Every parent looks forward to that time when their children get accepted to their chosen college or university. It’s a time of great excitement and pride of accomplishment for both parents and children.
It is also a time of nervousness and uncertainty for both parties regarding the new environment, friends, work load, and most importantly, finances.
Many forward planning parents have set up a 529 prepaid tuition plan to help ease the burden of high tuition costs. If you are like most parents, it comes as a surprise how many additional expenses, outside of tuition, room and board, that your children will accrue during the college years. Therefore, the question becomes, can 529 prepaid tuition funds be used for general living expenses?
The short answer to this often asked question is no, 529 prepaid tuition funds cannot be used for general living expenses. The funds are federally mandated to be used for “qualified education expenses” only.
This term is defined as something strictly required for enrollment and attendance. Most living expenses can not qualify for the Federal mandate. However, there can be exceptions; for example, groceries for a student living off campus could be considered as board charges. It’s best to clarify any gray areas with your 529 prepaid tuition plan administrator.