How To Use 529 Plans For Non-College Education

For years, 529 plans were marketed as college funds. The tax treatment is what drew families in: investment growth is tax deferred, in some states you can even get a tax deduction for contributions, and withdrawals are tax free when used for qualified education costs. 

In practice, these qualified expenses have included tuition, required fees, books, equipment, computers, and room and board for at least half-time students at Title IV–eligible institutions.

However, recent changes are making 529 plans even more flexible.

First, under the SECURE Act, 529 money may be used for expenses tied to a registered apprenticeship.

Second, under the OBBBA, qualified uses expand to include a set of non-college pathways: certain professional license and certification fees, exam costs such as the bar or CPA, and required continuing education to maintain a credential. 

The result is a wider on-ramp for students and working adults who prefer skills training over a traditional degree.

What Qualifies For 529 Plans

Families can already use a 529 for eligible trade and vocational programs if the school participates in Title IV federal student aid. That includes many technical colleges and career programs in fields such as HVAC, welding, culinary arts, and more - as long as they are connected to a community college or are accredited themselves. You can confirm a school’s status using the Federal School Code Lookup.

Registered apprenticeships also qualify. The apprenticeship must be registered with the U.S. Department of Labor, and students can search Apprenticeship.gov to verify.

Qualified costs mirror college rules: tuition and fees, required textbooks, supplies, and equipment, including tools and safety gear needed to participate. Computers and internet access qualify when required. Room and board qualify only when the beneficiary is enrolled at least half time in a degree or certificate program and the costs fall within the institution’s published cost of attendance.

Using 529 funds for expenses that fall outside these rules triggers federal income tax and a 10% penalty on the earnings portion of the withdrawal. State penalties may also apply. 

What Expands Due To The OBBBA

Beginning with withdrawals after July 4, 2025, the list of qualified uses includes more non-college paths:

The expansion does not cover recreational classes, commuting or travel costs, or general career development without a formal credential. Room and board remain limited to half-time enrollment in a degree or certificate program and are capped by the school’s published allowance.

Because 529 plans are subject to both federal and state tax law, some states may take time to align with the new federal uses. Families who claim a state deduction or credit for contributions should confirm how their state treats these expanded withdrawals. Look at The College Investor's full guide to each 529 plan by state.

How To Prove Eligibility

A few steps reduce the risk of a tax surprise:

Key Things To Remember

529 plans can trim the bill, but they may not cover everything. Students can layer scholarships or grants from schools and industry groups, take on paid apprenticeships that include classroom hours, and consider employer tuition support where offered.

If a 529 has more money than needed, the account owner can change the beneficiary to another family member, or leave the funds to grow for future education. Non-qualified withdrawals remain an option, but the earnings portion will be taxable and subject to the 10% penalty.

The cost and time commitment of a four-year degree remain barriers for many households. Trade school, registered apprenticeships, and license-based careers can offer faster entry into the workforce at a lower total cost. 

With the 2025 expansion, a 529 can now follow students into those settings, support mid-career upskilling, and cover required continuing education, all while preserving the tax benefits that make the accounts attractive in the first place.

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