Several of my clients have shared that their grandchildren are preparing to study abroad this coming school year, including colleges and universities in the United Kingdom, Italy, and Ireland. Those conversations have stirred up great memories of my time studying abroad while attending King’s College in Northeastern Pennsylvania (not King’s College at Cambridge). I spent a semester living and studying in London, and it was one of the great experiences of my life.
Now, years later, I’m getting to see the experience from a different perspective as my son studies abroad in Florence, Italy. Hearing about his experiences, travels, and day-to-day life overseas has reminded me just how valuable studying abroad can be, both educationally and personally.
Today, there are even more opportunities and options to study abroad than when I was in college. Most schools offer programs where students can spend a single semester or an entire school year studying at a foreign university while still enrolled in their domestic school. Another option allows students to enroll full-time at a foreign college or university.
What Your 529 Plan Can Be Used For
Whether studying domestically or abroad, the cost of a college education has continued to rise at more than three times the annual rate of inflation over the last 20 years. The total cost of a four-year domestic education averages between $120,000-$250,000+, depending on the type of institution you attend (private or public). This cost includes tuition and fees, books and supplies, room and board, and transportation. The cost of studying at an international university can vary widely by country, but it is generally slightly less expensive than studying in the U.S.
One of the most common vehicles for saving for and funding college costs is the 529 Savings Plan, a tax-advantaged investment vehicle designed to encourage people to save for future higher education expenses. Contributions to the plan are invested, and earnings grow tax-free when used to pay for qualified education expenses for the designated beneficiary.
Distributions from 529 Plans can be used tax-free to study abroad. There are restrictions, however. Similar to the rules for domestic college studies, the distribution must be used for qualified higher education expenses at an eligible institution. The key words there are “eligible institution.” Eligible institutions are colleges and universities that are eligible for Title IV federal student aid.
Tuition, fees, books, supplies, equipment, and room and board (if enrolled at least half-time) are considered qualified expenses. Transportation and travel-related expenses, basic living expenses, and health insurance are not considered qualified expenses.
One important change in recent years came through FAFSA simplification rules. Previously, distributions from grandparent-owned 529 plans could reduce a student’s financial aid eligibility because those distributions were treated as untaxed income to the student. Under the simplified FAFSA rules, distributions from grandparent-owned 529 plans are no longer counted as student income, removing a planning concern that many families once had when helping to fund college expenses.
How to Learn if You Can Use Your 529 Plan
The U.S. Department of Education maintains a list of international schools that participate in Federal Student Aid Programs. You can find this list on the Federal Student Aid website, under Participating Schools. I reviewed the list and, interestingly, King’s College (part of the University of Cambridge) is an eligible institution. If only I had known the rules back then.
Originally published August 2019. Updated May 2026.
