We just spoke with two parents whose college-age children are rounding out their undergrad experience by spending time at a university in Australia.
What a life, huh?
Your first thought may be how kids today get to do all kinds of cool stuff. (I haven’t been to Australia yet so I’m positively jealous!) Your second thought may be how on earth people pay for amazing study abroad opportunities like this.
The good news is that it’s easier than you think.
The Utah 529 College Savings Plan (by the way, one of our very favorite 529 plans, and one that is always highly-rated by Morningstar and others) has a helpful reminder in its April 2017 newsletter about paying for foreign study opportunities.
Many parents and grandparents already know that 529 college savings plans are the greatest thing since sliced bread. They’re flexible, adaptable and best of all, provide unbeatable tax-free growth for college. If you’re not using a 529 plan to pay for college, you could be missing out, so have that conversation ASAP with your financial planner.
Using your 529 plan to pay for overseas studies
Here’s something you may not know.
Your student can use their 529 college plan benefits to earn a college degree (or just study abroad) in Australia, Copenhagen, Hong Kong, London and many, many other world cultural centers.
Here’s the details:
College 529 funds “can be used to pay for tuition, fees, books, supplies, and other qualified educational expenses without tax penalty at many higher education institutions outside the United States,” say representatives at UESP, the Utah college 529 plan. (And if you didn’t know, you can use any state’s 529 plan. You don’t need to live there or go to college there. For our Florida clients, we usually select a plan based on lowest overall costs and best overall investment options).
Which schools are eligible?
How can you tell which foreign schools are eligible?
“Visit fafsa.ed.gov, the U.S. Department of Education’s federal student aid website, to determine whether an institution is eligible,” says UESP. “Click School Code Search, select State, and scroll down to Foreign Country to find an alphabetical list of colleges and universities abroad that are eligible.”
Last time I looked, there were over 400 foreign universities on the list.
How about study abroad for a semester or two?
What if you only intend to study abroad for a semester or two? You can still use your 529 plan to pay for it if the study abroad is eligible for credit at your student’s home institution in the U.S., and the U.S. institution is eligible under the normal Department of Education guidelines.