OCMP is Now Accepting Orders for the Spring Semester of 2024
The Spring semester runs from January 1 – May 31
Criteria for Room and Board as a Qualified Distribution
- You can use a 529 plan distribution to pay for a student’s room and board expenses if the student is enrolled at least half-time.
- The room and board expenses must be incurred while the student is enrolled at a college or university that is eligible for Title IV federal student aid.
- The student must be seeking a degree, certificate or other recognized credential
Caps on the Cost of Room and Board
- The room and board costs must not exceed the greater of The room and board allowance listed in the college’s official cost of attendance, or The actual invoiced cost of room and board if the student is living in housing that is owned or operated by the college
- Most colleges have three student budget allowances for room and board. One allowance is for students without dependents who live at home with their parents, one is for students without dependents who live in housing that is owned or operated by the college, and one is for all other students, such as students who live off campus.
- Thus, if the student is living off-campus, the cost of room and board must not exceed the allowance for room and board in the college’s student budget for students living off campus.
Paying for room and board with a 529 plan
- If the student is living on-campus, their qualified room and board costs will be equal to the actual invoice amount they are charged for housing owned or operated by the college. This typically includes housing costs and a meal plan.
- But for students residing in apartments or other off-campus housing, qualified room and board costs must be less than or equal to what is included in the college’s cost of attendance (COA) allowance for room and board for the period. The COA estimates a student’s total cost of college in a given year, which includes tuition, fees, room and board, transportation, books, supplies and equipment and other expenses, and is used to determine need-based financial aid eligibility. Keep in mind that not all items included in the college’s COA, such as transportation, are considered qualified expenses for 529 plan purposes.
- Students can obtain their school’s room and board allowance for residing off-campus from the college’s website or the financial aid department. The college will typically provide an allowance for those who reside in apartments as well as those who live at home with their parents during the school year. While living off-campus, add up the receipts from any rent, utilities, groceries or other housing expenses each year until you reach the maximum amount for a tax-free 529 plan withdrawal.