There’s no way around it—education is expensive. From rising college tuition to the everyday costs of books, housing, and supplies, the price tag can add up fast. And for many families, figuring out how to cover those expenses can feel overwhelming.

That’s where a 529 plan comes in. Whether you’re saving for private school, college, grad school, or even student loan repayment, this tax-advantaged savings account is one of the most flexible tools available to help you plan ahead—without sacrificing your financial stability today.

Let’s break down how it works and how to make the most of it.

What Is a 529 Plan?

A 529 plan is a tax-advantaged savings account designed to help families set aside money for qualified education expenses. Here’s the big benefit:

• Your money grows tax-free, and
• Withdrawals are tax-free too—as long as the funds are used for eligible education costs.

These plans are sponsored by states or educational institutions, but you don’t have to invest in your home state’s plan. Many families shop around for the plan that offers the best benefits, investment options, or state tax deductions.

What Can You Use a 529 Plan For?

529 plans have become increasingly flexible over the years. Here’s what’s currently considered a qualified education expense:

• Tuition and fees (K–12 private school and postsecondary education)
• Books and required supplies
• Computers, software, and internet access (if used primarily for school)
• Room and board (if the student is enrolled at least half-time)
• Special needs services and equipment
• Student loan repayments (up to a lifetime limit of $10,000 per beneficiary)

And here’s what you can’t use 529 funds for:

• Transportation or travel costs
• Health insurance
• College application or testing fees
• Sports, clubs, or other extracurriculars (unless part of required tuition)

How to Use Your 529 Plan

Let’s break it down by category to avoid any confusion:

• K–12 Tuition: You can use up to $10,000 per year per student for tuition at public, private, or religious elementary and secondary schools.
• College or Vocational Tuition & Fees: Fully covered, including at eligible trade schools and apprenticeships.
• Books & Supplies: Only if they’re required by the school or course.
• Room & Board: Covered if the student is enrolled at least half-time. For off-campus housing, you’re limited to the amount the school includes in its published cost of attendance.
• Student Loans: You can use up to a lifetime limit of $10,000 per beneficiary to repay qualified student loans.
• Technology Needs: Computers, internet access, and educational software are covered if they’re primarily used for schoolwork.

What Happens If You Don’t Use the Money for Education?

Plans change—and fortunately, so can your 529.

If the original beneficiary doesn’t use all the funds, you have a few options:

• Change the beneficiary to another eligible family member (including siblings, cousins, or even yourself).
• Use the funds to pay off student loans, up to $10,000 per person.
• Rollover to a Roth IRA: A new option allows you to move unused 529 funds into a Roth IRA for the beneficiary, subject to IRS rules. As of now:
  • The 529 must be open for at least 15 years.
  • Rollovers are subject to annual Roth contribution limits.
  • The lifetime rollover limit is $35,000.

If you withdraw money for non-qualified expenses, you’ll generally owe income taxes and a 10% penalty on the earnings portion of the withdrawal. However, exceptions apply—like if the student earns a scholarship or attends a U.S. military academy.

Final Thoughts

A 529 plan is one of the most versatile and tax-friendly ways to save for education—but like any investment tool, it’s important to understand the rules. The more strategic you are with how you save and spend, the more impact your money can have when it’s time to pay for school.

Need Help Planning for Education Costs?

If you’re unsure how a 529 plan fits into your broader financial picture—or you want help choosing the right plan for your goals—we’re here to help.

At Navalign Wealth Partners, we help families make confident, well-informed decisions about planning for education. Whether you’re just getting started or rethinking your strategy, let’s talk about how to make the most of your investment in the future.