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I attend university in the United Kingdom but have a 529 college savings plan in the United States. As I understand it, money from this plan can be used to cover my off-campus housing expenses.

However, the amount cannot be greater than:

The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution.

This seems to be straightforward for those attending US-based universities, where students generally pay a fixed price for dorms (or where the prices vary by only small amounts). However, my university offers a prodigiously large variety of accommodation arrangements, ranging from situations where 3 students live in stacked beds in a single room, all the way up to studios that cost two thousand pounds per month.

Am I only able to apply the cost of the cheapest available housing option to my off-campus rent, or could I apply the cost of an equal housing situation offered by the university to my off-campus rent?

JosephG
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2 Answers2

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You misunderstand the eligibility criteria. The quotation you linked is actually the second part, from publication 970:

a. The allowance for room and board, as determined by the school, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student.

b. The actual amount charged if the student is residing in housing owned or operated by the school.

b. is saying that you can only subtract the actual amount paid for on-campus housing, not that this has any bearing on your rent off-campus: note the sentence construction - "You can deduct an amount that is no greater than the actual amount charged, if the student is residing on-campus". b. only applies if you are living on-campus.

a. on the other hand is what is relevant: schools are expected to define what an acceptable allowance is for financial aid purposes (as someone with any of various forms of federal financial aid, including stafford/perkins loans, is only able to accept aid up to that amount). You should contact your institution and find out if they can provide that amount. If they cannot, it's possible that the school is not eligible for the 529 program at all - not all overseas schools are. See further up in publication 970:

An eligible educational institution also includes certain educational institutions located outside the United States that are eligible to participate in a student aid program administered by the U.S. Department of Education.

Joe
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One perspective you could take when facing questions such as this one is "If I am audited by the IRS, will this expense be considered reasonable and justifiable?"

Given the circumstances you describe, if you can point to the university housing and state "About half of the on-campus options which were available were more expensive than my off-campus housing rates" then I'd say you're on solid ground.

If on the other hand, you have to point to an exceptional circumstance (such as an unusually expensive on-campus option) and then state "My housing was only 10% more expensive than this option", I'd say you're on less stable ground.

Derek_6424246
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