Can 529 Plan funds be used to pay for OFF-CAMPUS Room & Board?  Here is your guide.

A 529 plan is a tax-advantaged savings plan designed to encourage saving for future education costs. 529 plans, legally known as “qualified tuition plans,” are sponsored by states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code.

A tax-advantaged 529 college savings plan can be used to pay for college, but not all expenses qualify. Withdrawals from 529 plans are called distributions. These must be used toward qualified education expenses or else they will incur federal income tax and an additional 10% penalty.

Qualified expenses in a 529 plan may include college tuition and fees, vocational and trade school tuition and fees, some room and board, off-campus housing, food and meal plans, books and supplies, computers, computer software, internet services, special-needs equipment, and some business purchases.

How to Pay for Room and Board

A 529 plan may be used to pay for room and board but only if certain requirements are met.  Room and board includes the cost of housing and the cost of a meal plan.  Colleges usually have room and board budgets for:

  • students who live on-campus in college-owned operated housing,
  • students who live off-campus in an apartment, and
  • students who live off-campus with their parents or other relatives.

For room and board expenses to be considered qualified, the student has to be enrolled in an eligible college program on at least a half-time basis. Qualified room and board costs can include both on- and off-campus housing costs, as long as they were incurred during an academic period during which the student is enrolled or accepted for enrollment in a degree or certificate program or another program leading to a recognized education credential.

Enrollment in a study abroad program may also be considered as long as it is approved for credit by the student’s home college or university. Rent incurred during the summer months is also considered qualified when the student is enrolled at least half-time.

Living On-Campus

If a student is living on-campus, the qualified room and board costs will be equal to the actual invoice amount that the college charges for housing owned or operated by the college.  It typically includes housing costs and a meal plan.

Living Off-Campus

If a student is living off-campus, housing and rentals are qualified up to the cost of room and board on-campus.  For example, if it would only cost $1,500 a month to live on campus in campus provided housing, but the student chooses to live off-campus and pays $2,000 a month for rent and utilities, the student can only claim up to $1,500 a month since living on campus is cheaper.

If a student is living off-campus because on-campus housing is not available, then the student can claim the higher off-campus costs.  However, the student needs to obtain a letter from the school signed by a school official that specifically states that on-campus is not available and it directs that the student must make other housing accommodations.

In this case, the cost of the off-campus accommodation must be reasonable and within the acceptable range for the locality where the college is located.

Food and Meal Plans

Since room and board costs are qualified expenses, this means that students with an on-campus meal plan can pay for it with 529 funds.

Students living off-campus can designate food as a qualified purchase as long as the amount spent is less than or equal to what is included in the college’s cost of attendance allowance for room and board.  Students can only claim the lesser of either what they actually pay and prove with receipts for the food they buy, or what the school would charge for a meal plan that would meet the students’ needs.

The only way students can claim the higher costs of living and shopping for food off-campus is if the campus does not have housing available and it is proven with a letter from the school stating this as a fact.  It may also apply if eating on campus is not conducive to the primary reason why the student is there in the first place, which is to learn and get their degree.

Even if students have a letter verifying that campus housing is not available, it does not automatically mean that they can claim the higher costs of food purchased off-campus.  Even these costs must be within reason and there are established per diems for food allowances.  The allowed per diem amounts vary widely and it depends on where the student is attending college and the cost of living in that area.


To be able to maximize paying for food and board expenses using 529 funds, students need to keep it real.  If expenses are beyond what is real and reasonable, it will be the IRS who will keep it real with an audit about 24 to 36 months after filing a tax return.  So it is better to know what the qualified expenses are for a 529 fund or to consult a tax professional.

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