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529 Funds Can Now Be Used for Apprenticeships, Student Loan Repayment


On Dec. 20, 2019, the Setting Every Community Up for Retirement (SECURE) Act was signed into law as part of the federal year-end spending bill.

In addition to changes to retirement planning, the new law allows tax-free 529 college savings plan withdrawals to be used to pay for registered apprenticeship programs and up to $10,000 in certain student loan repayments, bringing new flexibility and expanded utility to 529 plans.

It’s important to note that although the new law allows for student loan repayment (either principal or interest) to be considered 529 plan qualified higher education expenses, this repayment provision is limited to a lifetime maximum of $10,000 per 529 plan beneficiary and $10,000 for each of an account beneficiary's siblings.

Siblings may include a brother, sister, stepbrother or stepsister. A 529 plan account owner may change the 529 plan beneficiary at any time without tax consequences. Customers should consult their tax adviser to determine how this repayment may impact them or their designated beneficiary. Related: New Law Allows 529 Plans to Repay Student Loans.

“Making 529 plans more flexible and effective as a financial planning tool is a win for everyone,” said Mary Morris, CEO of Virginia529. “There’s no single pathway to success and allowing greater flexibility for individuals to pursue their educational and career goals through expanded use of 529 plans will help more people. Our economy and country’s workforce will be the better for it.”

The passage of this law comes on the heels of the recent bipartisan legislation introduced by Rep. Abigail Spanberger and Rep. Rob Wittman that would further expand the use of 529 plans to include an even broader array of workforce programs for students.  Work on this legislation will continue in 2020.

Through the SECURE Act, 529 plans can be used to fund expenses including fees, books, supplies and equipment required for participation in a registered apprenticeship program. The Freedom to Invest in Tomorrow’s Workforce Act, if it were to pass, would allow students to use their 529 funds to pay for training, certification and credentialing programs, in addition to traditional two- or four-year college degree programs. Related: Spanberger, Wittman propose bipartisan legislation expanding use of 529 funds.

Want to learn more about registered apprenticeship programs? Visit

If you have any questions, please contact Virginia529 Customer Service.

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