rollover

Starting in 2024, unused 529 funds can be rolled over into a Roth IRA for the beneficiary under the SECURE 2.0 Act. The lifetime cap is $35,000 per beneficiary.⁵ The requirements are narrower than most summaries suggest:

The 529 account must have been open for more than 15 years
Annual rollovers cannot exceed the Roth IRA contribution limit, which is $7,500 for 2026⁶
Only amounts contributed to the 529 more than five years before the distribution date can be rolled over
The rollover must move directly from the 529 trustee to the Roth IRA trustee⁵

The 15-year rule is the one that trips people up. A 529 opened when the student was already in college has not been open long enough by law school graduation. Draining a full $35,000 into a Roth takes roughly five years of annual rollovers.

Changing the Beneficiary

If the Roth rollover does not fit, changing the beneficiary to another family member has no tax consequences.⁷ The IRS defines family broadly: siblings, parents, children, nieces, nephews, first cousins, and their spouses all qualify. A graduate who never has children can redirect a balance to a niece or nephew’s future schooling.

Reporting and Timing

The plan administrator issues Form 1099-Q for every 529 distribution. If the money goes to the student or directly to the school for the student’s benefit, the form is in the student’s name. If it goes to the account owner, the form is in the owner’s name.⁸ Whoever receives the 1099-Q has to be able to show the IRS that the distribution paid qualified expenses.

Distributions and the expenses they pay have to land in the same tax year. Paying spring tuition in December and taking the 529 distribution in January creates a mismatch that can trigger penalties even when the total math works. The safe rule is to take the distribution in the same calendar year you pay the bill.

You can also claim a Lifetime Learning Credit in the same year you take a 529 distribution, but not on the same dollars of expense.⁴ Subtract scholarships and grants first, set aside enough expenses to maximize the credit, then use 529 funds for the rest. The American Opportunity Credit does not apply to law students because it is limited to the first four years of post-secondary education.

Non-qualified distributions get taxed twice: the earnings portion is added to taxable income, and a 10% additional tax applies on top.¹ Some states also recapture any state income tax deduction claimed on the original contribution. Between the loan repayment provision, the beneficiary change option, and the Roth rollover, letting a leftover balance sit and eventually take a full non-qualified hit is rarely the right move.

1
Office of the Law Revision Counsel. 26 USC 529 – Qualified Tuition Programs
2
Internal Revenue Service. Eligible Educational Institution
3
Internal Revenue Service. Qualified Education Expenses
4
Internal Revenue Service. Publication 970, Tax Benefits for Education
5
Internal Revenue Service. Publication 590-A, Contributions to Individual Retirement Arrangements
6
Internal Revenue Service. Retirement Topics – IRA Contribution Limits
7
Internal Revenue Service. 529 Plans – Questions and Answers
8
Internal Revenue Service. Instructions for Form 1099-Q Payments From Qualified Education Programs