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College Alternatives 2020: Can You Use A 529 for a Gap Year?

This summer, my school district’s online mom group was flooded with posts seeking advice on what teens should do about college: Take a year off? Study closer to home? Many parents had opinions: “Don’t do it! They’ll never go back!” they’d say.

Which got me wondering: Why not? In many countries, a year off between high school and college—what’s called a gap year—is part of life. Can it be done? When does it make sense to pivot plans?

“As colleges are announcing their COVID-related schedules, more parents are calling to inquire about other options,” says Julia Rogers at EnRoute Consulting, a firm specializing in gap year planning. “Many colleges have branded themselves as not just an education but also an experience. With on-campus living in doubt, families are asking, ‘If we can’t have that experience, is it worth it?’”

If you’re wondering if a change in plans makes sense for your family—and how it will impact your finances—here are some things to consider:

What Are the Alternatives to College?

The class of 2020 has experienced several rounds of disappointment: canceled proms, virtual graduations, and remote college plans, to name a few.

While international travel may be out, students who want to grow personally and gain practical skills can consider other creative alternatives, such as a wilderness-based gap year program, working on the election, or volunteering at a food bank or other service organization.  Families may want to check out the Gap Year Association, Service Year Alliance, or the Student Conservation Association for ideas and advice on creating a gap-year plan.

What Is the Financial Impact?

Is the expense of college worth it right now? That’s a question many students and families are weighing. But using this time to consider college more deeply may be something of a blessing in disguise, says Judy Cunningham, community outreach manager for the Ohio Tuition Trust Authority, which manages Ohio’s 529 Plan, CollegeAdvantage. “The pandemic is pushing families to look at what their students should be doing versus what they want to be doing. This may be the impetus that makes families sit back and say, ‘let’s re-evaluate.’”

Cunningham has seen how crisis situations can shine the spotlight on new career opportunities, in this case: research, medicine, science, and public safety. Students may reconsider their school of choice—and look at options that are either closer to home or better suited to their long-term goals, like apprenticeships, non-traditional schools, or a gap-year program. She notes that a 529 plan can be used for any federally accredited educational institution offering gap year programming. To confirm that an institution is federally accredited, visit the U.S. Department of Education’s website: fafsa.ed.gov. If you’re hoping to use a 529 plan withdrawal for an apprenticeship program, you can visit apprenticeship.gov to confirm they are registered with the Secretary of Labor’s National Apprenticeships Act.

How to Decide?

Going away to college gives teens the opportunity to live independently. If on-campus living is put on hold, what does that mean for your student emotionally and financially?

Cunningham notes that many universities are reworking their terms and policies. Some are eliminating rules related to all freshman living on campus. Others are writing in specifics on what housing costs—if any—will be refunded if campuses are closed. “It’s important to look at the fine print for costs. This includes financial aid and scholarships. Some can’t be deferred,” she says.

Rogers knows this is a sticking point for many parents. “Getting into college is such an arduous affair. It can be overwhelming to reconsider plans,” she says. “But the outcomes from a gap year can pay off for years down the road with personal development and skills that help students understand and focus on college when the time is right.”

Julie Schuler

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

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