If you've contributed money to a 529 college savings plan for college expenses, those funds can be used to pay study abroad expenses, too. subject matter experts, Kim Porter is a former contributor to Bankrate, a personal finance expert who loves talking budgets, credit cards and student loans. This compensation may impact how and where listings appear. But check first, say the experts. There are about 400 colleges in other countries that are eligible to use 529 money, Kantrowitz says. It encourages people to save money by offering tax incentives. The beneficiary attends a military academy. California Consumer Financial Privacy Notice. While we adhere to strict 529 plans can be used for whatever comes after high school, which includes trade, technical and specialty schools, community colleges, certificate programs, four-year universities and colleges, graduate school, law school, and med . U.S. Department of Education's school code lookup. Investopedia does not include all offers available in the marketplace. Books, textbooks, supplies and equipment. Select a 'state' and leave 'school' blank to see all schools for that particular state, territory, or foreign country. The latest articles and tips to help parents stay on track with saving and paying for college, delivered to your inbox every week. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence. Helping families save for college since 1999. A 529 account only considers K-12 tuition as a qualified expense. Porter writes for publications such as U.S. News & World Report, Credit Karma and Reviewed.com. Many states offer tax deductions or credits when parents or grandparents fund 529 accounts. These withdrawals are tax-free as long as they're used for qualified education expenses. Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. Health insurance, car insurance, renters insurance these are necessary expenses for many students. The good news is that you can use your 529 money to pay for some of the expenses associated with studying in a foreign country. She is also a speaker and communications consultant. In particular, while tuition, fees, books, supplies and equipment, and room and board (if enrolled at least half-time) are considered qualified expenses, transportation and travel expenses are not. For example, room and board on campus may be an option but how does that compare to the cost of living off campus? Theyre also flexible; if your child receives scholarships or chooses not to attend college, you can designate a new beneficiary, and you can invest in almost any plan. Any other tax-free payments (but not gifts or inheritances) received as educational . 4 Surprising Places to Use 529 Plan College Savings Schools Details: 3. International schools: There are more than 400 schools abroad that are also eligible for 529 funds, including the Glasgow School of Art, the Australian National University Verified 7 days ago Most study-abroad expenses are made up of tuition, fees, required textbooks, and approved room-and-board expenses, which are eligible to be funded through withdrawals from a 529 account. A 529 plan is an account that helps people save money for higher education. You can search for colleges and universities that are eligible for Title IV federal student aid using the tool atFederal School Code Lookup for Section 529 Eligible Institutions. 529 Plan: What It Is, How It Works, Pros and Cons, How New Tax Changes Promote 529 Investments. We maintain a firewall between our advertisers and our editorial team. Required textbookswhich can be another significant expenditureare also covered. The funds can be used for a variety of qualified educational expenses, including tuition, fees, books, room and board, and computer equipment. 444 Brickell Avenue, Suite 820 Miami, FL 33131. Any accredited institution should be able to accept funds from a 529 savings plan. If your child is heading abroad for higher education, you might be looking for ways to cover the cost. Often, study abroad costs are paid to U.S.-based schools that run the programs, but there are also over 400 schools outside of the U.S. that are considered eligible. 313 Qualified Tuition Programs (QTPs), Publication 970: Tax Benefits for Education, Many Students Get Federal Student Aid to Help Pay for Their Study at International Schools, Either at the Undergraduate or Graduate Level. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. You can find out by consulting the Federal School Code List. Many students who use 529 plans (college savings accounts) to fund their education at KU can also use their 529 plan for study abroad. 313 Qualified Tuition Programs (QTPs), Publication 970, Tax Benefits for Education. The same list of things that would be covered at your home school mentioned earlier. - S.S., Lubbock, Texas Answer: Yes. The cost largely hinges on three things: If you are enrolling in a study abroad program through your home university, you'll effectively pay the same for tuition, fees, and room and board at the host school as you would at home. Many 529 plans offer gifting platforms to allow friends and family to contribute. Unfortunately, there are study abroad coststhat are not covered because they are not considered qualified expenses by the Internal Revenue Service (IRS). Saving For College is an unbiased, independent resource for parents and financial professionals, 2023 Bankrate, LLC. As long as the academic institution you plan to attend outside of the U.S. is eligible to participate in federal student aid programs, you can use your 529 money to pay for qualified education expenses. Internal Revenue Service. That way, youll be prepared if the IRS audits your tax return and tries to challenge whether the expenses are eligible for tax-free withdrawals. Here are the rules. Generally, those include the normal costs of attending an educational institution, such as: But a 529 plan wont cover certain expenses, including: If you use 529 funds to pay for these nonqualified expenses, the IRS will apply income tax to the withdrawals, as well as a 10 percent penalty on the earnings portion of the withdrawal. Financial Aid & Scholarships. You can find out which schools qualify by checking the Department of Educations list of participating schools. The majority of 529 savings plans have no state residency requirements, leaving you free to choose froma vast number of plansalthough you are likely to forgo a state tax break for your contributions if you do. Posted Date. Internal Revenue Service. Our editorial team does not receive direct compensation from our advertisers. Using a 529 Plan To Pay for the Cost of Studying Abroad 529 plans are designed to offer a tax-advantaged way to save for qualified higher education expenses at eligible colleges and universities. Your state may impose taxes and penalties as well. Study abroad programs can also be sponsored by third-party companies, which charge their own fees. Room and Board Apply Now! The Uniform Gifts to Minors Act allows minors to own property including securities. You may also be subject to taxes and penalties levied by the state in which the account is held. We also reference original research from other reputable publishers where appropriate. The offers that appear in this table are from partnerships from which Investopedia