Back to School & College Funding 101

By - The LSG Team

Back to school looked much different this year than we are used to seeing, but of course that is no surprise in this 6th month of COVID-19 restrictions. With the challenges posed to education by this new environment, we felt it was good timing to pass along some information about 529 college savings plans and the ways in which their stipulations have expanded.

Take a look at the list below and let us know if you have any questions or comments. We appreciate your feedback, and we look forward to hearing from you.

• Living Off Campus

  • If your student lives off-campus, 529 funds can be used to pay for their rent. For example, the room and board assumption for an off-campus student at Texas State University is $10,210 for the school year (Texas State Cost of Attendance). Every college will be able to provide a cost of attendance (see the College Board link below). For a student registered at Texas State, up to $10,210 can be taken from the 529 to pay for rent. Students must be enrolled at least half-time to use 529 money to pay for living expenses.

• Private School

  • As of 2019, up to $10,000 can be used from 529 accounts to reimburse tuition for elementary, middle and high schools.

• Technology

  • Computers, related equipment and even internet service can be paid for with 529 funds, but only if they are primarily used by the 529 beneficiary for use at the eligible institution. For example, buying a student a laptop which they will use for remote or in-person college classes is a valid expense. Buying the new Microsoft Flight Simulator software, however, would not qualify.

• Room and Board Refunds

  • In the case where a semester is cut short and a refund for room and board is issued, those funds still need to be spent on qualified college expenses in order to retain their tax status. Alternatively, the refunded money can be re-contributed to the beneficiary’s 529 within 60 days.

• Paying Off Student Loans

  • A student can use up to $10,000 from a 529 account to pay off outstanding student loans. This is a lifetime limit per student.

• To learn more about college cost and 529 information visit the following links:

  • https://www.collegeboard.org/

    • Includes a breakdown of costs for essentially all US colleges and universities.

  • https://www.savingforcollege.com/

    • Wide range of information on college costs, funding, student loans, 529 plans, etc.