Can a 529 Plan Be Used to Pay for Room and Board?

Featured Stories

Filter By Categories

What is a 529 Plan?

A 529 plan is a tax-advantaged investment account in which parents can use after-tax dollars towards qualified higher education expenses. Earnings in the account accrue tax-free and can be used for tuition and other expenses, depending on the type of account. There are two types of 529 plans.


529 College Savings Plan

The most popular type of 529 plan is the 529 college savings plan, in which an account owner can save towards the beneficiary’s higher education expenses including tuition, room and board, and other qualified expenses.


529 Prepaid Plan

The less popular 529 prepaid plan allows the account holder to purchase prepaid tuition to be used at a designated institutional partner. Unlike 529 college savings plan, 529 prepaid plans can only be used for tuition and mandatory fees.


In this article, the 529 plan refers to the 529 college savings plan.


What are the Criteria for Using a 529 Plan to Pay for Expenses?

Not all qualifying expenses in the Cost of Attendance (COA) are qualified expenses for the 529. Some living expenses, such as transportation costs cannot be paid using a 529 distribution. If you plan to use your 529 plan to pay for room and board, you should meet the following criteria:


  • Must be enrolled at least half-time (verify the number of credit hours with the university)

  • Must be enrolled at an eligible institution

  • Enrolled in a degree or certificate program, no continuing education classes


Paying for Room and Board with a 529 Plan

If a student meets the eligibility criteria, the account owner can use the 529 plan to pay for both on-campus and off-campus housing expenses.


Paying for On-campus Housing

If the student is living on-campus and using a meal plan, paying for room and board with a 529 plan is easy as most plans have an option to send a check directly to the school. You can also pay expenses and reimburse yourself.


Paying for Off-campus Housing

You can usually pay for off-campus living expenses by paying expenses out-of-pocket and reimbursing yourself with funds from the 529 plan. Some plans may allow you to send the distribution check directly to the landlord.


Avoid Exceeding Expenses in Cost of Attendance (COA)

One of the biggest misconceptions about 529 plans and off-campus housing is that there are no restrictions on the rent, utilities, groceries, or other expenses that a student can pay with their 529 plan. Most colleges calculate a separate cost of attendance for students living in off-campus housing that is slightly lower than on-campus room and board fees. If you don’t see a published off-campus COA, it’s possible that it’s the same for on- and off-campus students.


In either case, it’s important to ensure that the room and board fees don’t exceed the projected expenses in the COA for the nine-month academic year. If they do, any amount over and above the COA will be deemed a non-qualified higher education expense subject to tax and a 10% penalty. Even if the apartment is leased for 12 months, you can only cover up to the estimated cost of off-campus housing in the COA.


Using a 529 Plan to Pay Room and Board

While you absolutely can use 529 college savings plans to pay for room and board expenses, taking a few precautions will make it easier for you come tax time. Always try to pay room and board expenses directly to the university or landlord with a distribution check from the plan. If you can’t use this option, are paying out-of-pocket, and plan to reimburse yourself, be sure to keep all receipts and copies of checks to support expenses.

Sign up for updates

Popular Tags

Financial Aid and Scholarships* Cost of College* paying for college financial aid FAFSA grants and scholarships Student Loans* Saving for College* federal student loans college tuition 529 plan cost of attendance college financial planning expected family contribution financial aid award private student loans taxes room and board college savings plan on-campus housing Salary and Career* college expenses federal financial aid budgeting for college edmit hidden gems merit scholarships parent PLUS loan merit-based financial aid private universities public universities CSS profile college applications college costs edmit team education expenses financial need living expenses application fees financial aid appeal income off-campus housing loan forgiveness affordable college college majors student loan assistance work-study application fee waivers degree programs edmit scholarship institutional aid loan repayment career choosing a college choosing a major in-state tuition net price prepaid tuition plans SAT budget college search free tuition international students internships need-based financial aid need-blind colleges private scholarships qualified higher education expenses repayment plans southern colleges tuition discount tuition guarantee tuition payment plans 401k ACT UGMA UTMA college ranking systems college visits credit score discretionary income education savings accounts fees full ride scholarship grants health insurance options investment ivy league schools meal plans midwestern colleges need-aware colleges out-of-state tuition retirement savings school-based scholarships student loan debt western colleges 568 presidents group Inversant MEFA applying to college asset protection allowance best price campus life college advisor college deposit college spending concurrent enrollment cost by region cost by state crowdfunding educational expenses esports fee waivers financial literacy fraternities and sororities full tuition gap year home equity loan income share agreements liberal arts degree line of credit medical expenses military benefits new england colleges out-of-state students percent need met private college consultant saving small business standardized testing state aid state schools student bank accounts student organizations title IV schools travel expenses tuition decreases tuition increases tuition insurance tuition reciprocity undocumented students