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Can I use a 529 plan to study abroad?

Student looks at a map while studying abroad
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If your child is heading abroad for a higher education, you might be looking for ways to cover the cost. The average price tag of attending an international school is around $18,000 per semester for American students, according to research by the International Institute of Education.

One way to foot the bill is to use a 529 plan. These tax-advantaged investment accounts allow you to stash away money for qualified education expenses, including tuition at eligible international schools. Here’s what to know about using these accounts for studying abroad.

What is a 529 plan?

A 529 plan is an account that allows you to save after-tax money for education expenses. You can withdraw the funds tax-free as long as they’re used for qualified education expenses at universities, technical schools and vocational programs. The funds can even be used to pay for tuition at overseas universities or K-12 private schools.

Pros and cons of a 529 plan


  • Tax benefits. You won’t pay income taxes on earnings while your money grows in the account. Withdrawals are also tax-free as long as you use the money to pay for qualified education expenses. Plus, your state may offer a tax break on contributions.
  • Flexibility. You can invest in almost any 529 plan, even if your child winds up attending school in a different state. You can also use the funds to pay for tuition at many types of schools, including international universities.
  • Student loan repayment. Up to $10,000 from a 529 plan can be used to repay the beneficiary’s student loans, and another $10,000 can be used to pay for their siblings’ loans.


  • Limited investment options. The money you contribute to a 529 plan is invested in mutual funds, exchange-traded funds or individual stocks. But your options vary with every plan, and you won’t have control over the individual assets within the fund.
  • Potentially high fees. Many 529 accounts come with fees that eat into your earnings.
  • Penalty on nonqualified expenses: The account holder pays a 10 percent penalty if they withdraw funds for nonqualified expenses. So if you overestimate your child’s education expenses one year, for example, the penalty applies to unused funds.

Can I use a 529 plan to fund my study abroad?

Distributions from a 529 plan can be used to pay for qualified higher education expenses at eligible international schools or universities. But to avoid taxes and penalties, it’s important to be sure that the school and the withdrawals meet IRS rules. Here are a few factors to consider.

Are the expenses qualified?

You’ll need to use the money from a 529 plan on qualified higher education expenses. This restriction applies both for U.S. schools and international schools. Additionally, students must use the plan withdrawals in the same calendar year that the qualified expenses are paid.

How long is the student’s stay?

Students must be enrolled in school at least half time for a 529 plan withdrawal to count as a tax-free distribution. The beneficiary may enroll at an international school for their entire educational program, or they can choose to spend a semester or two abroad. For the latter option, the student’s classes must be accepted for credit by a U.S. college or university.

Is the international school eligible?

To use 529 funds for an international school, the institution must be eligible for Title IV federal student aid. You can find out which schools qualify by checking the Department of Education’s list of participating schools. About 400 international schools are currently eligible for federal student aid.

If you can’t find a particular institution on the list, contact the school’s administrative office and ask whether students can apply for federal financial aid in the U.S. If the answer is “yes,” ask for the school’s code.

A small number of schools that may be eligible under Title IV choose not to participate in the federal aid system and will not have a school code. In these instances, ask whether the school has received a determination from the IRS granting eligible status and permitting students at the school to take tax-free distributions from their 529 plans.

What expenses will my 529 plan cover?

A 529 plan allows you to save money for “qualified” education expenses. Generally, those include the normal costs of attending an educational institution, such as:

  • Tuition and fees.
  • Books, textbooks, supplies and equipment.
  • Room and board (if enrolled at least half time).

But a 529 plan won’t cover certain expenses, including:

  • International health insurance.
  • Travel expenses.
  • Basic living expenses.
  • Sports and activity fees.

If you use 529 funds to pay for these nonqualified expenses, the IRS will apply income tax to the withdrawals, as well as a 10 percent penalty on the earnings portion of the withdrawal.

Should I use my 529 to study abroad?

A 529 account can be a great way to cover the cost of school overseas. To figure out if this is a good fit for your family, first make sure that your child wants to attend an eligible school and that you plan to use the funds for qualified purposes.

Next, you can compare program costs. If your child enrolls in a study abroad program for one or two semesters, they’ll pay tuition and fees to their home university. But if they’re earning a degree through the host school, the school determines the cost of attendance. It might make sense to reserve 529 funds for expenses at the child’s home school if the international school offers a much lower cost.

If the study abroad program is offered through a third-party service, keep detailed records of the expenses you pay.

Next steps

If you’ve saved money in a 529 savings account and your child wants to study abroad, first make sure that they choose a school that’s eligible for federal student aid. You can withdraw funds tax-free as long as they’re used for qualified education expenses in the same year you take out the money.

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Written by
Kim Porter
Contributing writer
Kim Porter is a former contributor to Bankrate, a personal finance expert who loves talking budgets, credit cards and student loans. Porter writes for publications such as U.S. News & World Report, Credit Karma and When she's not writing or reading, you can usually find her planning a trip or training for her next race.
Edited by
Student loans editor