Using Your Funds Flexible Options for Every Student

It’s hard to predict where your student’s path will go, so CollegeCounts offers versatility for anyone saving for higher education.

Use of Funds

When the account beneficiary is ready for college, your CollegeCounts account can be used for a wide range of qualified expenses at eligible institutions. Here is the important information you need to know about withdrawals from your account as your beneficiary prepares for their first (or last) semester.

tuition, fees, books, supplies, and equipment required for the enrollment or attendance of a Designated Beneficiary at an eligible educational institution;
expenses for room and board (with certain limitations) incurred by the Designated Beneficiary who are enrolled at least half-time;
expenses for the purchase of computer or peripheral equipment, computer software, or Internet access and related services, if such equipment, software, or services are to be used primarily by the Designated Beneficiary during any of the years the Designated Beneficiary is enrolled at an eligible educational institution;
expenses for special needs services in the case of a special needs beneficiary which are incurred in connection with such enrollment or attendance;
expenses for fees, books, supplies, and equipment required for the participation of a Designated Beneficiary in an apprenticeship program registered and certified with the Secretary of Labor under section 1 of the National Apprenticeship Act;
up to a lifetime maximum of $10,000 paid as principal or interest on any qualified education loan of the Designated Beneficiary or a sibling of the Designated Beneficiary. A sibling includes a brother, sister, stepbrother, or stepsister. For purposes of the $10,000 limitation, amounts treated as a qualified higher education expense with respect to the loans of a sibling of the Designated Beneficiary are taken into account for the sibling and not for the Designated Beneficiary.
up to a maximum of $10,000 per year in tuition expenses, incurred by a Designated Beneficiary, in connection with enrollment or attendance at an eligible elementary or secondary public, private or religious school.

Note: The earnings portion of a non-qualified withdrawal is subject to federal income tax and 10% federal penalty tax. In addition, Alabama provides in the event of a non-qualified withdrawal an amount that must be added back to the income of the contributing taxpayer. The amount to be added back will be the amount of the non-qualified withdrawal plus 10% of the amount withdrawn.

Qualified Higher Education Expenses

Tuition, fees, books, supplies, and equipment required for enrollment or attendance of a Beneficiary at an Institution of Higher Education;

Room and board expenses (with certain limitations) incurred by students who are enrolled at least half-time;

Computer equipment, software, and Internet access and related services used primarily by the Beneficiary while enrolled;

Special needs services in the case of a special needs Beneficiary which are incurred in connection with such enrollment or attendance;

Apprenticeship Program Costs, including tuition, fees, books, supplies, and equipment required for participation;

Qualified Education Loan repayments for the Beneficiary or their sibling, subject to a lifetime limit of $10,000 per individual;

Qualified Elementary and Secondary Expenses (K-12) in connection with the Beneficiary’s enrollment or attendance at an elementary or secondary public, private or religious school, subject to an annual $10,000 per Beneficiary limit (increasing to $20,000 after 2025); and

Qualified Postsecondary Credentialing Expenses such as tuition, testing fees, and materials for approved credential programs.

Eligible Educational Institutions

Your CollegeCounts 529 plan savings can be used at a wide range of schools, including colleges, universities, trade schools, and other programs that qualify for federal student aid. Your savings can be used at schools across the country, as well as some foreign schools.

List of Eligible Schools

Payment Options

Distributions from your CollegeCounts account can be paid to the Account Owner, the Beneficiary, or directly to the school.

Requesting a Withdrawal is Easy!

An account owner or custodian (under a state UGMA/UTMA) may request a withdrawal online or by downloading and submitting the Withdrawal Request Form.

Plan Ahead When Requesting a Withdrawal

Generally, if a request is received in good order on a business day prior to the close of the markets (typically 3 p.m., Central Time), the investments will be sold at that day’s closing prices, and funds will be sent electronically or mailed the following business day. Please plan ahead and allow sufficient mail time. For withdrawals payable to the account owner’s bank account, please allow several business days for your bank to process the payment and credit your account.

Refunds from Eligible Educational Institutions

If you receive a refund from an Eligible Educational Institution for Qualified Higher Education Expenses that were paid from money withdrawn from your Account, you can:

Pay for Other Qualified Higher Education Expenses – use the funds to pay other Qualified Higher Education Expenses incurred by that Beneficiary in the same calendar year.
Recontribute Refunded Amounts to a 529 Account – if a student receives a refund of Qualified Higher Education Expenses that were treated as paid by a 529 distribution, the student can recontribute these amounts into any 529 account for which they are the beneficiary within 60 days after the date of the refund. The amount recontributed cannot exceed the amount of the refund.

You should consult with your financial, tax or other advisor regarding your individual situation.

Other Important Withdrawal Considerations

The tax benefits afforded to 529 plans must be coordinated with other programs designed to provide tax benefits for meeting higher education expenses in order to avoid the duplication of such benefits. You should consult with a qualified tax advisor with respect to the various education benefits.

The part of a distribution representing the amount paid or contributed to a qualified tuition program doesn’t have to be included as income. This is a return of the investment in the plan. The designated beneficiary generally doesn’t have to include as income any earnings distributed from a qualified tuition program if the total distribution is less than or equal to adjusted qualified education expenses. To determine if your total distributions for the year are more or less than the amount of qualified education expenses, you must compare the total of all qualified tuition program distributions for the tax year to the adjusted qualified education expenses. Adjusted qualified education expenses are the total qualified education expenses reduced by any tax-free educational assistance. Tax-free educational assistance includes: the tax-free portion of scholarships and fellowship grants; veterans’ educational assistance; the tax-free portion of Pell grants; employer-provided educational assistance; and any other tax-free payments (other than gifts or inheritances) received as educational assistance.

An American Opportunity or Lifetime Learning Credit can be claimed in the same year the beneficiary takes a tax-free distribution from a qualified tuition program, as long as the same expenses aren’t used for both benefits. This means that after the beneficiary reduces qualified education expenses using tax-free educational assistance, he or she must further reduce them by the expenses taken into account in determining the credit.

If a designated beneficiary receives distributions from both a qualified tuition program and a Coverdell Education Savings Account in the same year, and the total of these distributions are more than the beneficiary’s adjusted qualified higher education expenses, the expenses must be allocated between the distributions. For purposes of this allocation, disregard any qualified elementary and secondary education expenses.

A tuition and fees deduction can be claimed in the same year the beneficiary takes a tax-free distribution from a qualified tuition program as long as the same expenses aren’t used for both benefits.

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