Tax Guide

529 Plan: Qualified Education Expenses

529 Plan: Qualified Education Expenses
Ines Zemelman, EA
01 March 2021

A 529 plan, also known as a qualified tuition program (QTP), is a state program that helps families save on their children's education expenses. This plan allows a contributor (parents or family members) to either prepay qualified higher education expenses at an eligible educational institution or contribute to an account for paying those expenses.

Qualified expenses for QTP

You can deduct up to $10,000 per year. So, what are the qualified expenses for the purpose of the student loan interest deduction?

  • Tuition and fees
  • Room and board
  • Books, supplies, and equipment
  • Other necessary expenses (such as transportation)

Pay attention to the cost of room and board as it qualifies only to the extent it isn't more than:

  • The allowance for room and board that was included in the cost of attendance or
  • If greater, the actual amount charged if the student is residing in housing owned or operated by the eligible educational institution

What is an eligible educational institution?

An eligible educational institution is an accredited educational institution. They include public, non-profit, or proprietary colleges and universities. These institutions also should be eligible for participation in a student aid program led by the U.S. Department of Education. There also might be eligible institutions located abroad that provide student aid programs. 

As for the student loan interest deduction, an eligible educational institution manages an internship program that provides a degree or a certificate from a higher education institution or a hospital where students can get postgraduate training. 

An educational institution must stay eligible for the academic period for which the student loan was incurred. The deductibility of interest on the loan isn't affected by the institution's subsequent loss of eligibility.

How to check the eligibility of an educational institution?

Basically, there are two main criteria: an eligible educational institution offers higher education beyond high school (it can be a college, university, or other institution), and it should be eligible to participate in a student aid program. 

If you want to make sure that your school is an eligible educational institution, you can do the following:

  1. Make sure that students receive a Form 1098-T, Tuition Statement.
  2. Check out the U.S. Department of Education’s Database of Accredited Post Secondary Institutions and Programs (DAPIP) or the Federal Student Loan Program list.
  3. Ask the school if they are an eligible educational institution.

Which plan is for you?


To define the best plan, check out the College Savings website that gives you a comparison of all of the offered plans by each state.

International Schools which participate in U.S. Federal loan programs

This spreadsheet contains the full list of Foreign Schools that participate in the Federal Student Loan Programs and are eligible for qualified education expenses.

Ines Zemelman, EA
founder of Taxes for Expats