receives compensation. What college expenses are covered by a 529 plan when you study abroad? A qualified tuition program shall be exempt from taxation under this subtitle. A 529 College Savings Plan is named after Section 529 of the Internal Revenue Code, and it is often just called a 529 plan. so you can trust that were putting your interests first. (You cant use your 529 to pay for U.S. health insurance either.). Travel-abroad expenses such as airfare or international health insurance would not be qualified education expenses and could not be paid for with 529 funds. Save for anyone You can open an account for a child, grandchild, friendeven yourself. Saving For College is an unbiased, independent resource for parents and financial professionals, providing them with information and tools to understand the benefits of 529 college savings plans and how to meet the challenge of increasing college costs. Does Each Need a Separate 529 Plan? Many foreign colleges and universities are on the list. Before putting down a deposit on an expensive study abroad program, you may want to familiarize yourself with the rules regarding 529 plans and educational trips. Traditional 529. Registered and certified apprenticeship programs. Just be sure the program is approved by the Department of Education and that you use withdrawn funds to cover qualified education expenses (which don't include travel expenses). The fantasy of studying abroad is often accompaniedby sticker shock, as tuition and housing costs for these programs continue to rise. What to do when you lose your 401(k) match. Can I Roll a Traditional IRA Into a 529 Plan for My Grandchild? You can use 529 money tax-free at any college that is eligible for federal financial. Postsecondary education tuition - Regardless of the school your child chooses to attend, your 529 savings plan funds can be used toward tuition as long as the school is eligible for federal student aid (see Qualified Tuition Expenses on page 2). The listing is based on the U.S. Department of Education's school code lookup. There's something else to consider if you are going through a third-party provider. Tax-Smart Ways to Help Your Kids or Grandkids Pay for College, 529 Strategies That Maximize Student Aid Options, Great Financial Gifts for Kids for the Holidays. However, student insurance costs aren't in the category of 529 qualified expenses. Read our, Using a 529 Plan To Pay for the Cost of Studying Abroad. Our loans reporters and editors focus on the points consumers care about most the different types of lending options, the best rates, the best lenders, how to pay off debt and more so you can feel confident when investing your money. If you cant find a particular institution on the list, contact the schools administrative office and ask whether students can apply for federal financial aid in the U.S. A lot of parents will also be happy to know that they have the option to use 529 assets to pay for up to $10,000 in tuition expenses (per beneficiary) at elementary, middle, or secondary public, private, or parochial schools. The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. ; This includes citizens of the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, The funds from 529 education savings account can be used at any accredited university in the US as well as some qualifying institutions abroad. Joe says the 529 is typically for tuition, room and board, books and supplies, and he has never seen his clients attempt to use the savings to travel to a college, university or an internship. in Aviation Maintenance Technology, a B.A. What about the Plane Ticket? Hope Credit was a nonrefundable higher education tax credit offered to some American taxpayers, replaced in 2009 by the American Opportunity Tax Credit (AOTC). The more important consideration is what you cannot use 529 account money for when paying the cost of studying abroad. How To Save on the Cost of Studying Abroad. 1. Education loans can be obtained from the government or through private-sector lending sources. 3. Travel to and from the host country or school, International health insurance or health care costs incurred overseas, Living expenses beyond room and board as provided by the host school, Fees for activities and sports that aren't part of your curriculum. More than 400 foreign colleges and universities are eligible for Title IV federal student aid. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Please see our Contact Us page for details, hours, and additional information. When she's not writing or reading, you can usually find her planning a trip or training for her next race. Study abroad expenses such as tuition and fees, program fees, room and board, and required textbooks are eligible to be funded with a 529 plan, just like they are in the United States. University of Louisville Office of Study Abroad and International Travel. So, for example, while you may use your car to drive to school, you cannot use 529 funds to insure the vehicle. Investopedia requires writers to use primary sources to support their work. *Earnings on nonqualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes. Qualified expenses are amounts paid for tuition, fees and other related expense for an eligible student that are required for enrollment or attendance at an eligible educational institution. Study Abroad and 529 Plans. Any costs associated with an international cellphone. But the most common use is for parents or other relatives to open a 529 account with a child as the beneficiary. This is an important question and finding the answer starts with analyzing the cost of studying abroad. Here are seven ways to put a 529 plan to use: 1. A Red Ventures company. If you are living off campus while studying abroad (as opposed to on campus housing provided through the host school), then room and board can't exceed the school's (presumably US school and not the hosts) published cost of attendance . Federal School Code Lookup for Section 529 Eligible Institutions. Photo . Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Notwithstanding the preceding sentence, such program shall be subject to the taxes imposed by section 511 (relating to imposition of tax on unrelated business income of charitable organizations). Fortunately, the bulk of study abroad expenses consists of tuition, fees, and room and board, which are eligible to be funded with529 money just as they are in the United States. Internationales Theologisches Institut AUSTRIA Eligible Antwerp Management School BELGIUM Deferment Only College of Europe BELGIUM Deferment Only Ghent University BELGIUM Deferment Only Katholieke Universiteit Universit de Lige Universiteit Antwerpen BELGIUM BELGIUM BELGIUM Deferment Only Deferment Only Bankrate follows a strict Please contact your own tax professionals with any questions, or ask us for a referral to a US tax professional we recommend. But if theyre earning a degree through the host school, the school determines the cost of attendance. Michael Boyle is an experienced financial professional with more than 10 years working with financial planning, derivatives, equities, fixed income, project management, and analytics. Qualified Education Expenses for Education Credits. 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