Can a 529 Be Used for Technical School?


Prior to graduation, families and students should assess the type of institution they would like to attend. While some prefer to attend a conventional four-year college, others may desire to select a technical school. According to the Organization for Technical Schools, attending technical school can save families up to $20,000 per year as compared to a four-year institution. If a family has a 529 savings plan established it can result in additional cost savings.

529 Facts

In 1996, Congress created Section 529 of the Internal Revenue Code. The 529 is a college savings and investment program designed to help families save and invest for qualified higher educational expenses for a beneficiary on a tax-favored basis. Qualified higher education expenses include tuition, fees, books, supplies, equipment, computers and related technology and room and board for a student attending at least half time at a qualifying institution.


To establish a 529 plan, there must be an account owner and a beneficiary. There are two types of 529 plans: prepaid tuition plans, which are generally set up to allow families to prepay a student’s future tuition and fees at a particular college or university, and savings plans, which allow families to save for a student’s qualified higher education expenses at any eligible educational institution. Today, all 50 states and some international locations provide access to at least one type of 529 plan. The earlier you start your 529 plan, the more you will save. Investors looking to start a 529 plan should consult their state’s plan for the various requirements and investment options.


In addition to school-related expenses and tuition at colleges and universities, the 529 savings program can also be used at any technical school in the country as long as the school is accredited. In most states, there are no income limitations or age restrictions. Generally the account owner sets up the plan and controls the account. The beneficiary is the designated student or individual that will attain the benefit of qualified higher education expenses at the selected institution.

Qualifying Schools

The U.S. Department of Education determines accreditation by assessing whether or not any post-secondary institution meets the required criteria levels. There are some technical/vocational schools that do not meet these criteria; however, many of them do. The goal of accreditation is to ensure that education provided by institutions of higher education meets acceptable levels of quality. Accrediting agencies, known as private educational associations, develop evaluation tools to ensure that the technical institute meets the necessary criteria. If they do meet the criteria, they become accredited. The U.S. Department of Education's website has a list of accredited post-secondary schools and programs searchable by state, accrediting agency or institution (see Resources).


It is important to keep abreast of any changes to the tax code, state regulations or changes in investment options that could positively or negatively impact your particular plan. It is also necessary to watch for increases in tuition that could create a shortfall in your plan's projected outlay.

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