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Have a 529 College Savings Plan? You’ve Got More Options Than You Might Think

As the parent of two teens, some days I feel dizzy from the changes happening in their educational journey. We went from pre-pandemic normalcy to pandemic learning to what is now post-pandemic “return to normal.” Yet, with my 17-year-old reviewing his post-high school options, normal doesn’t feel so normal anymore. 

We keep hearing stories about teens making alternate plans for what to do after high school. Some are re-evaluating whether attending college is the best choice. Maybe a gap year or trade school is a better fit? 

We also keep looking at the funds we’ve saved for college and wondering if they will, in fact, cover all the bills. (Spoiler alert: they probably won’t.) 

When we started saving, my kids were both infants. Big plans and high hopes were supported by small monthly contributions to their 529 accounts. These savings plans offered us a tax-advantaged way to save for college. Now that my kids are older, I realize that the four-year-public college experience I had in mind for them might not happen. In fact, for my son, college will likely be an extended affair since he’ll need an advanced degree for his chosen field.

I’m not alone in realizing that the plan I made for my teen when he was little isn’t the plan he has for himself. “When today’s parents were growing up, life decisions were more clearcut: get your license at 16, get a job, graduate and go to college. Today’s teens are re-evaluating these norms,” said Tim Gorrell, former executive director of the Ohio Tuition Trust Authority, which manages Ohio’s 529 Plan, CollegeAdvantage. 

In his role, Gorrell has talked to many parents whose children have delayed or extended their college journey or chosen to explore different educational opportunities. Those parents often wonder if the funds they’ve saved in a 529 account – which has certain parameters tied to withdrawals – can be used for more non-traditional learning. 

The fact is 529 savings come with a lot of options beyond paying tuition for a 4-year college. Here are the top ways today’s students are using their 529 funds to jumpstart life after high school and prepare for what’s next. 

What Can You Use a 529 For?

Trade School

Gorrell speaks with a lot of parents who wonder if saving for college makes sense given all the unknowns. “They will say things like, ‘I have no idea what [my teen] is going to be,’” he said. “The fact, is one way or another – whether they choose a trade school, a traditional four-year university or other avenue, they’re going to need training to build a career.” Funds saved in a 529 account can be used towards any accredited college, university, vocational school or other program recognized by the U.S. Department of Education. You can find a list of eligible programs by visiting the U.S. Department of Education’s FAFSA website. A good rule of thumb is: If a school has a Federal School Code, the program is likely eligible. 


If your child’s trade school program or desired career includes an apprenticeship, some costs—such as fees, textbooks, supplies and equipment—may be paid for with a 529 account. The apprenticeship program must be registered with the U.S. Secretary of Labor’s National Apprenticeships Act to qualify. 

Gap Year Programs

If your teen has dreams of backpacking across Europe, their 529 won’t cover it. However, some gap-year programs offer college credit or other educational opportunities and are accredited. When reviewing gap-year programs with your teen, look for those that offer partnerships with universities. 

Post-Secondary Education

Whether your child decides to get a master’s degree at age 22 or 33, they can use their 529 funds. They can never age out of using 529 funds for education. This is great news for some programs that might call for a few years of work experience before continuing with an advanced degree – teaching, nursing and business, for example.

Off-Campus Living

Is your teen planning to live off campus during college? You can use your 529 funds to help pay for it. You can take up to the amount their school charges for housing and withdraw it from a 529 to cover off-campus expenses. 

All Those College Fees

College tuition and room/board are just the start of fees associated with attending college. Books, computers and other equipment may all be covered under 529 savings. If it’s an expense required by the university or educational institution, it’s likely covered. 

Transfer to other Beneficiaries

Maybe your first born chooses a lower-cost school or takes advantage of the G.I. Bill — and you have the luxury of funds left in their 529 account. These funds can be transferred to another beneficiary. As long as you’re the account owner, you can transfer funds between children on the account. If your older child took out loans for their education, and their younger sibling has 529 funds left in their account after college, these can be used to help pay down the loan. With new laws, 529 funds can be used to pay the principal and interest on qualified education loans for the 529 beneficiary or the beneficiary’s siblings. The provision is for a lifetime total of $10,000 per beneficiary.

Funding a Roth IRA

Your child’s 529 can now help them jumpstart their retirement savings. The federal government recently added another type of qualified distribution for 529 accounts with the SECURE 2.0 Act of 2022. It will allow select unused 529 funds to roll over to a Roth IRA for the same 529 beneficiary. This new benefit will go into effect Jan. 1, 2024. There are a few requirements the fund must meet, including that the 529 account must be open for at least 15 years. Rollovers must also meet federal limits set on Roth IRA contributions, and there is a lifetime $35,000 cap. 

Whether your teen decides to pursue higher education – or explore other avenues towards their passions – the money you’ve been saving in a 529 can help them. And that’s good news for parents of children at any age. 

Julie Grippo Schuler lives in Medina, Ohio with her high school son and middle school daughter.

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