Distributions from 529 college savings plans can be used tax-free to study abroad, subject to certain restrictions. In particular, the distribution must be used to pay for qualified higher education expenses at an eligible educational institution. Eligible educational institutions include colleges and universities that are eligible for Title IV federal student aid.
There are two different ways to study abroad.
- Most U.S. colleges and university offer a study abroad program, in which the student spends a term or two studying at a foreign university. If the U.S. college or university is eligible for Title IV federal student aid, the study abroad program will be eligible for federal student aid, provided that the classes in the study abroad program are accepted for credit by the U.S. college or university.
- Students can also enroll in a foreign college or university for their entire educational program, provided that the foreign college or university is eligible for Title IV federal student aid. (Foreign colleges and universities that are eligible for Title IV federal student aid are limited to federal student loans.) More than 400 foreign colleges and universities are eligible for Title IV federal student aid.
You can search for colleges and universities that are eligible for Title IV federal student aid using the tool at Federal School Code Lookup for Section 529 Eligible Institutions.
Even though any expense in the college’s cost of attendance is eligible for Title IV federal student aid, including reasonable costs associated with study abroad, qualified higher education expenses for 529 plans are limited to a subset of the cost of attendance. The same restrictions on qualified higher education expenses for study in the U.S. apply to using a 529 plan distribution to pay for study abroad. In particular, while tuition, fees, books, supplies and equipment, and room and board (if enrolled at least half-time) are considered qualified expenses, transportation and travel expenses are not.