What Can 529 Funds Be Used For? Tuition, Room and Board, Loans

Money in a 529 plan can be used tax-free for a defined list of education costs: tuition and mandatory fees at eligible colleges, universities, and vocational schools; required books, supplies, and technology; room and board for students enrolled at least half-time; special needs services tied to enrollment; up to $10,000 per year in K–12 tuition; registered apprenticeship expenses; up to $10,000 lifetime in student loan repayment; and, since 2024, rollovers into a Roth IRA for the beneficiary. Anything outside those categories is a non-qualified withdrawal, which means the earnings portion is added to taxable income and hit with an extra 10 percent tax.¹

College and Vocational School Tuition and Fees

Tuition is the most common use. The school has to be eligible to participate in federal student aid programs run by the U.S. Department of Education, which covers most accredited public, private nonprofit, and for-profit postsecondary institutions.²

Mandatory fees qualify too, as long as every student has to pay them as a condition of enrollment. Lab fees, technology fees, and student activity fees typically fit. Optional charges like parking permits, athletic passes, or club memberships do not.³

Foreign schools can also qualify. If an overseas university participates in the federal student loan program and holds an Office of Postsecondary Education Identification number, its tuition is treated the same as tuition at a domestic school.⁴

Books, Supplies, and Technology

Books, supplies, and equipment your course of study requires are treated the same as tuition when they’re needed for enrollment or attendance.¹

Technology has its own carve-out in the statute. Computers, peripheral equipment like printers and monitors, internet access, and software used primarily by the student during enrollment all qualify. Software for sports, games, or hobbies is excluded unless it’s predominantly educational, and equipment used mainly for entertainment falls outside the definition.⁵

Required textbooks, a laptop for coursework, calculators, lab materials, and course-required software subscriptions all fit. A gaming console or streaming subscription doesn’t, even if a class occasionally uses it.

Room and Board

Room and board qualifies for any student enrolled at least half-time in a degree or certificate program at an eligible school. Half-time uses the same definition as the American Opportunity Credit: at least half a full-time course load for at least one academic period during the year.⁶

For students in on-campus housing, the qualified amount is what the school actually charges for dorms and meal plans. For students living off-campus, the cap is whatever room and board allowance the school publishes as part of its cost of attendance for financial aid purposes. Off-campus food, including groceries, counts against that limit. Anything above the allowance is treated as a non-qualified distribution.⁶

K–12 Tuition

Since 2018, qualified expenses have included tuition at elementary and secondary schools. You can withdraw up to $10,000 per beneficiary per year for tuition at a public, private, or religious K–12 school. The cap applies across all 529 accounts held for the same child, not per account.⁵

The K–12 rule is narrower than the college rule. Only tuition qualifies. Books, supplies, uniforms, transportation, and extracurricular activity fees don’t count, even if the school requires them.

Homeschooling is a gray area. The federal statute refers to tuition at a public, private, or religious school, and the IRS has not issued guidance treating homeschool expenses as qualifying K–12 tuition. Whether your state treats homeschooling as a private school varies.⁵

Watch the state side too. Roughly a dozen states have not adopted the federal K–12 provision, so a K–12 withdrawal can still be treated as non-qualified for state tax purposes, potentially triggering state income tax and recapture of any state deduction you took on the contribution. Check your state’s rules before pulling money out for tuition below college.

Registered Apprenticeships

The SECURE Act of 2019 added registered apprenticeships to the list. The program has to be certified and registered with the U.S. Department of Labor under the National Apprenticeship Act. Eligible costs include fees, books, supplies, and required equipment such as trade tools.¹

Student Loan Repayment

You can put 529 money toward student loan principal and interest, up to a $10,000 lifetime cap per person. The limit applies separately to the beneficiary and to each sibling, including step-siblings, so a family with three children could apply up to $30,000 total across them.¹

One tax detail matters. Any student loan interest paid with 529 funds cannot also be claimed as a student loan interest deduction on your federal return. You don’t get to use the same dollars twice.¹

Rollovers to a Roth IRA

Starting in 2024, SECURE 2.0 lets you roll unused 529 funds directly into a Roth IRA for the beneficiary, without income tax or penalty on the transfer. Several conditions apply:⁷

The 529 account must have been open more than 15 years.
Contributions made in the last five years, and their earnings, cannot be rolled over.
Each year’s rollover is capped at the Roth IRA contribution limit for that year ($7,500 for 2026), reduced by any other IRA contributions the beneficiary makes.⁸
Total rollovers cannot exceed $35,000 per beneficiary over a lifetime.

The money has to move directly from the 529 plan to the Roth IRA. Because of the annual cap, reaching the full $35,000 takes at least five years.

Special Needs Services

If the beneficiary is a special needs student, services connected to their enrollment or attendance at an eligible institution also qualify. This can include tutoring, educational therapy, and other support the school requires for the student’s participation. The service has to be tied to enrollment or attendance, the same standard that governs the other categories.¹

What Doesn’t Qualify

The boundary matters, because the earnings portion of a non-qualified withdrawal is taxable income plus a 10 percent additional tax.¹ Common expenses that fall outside the list:

Transportation costs like gas, car payments, transit passes, and travel to and from school.
Student health insurance premiums and medical bills.
Club dues, fraternity or sorority fees, and intramural sports fees.
Gym memberships, streaming services, and general personal spending.
Off-campus rent and food that exceed the school’s published cost-of-attendance allowance, or mortgage payments on a home the student occupies.
K–12 books, supplies, uniforms, and extracurricular fees, even when the school requires them.

If you accidentally withdraw more than your qualified expenses for the year, only the excess is treated as non-qualified. The portion that went toward approved costs keeps its tax-free status.

When the 10 Percent Penalty Is Waived

A non-qualified withdrawal normally carries the extra 10 percent on the earnings, but several situations remove the surcharge. The earnings are still counted as taxable income; you just avoid the penalty:⁹

The beneficiary receives a tax-free scholarship, in which case you can withdraw up to the scholarship amount penalty-free.
The beneficiary attends a U.S. service academy (West Point, the Naval Academy, the Air Force Academy, the Coast Guard Academy, or the Merchant Marine Academy), in which case you can withdraw up to the cost of attendance penalty-free.
The beneficiary dies or becomes disabled.

These waivers only strip the penalty. To keep the earnings tax-free as well, the money still has to go toward one of the qualified expense categories above.

1
Office of the Law Revision Counsel. 26 USC 529 Qualified Tuition Programs
2
Internal Revenue Service. Eligible Educational Institution
3
Internal Revenue Service. Publication 970 (2025), Tax Benefits for Education
4
U.S. Department of Education. International Schools Participating in the Federal Student Loan Programs
5
Internal Revenue Service. 529 Plans Questions and Answers
6
Office of the Law Revision Counsel. 26 USC 529 Qualified Tuition Programs – Section: Room and Board Included for Students Who Are at Least Half-Time
7
Internal Revenue Service. Publication 590-A (2025), Contributions to Individual Retirement Arrangements (IRAs)
8
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
9
Office of the Law Revision Counsel. 26 USC 530 Coverdell Education Savings Accounts