What expenses can 529 plan withdrawals be used for?
Withdrawals from 529 savings plans can be used penalty-free only to pay for qualified higher education expenses, such as tuition and fees; the cost of books, supplies, and other equipment; and in some situations the cost of room and board. (The cost of room and board may be a qualified higher education expense if the designated beneficiary is enrolled at least half time at an eligible educational institution.) Section 529 prepaid tuition plans typically cover tuition and required fees. Unlike the Independent 529 Plan, some states' prepaid plans may also cover room and board.

What if my child does not pursue a postsecondary education?
You may request a refund, and the account will be refunded according to the policy of your specific 529 plan. For 529 savings plans, the refund would include any earnings in the account. Under federal law, there may be income tax consequences including a refund penalty of 10 percent, except in the case of the student's death, disability, or receipt of a scholarship. In lieu of requesting a refund, you may choose either to hold the 529 plan investment until a later date when the student may decide to attend college, or transfer the benefits to another member of the student's family.

Will 529 savings plans affect a student's chance to qualify for financial aid?
Financial aid treatment of investments changes through the years so it is impossible to know how assets will be treated in the future. Typically, however, any investment may impact a student's eligibility for need-based financial aid. In addition, it is uncertain as to how much or what types of financial aid will be available to families in the future. You should contact the financial aid office of your local college or university for specific information on its financial aid treatment of 529 accounts.