Qualified 529 expenses

[anonymouse1]

I know you can claim at least as much as the "estimated cost" from the school is. The "estimated cost" assumes a double (I think in one of the freshman dorms), and since freshmen are required to have an Unlimited meal plan, probably the least expensive "Unlimited Basic" (no guest meals, no "dining dollars") plan.  Can you claim actual cost up to "equivalent costs" (for example, the apartment-style dorm DD was in last year which was 4BR/1BA is now $4623 and she's renting a 3BR/3BA furnished apartment and it should be less for the semester even counting utilities)? Do you only get to claim rent for September if classes start September 2nd, even if the lease starts August 1 and move-in for the dorms is before Labor Day (September 1), and 5 months' rent is less than 1 semester in the dorm (at least the equivalent junior/senior housing, not the "estimated cost" freshman double)? Do you get to claim rent for all of May if graduation is May 5 2026 (and dorms would let you stay until that day or a day later) or do you have to prorate? We're looking at 10 months' rent being less than 2 semesters in the (senior) dorm. If she can't sublet to someone for June and July we'll just have to pay those months out of pocket.  But I'm wondering if we can just submit $814x5 = $4070 for each fall and spring for rent, and up to the $3430 cost of the Unlimited Basic meal plan for groceries, or if fall is going to be limited to $814x4 = $3256 for rent and just slightly more (4 months plus 5 days in May?) for spring rent?

[Hal_Al]

Off campus rent and food are eligible expenses for a 529 distribution, but the amount is limited to the lesser of your actual cost or  the schools "allowance for cost of attendance" (COA) for financial aid purposes. Although COA is basically, and usually,  what the school charges on campus students for Room and board, you can't use that in an unclear situation, like yours. The COA is usually published by the school and on the web site.

See this off campus explanation:

https://www.glassjacobson.com/blog/529-off-campus-housing/ 

In most off campus situations, the COA is going to govern. That said, your actual costs would have to be prorated, for the actual time school was in session, e.g. you don't get to claim rent for all of May if graduation is May 5 2026. 

[anonymouse1]

Thanks - there is no difference in COA for food and housing for on-campus vs off-campus given.  Drilling down more into the costs (given as a combined number), a double is assumed to be $3477/semester and the meal plan is assumed to be the "flex" plan which is the middle tier with some "dining dollars", for $3580/semester.  Since they are combined on one line in the COA, is it allowed to take up to the entire $7057/semester for rent, utilities, and food, or is it limited to a maximum of $3477 for rent and utilities and up to $3580 for food?  Meaning, can she withdraw the $814 monthly rent (let's say times 4 since there are only 4 full months per semester - we'll deal with the few extra days in May next year), for a total of $3256 and she can reimburse herself for up to say $100/month for utilities if she only spends $3400 on food, including the 25-meal "commuter" plan she's chosen (subsidizing the utility bill out of her food allowance)?  We have no idea what to expect for utility bills - or food, for that matter - in the current economy.  You would think that $769/month for food and $100/mo for utilities (split with 2 other roommates) would be enough, but the school is very close to the Canadian border and I presume the local electric company buys electricity from Canada.

[Hal_Al · Accepted solution]

Q.  Since they are combined on one line in the COA, is it allowed to take up to the entire $7057/semester for rent, utilities, and food?

A. Yes. 

[anonymouse1]

Thank you.