Give yourself a high five for whatever you’ve done to date to prepare for your child’s upcoming college expenses.
As you likely know, funds accumulated in a 529 plan account can be used to cover a wide range of the costs your child will soon face. These include tuition, fees, books, supplies, and any computer equipment and software required for attendance. And if attending at least half-time, certain room and board costs are covered as a 529 plan expense as well.
There are, however, some expenses that cannot be covered by 529 plan account withdrawals. By setting aside a portion of cash graduation gifts, as well as summer earnings, and carefully budgeting any personal expense stipend you’ll be providing once the semester begins, your child can be well prepared to make a meaningful contribution toward the funds they’ll need to cover some of these uncovered costs.
Often-overlooked expenses that are not covered by 529 plan accounts include:
Dorm décor
Attending college comes with upfront costs – and they tend to be higher for first-year students who don’t yet have a realistic idea of what’s truly needed — and who may overspend on things like room décor.
The more traditional dorm room expenses you’ll face include bedding (such as blankets, pillows, a comforter or bedspread, mattress topper, and those sometimes hard-to-find extra-long twin sheets), under-the-bed storage units, a mini refrigerator, and other small appliances or decorations that help turn a dorm room into a comfortable space that feels more like home. Add shower shoes, a laundry bag, bathroom caddies, and a bed riser, and you’ve got some shopping to do.
Travel to/from campus
From the first drop-off trip through all the trips to and from campus that will be made in the coming years, the cost of transportation is an expense that needs to be budgeted for. Trips between home and campus — especially during peak travel times like holidays and school breaks — can add up quickly. Whether taking a bus, train, or plane, or sharing the cost of gasoline and tolls with a fellow student, your child will need to plan ahead for these expenses. If your child intends to bring a car to campus (where permitted), it’s important to note that the cost of parking, gasoline, and maintenance is not an allowable expense for 529 plan purposes.
And if you plan, as a parent, to visit for a family weekend, you’ll need to factor in the cost of both transportation and lodging (and be sure to book ahead!). Additionally, if you plan to travel to bring your child home after a semester or school year ends, you’ll need to budget for those transportation expenses as well.
Everyday personal expenses
The cost of laundry, cleaning supplies, toiletries, meals outside of their paid-in-full dining plan, haircare, clothing, wellness products and services, and other day-to-day expenditures can add up if not properly budgeted for.
Campus life and involvement
Joining clubs, attending cultural or sporting events, and participating in other activities may come at an additional cost. These expenses may include costs associated with intramural activities, professional or social clubs, and fraternity or sorority membership dues.
Excursions with friends
Whether making a cross-town visit via Uber, a local weekend road trip via bus or train, or taking a full-blown spring break vacation with airfare and hotel included, travel costs must be factored in, as they are not a permitted expense for 529 plan purposes.
Technology & subscriptions (not required for attendance)
Technology and tech subscriptions that are not required for attendance are not permissible expenses that can be covered by 529 plan withdrawals. These include cell phones and cell phone service.
Storage
When the school year comes to an end, many families find it more convenient to place items that will be needed for the next academic year in storage at or near their child’s college rather than take them back and forth each year. If this sounds like an approach you’d like to undertake, be sure to research and include the cost of summer storage in your student’s budget for the school year.
Knowing which expenses can and cannot be covered with 529 plan funds helps families plan ahead and avoid unexpected financial strain.
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