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What is considered a qualified expense?

Most costs related to a beneficiary’s higher education qualify as an eligible expense. These include Qualified Higher Education Expenses (QHEE) as defined by the IRS:

  • Tuition and fees at eligible educational institutions
  • Books and software
  • Supplies and equipment (e.g. computers, internet, printers, etc.)
  • Certain room and board expenses

Federal law also considers student loans (up to $10,000 lifetime), certain apprenticeship programs, and tuition at an elementary or secondary public, private or religious school (up to $10,000 annually) a qualified expense. 

Qualified withdrawals are tax-free so long as the total withdrawals for the year don’t exceed a beneficiary’s adjusted QHEE.