7 Alternative Ways to Use Your 529 Plan Funds

529 plans have evolved well beyond their original role as a narrow college savings tool. Recent updates through the SECURE Act and the One Big Beautiful Bill Act (OBBBA) have expanded how you can use these accounts, giving you more flexibility without triggering taxes or penalties. Depending on your situation, you can now use 529 plan funds for ongoing education, to pay down student loans, or even to support retirement savings.

If you’ve built up a 529 balance and aren’t sure how it fits into your plan, or you want a more tax-efficient way to cover education-related expenses, here’s a fresh look at how these accounts can work for you today.

7 Additional Ways to Use Your 529 Plan Funds

#1: K–12 Education

Beginning in 2026, you can use up to $20,000 per year per student from a 529 plan for K–12 tuition at public, private, or religious schools. That’s a significant increase from the previous $10,000 limit and creates more room to use these funds strategically during your child’s school years.

Many plans also now cover a wider range of education-related expenses beyond tuition. For example, you may be able to use 529 funds for curriculum and instructional materials, books, online programs, tutoring, standardized test fees like the SAT or ACT, dual enrollment courses, and certain therapies for students with disabilities.

If you’re currently paying for any of these expenses out of pocket, this is a good time to reassess how your 529 plan fits into your broader cash flow and planning strategy.

#2: Trade Schools, Vocational Programs, and Apprenticeships

You can also use 529 plans to support career paths that don’t follow the traditional four-year college route. These funds can cover tuition, required fees, books, and supplies at eligible vocational or trade schools, including technical institutes, cosmetology programs, and culinary schools, as long as the program participates in federal student aid programs.

You can also use 529 funds for registered apprenticeship programs. This includes the cost of textbooks, equipment, and other required materials for programs recognized by the U.S. Department of Labor or a state apprenticeship agency.

#3: Career Credentials and Continuing Education

You can now use a 529 plan to invest in your skills and offset those costs in a tax-efficient way, whether you’re aiming to increase your income or transition into a new field.

These accounts now cover post-secondary credential and certificate programs, even when they aren’t tied to a traditional degree. You can apply funds toward tuition, required fees, and materials for programs designed for adult learners or those making a career change.

You can also use 529 funds to earn or maintain a professional license or certification. That includes exam fees and continuing education required to keep your credentials current, as long as the program meets federal 529 guidelines.

#4: Room, Board, and Living Expenses

You can also use 529 funds to cover the everyday costs that come with being a student.

For students enrolled at least half-time, on-campus room and board typically qualify up to the school’s published cost of attendance, which sets a clear limit on what can be covered tax-free. Off-campus living expenses may also qualify, but the rules are more specific.

Rent and groceries generally count up to the school’s stated room and board allowance. Dining out usually doesn’t qualify, however, and you’ll need to rely on the school’s cost estimates and keep detailed records to support these expenses.

#5: Special Education and Support Services

You can now use 529 plans to cover services that support a student’s ability to learn. This includes certain educational therapies for students with disabilities, such as occupational, behavioral, physical, and speech-language therapy, when provided by a licensed or qualified practitioner and tied to the student’s education.

Specialized tutoring and other support services may also qualify if they align with the student’s educational needs, though eligibility depends on federal guidelines and your specific state plan.

You can also roll 529 funds into an ABLE account for the beneficiary or a qualifying family member. This provision was set to expire at the end of 2025, but the OBBBA removed that deadline, so these rollovers are now allowed indefinitely.

#6: Student Loan Repayment

You can also now use 529 funds to help pay down student debt. The SECURE Act allows up to $10,000 per beneficiary, over their lifetime, to be applied toward qualified education loans, including both federal and private student loans. You can also use up to $10,000 for each of the beneficiary’s siblings to pay down their qualified student loans.

However, keep in mind that if you use tax-free 529 funds to pay student loan interest, you can’t also claim that same interest for the student loan interest deduction. It’s important to coordinate how you use these dollars, so you don’t give up a tax benefit unnecessarily.

#7: Roth IRA Rollovers

Lastly, you no longer have to keep leftover 529 funds tied to education. The SECURE Act allows you to roll unused 529 plan funds into a Roth IRA in the beneficiary’s name without triggering income tax or penalties, subject to certain limits.

Here are the key rules to keep in mind:

• You can roll over up to $35,000 per beneficiary over their lifetime.
• The 529 plan must have been open for at least 15 years before you start rollovers.
• Only the 529 beneficiary can receive the Roth IRA funds.
• Contributions and earnings from the past 5 years aren’t eligible for rollover.
• Annual Roth IRA contribution limits still apply, so you may need to spread transfers over multiple years.
• The beneficiary must have earned income at least equal to the amount rolled over in that year.
• The beneficiary must meet Roth IRA income eligibility limits for that year.
• You must complete the rollover as a direct trustee-to-trustee transfer to avoid taxes or penalties.

Because of these constraints, you’ll often get the best results by spreading this strategy over several years rather than trying to move everything at once.

Your 529 Plan Funds and Broader Financial Strategy

529 plans now offer far more flexibility, which makes how you use them just as important as how much you’ve saved. With the ability to support education, student loan repayment, career development, and even retirement planning, these accounts can play a meaningful role across different stages of your financial life.

At the same time, each use comes with tradeoffs. The timing and structure of withdrawals can affect your tax liability, your cash flow, and how efficiently the rest of your plan operates. Taking a coordinated approach helps ensure these funds support your broader financial objectives without creating unintended consequences.

If you’re unsure how your 529 plan fits into your current financial strategy, or you’re seeking a more structured approach to using these funds, working through the details with a Financial Security advisor can help. Contact us to discuss how these options align with your overall financial plan.